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World Bank advises mechanisms to detect conflicts of interest in oil licence applications
By Kemol King
If an entity applies to be awarded an oil block or any other extractive sector deal, the application process should involve mechanisms to detect any conflicts of interest.
This is just one of several pieces of advice proffered by Guyana’s development partner, The World Bank, in its publication ‘Licence to Drill: How to Reduce Corruption in Extractives Sectors’.
The Bank acknowledges that extractive industries tend to form large sources of income for rich and poor countries alike, and that they have transformational potential to support economic development. In this regard, it notes integrity screening as necessary, because natural resource sectors are highly susceptible to corruption in countries whose economies largely depend on them.
Quoting the Organisation for Economic Cooperation and Development (OECD), The World Bank stated that a conflict of interest arises “when a public official has private-capacity interests which could improperly influence the performance of their official duties and responsibilities”.
The Bank posited that the licence application systems should screen, in addition to applicants, officials of the licensing agency and any other officials with a decision-making role in the process.
The Integrity Commission would be instrumental in such a process.
The World Bank has identified three types of conflict of interest to be on the lookout for, from OECD research.
The first is the actual/real conflict, where there is in fact an unacceptable possibility of conflict between a public official’s interests as a private citizen and his/her duty as a public or civil servant.
The second is the apparent conflict, where the potential for doubt arises about the officials’ integrity and that of the organisation he/she represents.
The Bank advises that, to identify this conflict, one should ask, “Does official X appear to have a conflict of interest?”
The third type is the potential conflict, which may exist where an official has private capacity interests that could cause a conflict of interest to arise at some future time.
Some conflicts of interest, the Bank states, could be resolved by mitigation and monitoring, while others may be so serious that absolute prohibition is the only credible solution.
A suggestion by the Bank is a disclosure form, so the licencing agency could be furnished with requisite information to determine whether a conflict exists.
Energy Director, Dr. Mark Bynoe had said that Guyana may be ready to initiate the next licensing round for its offshore blocks in 2020, likely through an open bid process.
Pursuant to that, Dr. Bynoe said that he would prefer that Guyana’s Petroleum (Exploration and Production) Act be updated before the licencing.
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