Gov’t May Adopt Oil Management Covenant

The government of Cambodia has agreed to form a working group to study whether and how to adopt an international covenant that would help ensure proper management of oil revenues, officials said.

Cambodia agreed in principle to the Extractive Industries Trans­parency Initiative—a global coalition of governments, oil companies and civil society groups that advocates transparent revenue management—at June’s donor meeting, but has yet to consider the nuts and bolts of how it might actually be implemented.

“We have agreed to the general principles of EITI, but we have to do the study in order to agree on the mechanism,” said Hang Chuon Naron, secretary-general of the Ministry of Economy and Finance.

Hang Chuon Naron said the members of the working group had not yet been selected, but added that the group would convene “in the very near future” and make its recommendations some time next year.

Donors and civil society groups have long pressed the government to sign on to EITI, which calls for independent audits, active civil society monitoring and the publication of revenues from oil, gas and mining. To date, more than 20 countries, mostly in Africa, have committed to the initiative.

Working towards the adoption of the EITI was one of the conditions built in to the $70 million in aid the World Bank agreed to deliver on Aug 14.

“The agreement with the World Bank is to form an inter-min­isterial working group to study whether and how to formally endorse EITI,” Stephane Guim­bert, a Senior Country Economist for the World Bank, said in an e-mail.

Other donors have joined the World Bank in making EITI adoption a priority. Hang Chuon Naron said that Japan and the European Union had drafted aid commitments of $10 million and $22 million, respectively, and that negotiations with the UK and Canada were ongoing, all of whom call for progress on EITI.

Guimbert said donors—who will bear the costs of the study, which are expected to be minimal—hoped the group would conclude its work by next summer.

He added that future funding from the Bank is contingent on the government making “satisfactory progress” on governance reform, including EITI.

“Cambodia’s development partners view the endorsement of EITI as critically important for improving the likelihood of sound oil revenue management and for sending the right signal to the global community about the country’s commitment to a favorable investment climate,” Guim­bert said in an e-mail.

SRP lawmaker Yim Sovann praised the government for moving towards EITI implementation, but said the nation also needs a better legal framework to ensure that oil revenues benefit the nation as a whole. “This is big money,” he said.

Warwick Browne, Oxfam Ame­­rica’s regional project manager for extractive industries, called the establishment of the working group “a very positive move.”

 

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