About This Report
An Uncertain Future
August 24, 2010

Stalled Reform

The 2004 Abuja Declaration was, in principle, meant to have drawn on lessons of the past and prevented opaque practices in further oil negotiations and licensing but systemic problems have remained. Beyond the problems identified above related to mismanagement and potential corruption, São Tomé suffers from a series of institutional failures ranging from weak capacity to the lack of political will to adhere to commitments undertaken. For example, to date there has been no action to publish information on the website of the JDA—including payments to the JDA by oil companies and data on Nigeria and São Tomé’s use of funds received through the JDA—as promised under the declaration. [52]

Despite the promising discussions during the National Forum of 2003, tensions remain over limited development and the failure of politicians to deliver social benefits. For example, there is resentment by residents on Príncipe island that the regional government of Príncipe island was excluded during the setting up of the JDZ. Similar resentment exists with regard to decision making for the EEZ. The president of the Regional Government of Príncipe island, José Cassandra, told Human Rights Watch that he felt that on licensing of oil exploration in the EEZ his government should be an equal beneficiary with São Tomé although the population of Príncipe island is significantly smaller. [53]

São Tomé’s Failed EITI Candidacy

There is a disjuncture between the São Tomé government’s political rhetoric and the lack of real success in building serious institutional capacity to manage any future oil rents. This was highlighted by São Tomé being one of only two countries (the other is Equatorial Guinea) to have its candidacy in the Extractive Industries Transparency Initiative (EITI) end with expulsion. [54] This throws further doubt on the ability of São Tomé’s institutions to manage this process in an open, accountable, and transparent manner.

As early as March 2004 in Washington, DC, President Fradique de Menezes committed to “making all payments to the Joint Development Authority public along the guidelines of the Extractive Industries Transparency Initiative.” [55] São Tomé was accepted as an EITI candidate country on February 22, 2008, and was given until March 9, 2010 to undertake validation. However, little progress was made on meeting the requirements for this process other than officials attending a number of workshops and the appointment of an EITI National Coordinator, Genoveva da Costa. An international workshop on oil revenue management in São Tomé attended by President Menezes in October 2007 raised concerns over slowness and capacity to prepare for candidature criteria. [56]

The EITI Board, in its April 2010 meeting, held a frank discussion about the lack of progress in São Tomé. The minutes of this meeting explained that Prime Minister Branco had requested a voluntary suspension from EITI, citing the challenges associated with joint management of the JDC. According to the prime minister, progress was stalled for 18 months due to the need for coordination between officials from both countries. Although the EITI Board agreed that “the Nigerian authorities are in a stronger position and progress had been difficult,” it did not concur that this was the sole problem leading to the lack of progress. To the contrary, the EITI Board took important note of the following:

There did not appear to have been regular meetings of the MSG [multi-stakeholder group, a key requirement of the initiative], and there had been no strong or clear evidence of continued political commitment to the process. [57]

Moreover, São Tomé’s request for voluntary suspension was inconsistent with EITI’s rules. As EITI Board chair Peter Eigen explained in a letter to the government, “The EITI rules … permit voluntary suspensions in countries that are experiencing exceptional political instability or conflict. In the case of São Tomé e Príncipe, the Board did not consider that such circumstances existed.” The result was that the country was de-listed from the initiative, which is tantamount to expulsion.

The evident lack of political will cited by EITI’s Board also hampered São Tomé’s progress in other ways. The São Tomé government’s use of oil funds is regulated by various laws, discussed above. Some of these, such as the 2009 law requiring public tenders, were responses to problems that emerged during licensing rounds. The value of such laws, however, is negated if they are not implemented. Actual compliance by the São Tomé government with the governing oil management law came into question in 2005, when the National Assembly’s oil audit committee undertook an investigation. [58]

Capacity constraints also place São Tomé at a disadvantage. In early 2010, as noted, the government began work to creating a national oil company, Petrogás, and to seek to form a consortium with Angola’s Sonangol and Portugal’s Galp Energia. This arrangement has become politicized, with the former economy minister of São Tomé, Teotónio Torres, accusing Angola and Portugal of wanting to “rob” São Tomé’s oil in an effort to emphasize his nationalist credentials during the 2010 election campaign. [59]

[53]Human Rights Watch interview with José Cassandra, president of the Regional Government of Príncipe Island, São Tomé, July 29, 2009.

[54] Letter from Peter Eigen, chairman of the Extractive Industries Transparency Initiative, to President Menzes, April 29, 2010, http://eiti.org/files/2010_04_29_letter_he_president_menezes_sao_tome_e_principe.pdf (accessed August 18, 2010).

[55]“Creating a Stable Base for Transparency in São Tomé ’s Oil Sector,” H.E. Fradique de Menezes, President of São Tomé e Príncipe, Center for Strategic and International Studies, Promoting Accountability and Transparency in Africa’s Oil Sector Conference, Washington, DC, March 30, 2004.

[56]The conference highlighted ambiguity over the role of the Petroleum Oversight Commission (POC) and that to put the Initiative into practice, EITI criteria require the creation of a multi-stakeholder committee, but the role of this structure could be included in the POC. See, “National Discussion on Oil Revenue Management in São Tomé and Príncipe (STP) and Regional Coordination Meeting of Civil Society for Portuguese Speaking Countries in Africa,” International Alert, Publish What You Pay, UNDP, October 29-31, 2007, São Tomé, http://www.international-alert.org/pdf/National_Discussion_Oil_Revenue_Management_STP.pdf (accessed May 25, 2010). NGOs involved in promoting EITI are Webeto, International Alert, and FONG, the last of which represents over 85 São Tomean civil society organizations.

[57]Minutes of the 12th EITI Board meeting, April 2010, p. 6. http://eiti.org/files/2010-05-26%20Final%20Minutes%20of%20the%2012th%20Board%20Meeting.pdf (accessed August 2, 2010), p. 6.

 

[58]Human Rights Watch interview with Idalécio Quaresma, president of the National Assembly Oil Audit Commission, São Tomé, July 30, 2009.

[59]“Angola acusada de querer ‘roubar’ pertóleo de São Tomé e Príncipe,” RTP Africa, July 14, 2010.