Financial Governance Report Spotlights Priorities for Somalia Government

A poisoned chalice: President Hassan Sheikh Mohamud will inherit an illegally signed production sharing agreement.

Mogadishu (PP News Desk) — Published two weeks after the election of Somalia President Hassan Sheikh Mohamud, the Financial Governance Report 2022 highlights setbacks resulted by delayed elections and their impact on reforms and IMF Somalia Programme, as well as priorities for the incoming administration.

The political rift over elections and subsequent power struggle between President Mohamed Abdullahi Farmajo and Mohamed Hussein Roble strained  federal institutions  to a point that the Federal Government attempted  to award “concession contracts on a non-competitive basis without following the requirements of the Procurement Act.” The State Attorney General endorsed those underhand practices despite having no “powers under the Procurement Act to waive its provisions.” The Office of the Auditor General stopped the non-competitive contracts.

The State Attorney General is investigating the production sharing agreement that the Petroleum Minister signed with Coastline Exploration in violation of presidential decree on the moratorium on signing agreements during the transition period.

”It is becoming clear the role State Attorney General has had in protecting Roble, who has not suspended the petroleum minister for signing an illegal agreement on Somalia’s behalf” said Ali D. Dahir, a journalist.

The report mentions a remarkable progress in customs after the  introduction of Customs Automated System (SOMCAS) at Mogadishu Port and Airport in February 2022. It will be piloted in Puntland and Jubaland “in the second half of 2022.”  This federally uniform revue collection mechanism could pave the way for federal fiscal policy that can only succeed if the central government refrains from influencing electoral outcomes at federal state levels, interferences that partly caused electoral delays.

“The new administration will need to pay special attention to oil and gas contracting” the report urges the incoming administration.

Without revising the Petroleum Law, which contains contradictory articles, it is difficult to foresee how Somalia can benefit from oil and gas contracts awarded to foreign companies. The new government might try to persuade Coastline Exploration to abandon its claim that the production sharing agreement is valid.

“The incoming government may hesitate to investigate the manner in which the agreement was signed because the outgoing administration did not investigate  public asset disposals under the President Mohamud’s 2012-2017 administration, as suggested in the 2017 Financial Governance Report” said Abdullahi Ali, an economist in Mogadishu.

© Puntland Post, 2022