Rethinking governance

Transparency is paramount if Lebanon’s oil and gas industry is to succeed

Greg Demarque | Executive

The recent garbage crisis has managed to expose a myriad of problems which exist in our political system. Among these is the failure of the government not only to properly deliver a basic service like waste collection, but to decide how to deliver such a service through a transparent, collaborative process. In other words, the problem is not only the outcome but the actual process, which is a key determinant of good and effective service delivery. Often, the more transparent, accountable, and inclusive a decision-making process is, the better the service is in terms of price and quality. The less transparent decision making is, the worse off the result.

With the government’s failure to provide waste collection services—generally considered to be a relatively straightforward exercise—one can only wonder how it will be able to manage a complex sector like oil and gas, which has several stakeholders with varying interests at different stages of the value chain.

Concerns of corruption

Despite being a latecomer to the Levant Basin, Lebanon moved fairly quickly in the process. The parliament passed the offshore law in 2010 and set up the Lebanese Petroleum Administration (LPA), which prepared the bidding-related decrees, only to fall prey to Lebanon’s decision-making quagmire.

The LPA, whose members mirror the sectarian representation of the country, with a one-year presidential rotation for each of its six members, failed to assuage political elites’ fears of losing influence over the sector. In April 2014, the government set up a ministerial committee to advise the government on how to proceed with the oil and gas sector, hence duplicating the role of the LPA. If the committee’s work is to ensure that the LPA is performing well, one wonders why they have only managed to meet twice and have kept the process closed to the public, thereby raising more concerns as opposed to easing public fears of corruption.

Furthermore, the problem does not rest only with the executive body. The illegitimate parliament has also failed to play its role in asking the government where it stands on the development of the sector. In fact, some MPs have shown they have little interest in and knowledge about the sector. This is worrisome as they ought to play a major role in establishing the sector and ensuring that it will be properly managed.

A change in structure

Some have argued that the sector will remain paralyzed in the absence of a president and a new government. Unfortunately, this thinking is flawed. The formation of a new government and swearing in of a president will only give a semblance of normalcy in a country where such a state of affairs generally leads to collusion among the political elite at the expense of citizens’ welfare.

Some MPs have shown they have little interest in and knowledge about the sector

What Lebanon needs is a different governing structure where state institutions are actually functioning, transparent, inclusive, and accountable. The challenge we face is beyond the LPA. We need a responsible government that is able to put a petroleum policy in place and put it up to debate among the wider public. We need it to actually address the two decrees that are collecting dust. Equally important, we need it to launch a broad consultative process to reach a consensus on how to manage our natural resources. We need a parliament that cares to ask the executive body where it stands and why progress in the sector has been delayed. We need oversight agencies to be equipped to deal with a very complex sector that involves international oil companies, whose resources and capabilities can overwhelm the country’s institutions. We need a judiciary prepared to properly enforce contracts that include service companies as well. We need the LPA to institutionalize the consultation process with the wider public as well as make public its decisions that are relayed to the government.

In the meantime, the Lebanese Center for Policy Studies, as a think tank and part of the civil society community, needs to be ready to engage in the process, inform the public, and monitor the government. We, along with other civil society organisations, must create enough pressure to ensure that the government is held accountable, that the bidding process is transparent, and that contracts are sufficiently disclosed.   

The fall in oil prices by half, which makes deep water extraction less profitable, may provide Lebanon with a chance to postpone the development of the sector and reconsider its governing structure. The big question is: Will the political elite have the wisdom to restructure institutions so they become more effective or will they keep undermining institutions so the elite can try to benefit from the mess they are creating? If the latter is more likely than the former, then we must be very aware of the dangers that face us and ready to face the oil tsunami that could very well bury us all.

Sami Atallah is the director of the Lebanese Center for Policy Studies

One Comment;

  1. George Sabat (ACMA) said:

    Mr. Atallah, allow me to suggest that transparency has always been a problem with all the governments in Lebanon during the past seventy years, so why should it now get different, particularly when such a sensitive domain as the oil and gas industry, is concerned? Over the past four years there has been a lot a lot of talk about Lebanon’s hidden health offshore and inshore. But talk is just about all that we have harvested so far. With the dramatic fall of oil prices on the international market our hopes of ever getting access to that industry appear very slim today.

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