The controversial Production Sharing Agreement signed on behalf of Somalia by the Petroleum and Mineral Resources Minister Abdirashid Mohamed Ahmed with Coastline Ltd in violation of a Presidential Decree on the transition period puts Somalia in a weaker position, Professor Abdulkadir Abikar Hussein told Brit Somali TV. Abikar mentioned institutional inadequacies that should have been taken into account before entering into such an agreement with a foreign company. Somalia rejected the agreement. “If it goes to an arbitration court, Coastline Ltd could probably win it” said Abikar.
It is not the agreement signed by the Petroleum Minister that could prove useful for Coastline Ltd to challenge Somalia’s position, it is the Somali Petroleum Law signed into law on 2 February, 2020 by President Mohamed Abdullahi Mohamed.
Neither the incumbent Federal Government nor the group of politicians who describe themselves as the “Opposition” has taken the time to study the contents of the Petroleum Law, which contains contradictions and ambiguities that facilitate corrupt practices by rogue Ministers or senior officers at the Somali Petroleum Authority.
The outgoing bicameral legislature of Somalia ratified the Petroleum Law in 2019 and 2020. A legislative history of the bill could illuminate to what extent MPs and Senators have discussed the contents of the draft law. This essay will discuss aspects of the Somali Petroleum Law to highlight its potential for facilitating corruption within the Federal Government of Somalia.
Politically and Economically Divisive
The Somali Petroleum Law divides Somali regions into petroleum-producing and non-petroleum producing regions. This distinction under the 4.5 power-sharing arrangement further compounds the absence of transparency at the Federal Member States and at the centre as far as the Sharing of Petroleum Income is concerned. Some Federal Member States have relatively longer coastlines, whereas some regions may be put at disadvantage for being excluded from potential oil exploration operations. Just as the 4.5 system promotes political inequality, the Sharing of Petroleum Income institutionalises economic inequalities.
Past Agreements
The Somali Petroleum Law ambiguously addresses past agreements signed with foreign companies. Article 9 contains three sub-articles. Sub-article 1 (“All agreements pertaining to petroleum that were signed with administrations existing in parts of Somalia or previous provisional governments in the period between December 1990 and up to September 2012 are considered null and void”), and sub-article 2 (“All the agreements signed between foreign companies … [and] Somalia before 1991 are considered valid agreements and they will be given full consideration”) contradict each other. Unfamiliarity with Somali political history comes to the surface: in December 1990 there was a fully recognised government in Somalia. Sub-article 3 (“These companies which had previous agreements before 1991 will have to renew them with the Federal Government of Somalia in accordance with article 54”) contradicts sub-article 2. If the Federal Government of Somalia considers a past agreement signed by the pre-1991 Somali government with a foreign company to be valid, there is no need for renewal.
Conflicts of Interest
Article 13 of the Somali Petroleum Laws emphasises powers exclusively vested in the Federal Government of Somalia to sign agreements with foreign companies “doing exploration and drilling for oil”, but bypasses present or past conflicts of interest that can only be prevented through due diligence. The former Somalia Prime Minister Hassan Ali Khaire under whose watch the Petroleum Law was ratified had been an executive of Coastline Ltd (formerly Soma Oil and Gas). His political role and the rebranding of Soma Oil and Gas coupled with the signing of an illegal Production Sharing Agreement point to political unaccountability and self-serving nature of the Somali federal institutions. The Petroleum Law increases the risk signing agreements for personal interest rather than national interest.
Mock Investigation Powers
Which body has the mandate to investigate any contraventions such as the illegal Production Sharing Agreement? The Petroleum Law grants the Somali Petroleum Authority the mandate to “investigate or cause to be investigated whether any requirement or condition of an Authorization has been or is being contravened” (Article 19, sub-article 15) in addition to its powers “negotiate Production Sharing Agreement…(Article 19, sub-article 14 (c) ” and “to modify and revoke any Authorization in accordance with this Law …(article 19, sub-article 14 (e).
In the VOA Somali Service interview, the Petroleum Minister did not refer to the Somali Petroleum Authority on whose recommendation he ought to sign the Production Sharing Agreement (Article 24, sub-article 1). He said that the Production Sharing Agreement file was in the possession of the President, despite the Minister going public in 2021 with his knowledge of the Presidential Decree against signing any agreements during the transition period. The Federal Government of Somalia did not seek professional advice from reputable experts before submitting the law for ratification by the Lower House and the Upper House. It is a piece of legislation that entrenches venality in the Somali federal institutions. It might have been written by foreign companies interested in petroleum exploration in Somalia. It is full of loopholes that the Petroleum Minister can exploit to defend himself against accusations of professional dishonesty. The challenge is to figure out how the bicameral legislature of Somalia can be reformed to abrogate laws that jeopardise the national interest of Somalia. The Somali Petroleum Law is the litmus test for Somalia’s next bicameral legislature, or perhaps a hot election topic for Somali presidential candidates. The poorly written Petroleum Law constitutes a legitimation crisis for the Somali federal institutions.
Liban A. Ahmad
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