Cambodia’s nascent extractive industry currently accounts for only a small fraction of government revenues as it lacks transparency and is vulnerable to corruption, lawmakers and industry insiders said yesterday in the wake of a report released this week.
On the New York-based Revenue Watch Institute’s Resource Governance Index – which measures the quality of governance in the oil, gas and mining sectors – Cambodia “failed” with grade 29, ranking 52nd out of 58 countries, with very low scores on transparency levels and checks and balances, though its “emerging legal framework” earned a higher score.
The report criticised the “opaque” licensing process for extraction projects, which involves direct negotiations between companies and the government as well as “a near-total lack of government data on the extractive sector”.
“The right to explore mines in Cambodia [is] given to the private companies without transparency and a lot of corruption, and we do not have access to the information,” Cambodia National Rescue Party spokesman Yim Sovann told the Post yesterday.
“[There are] no quality checks because those who get the concessions from the government are high-ranking officials from the CPP with foreign investors, and they never respect the law.”
The report also states that the Law on Management and Exploitation of Mineral Resources contains critical gaps and ambiguities, adding that a petroleum law has been in draft form for over 10 years.
Estimates of potential revenues from these resources vary from millions to billions of dollars. The Cambodian government expects tax revenues of $200 million a year from the oil and gas sector when oil production begins, but Mam Sambath, executive director of the NGO Development and Partnership, said the revenues could be closer to $600 million.
The report blames insufficient government reporting mechanisms and a lack of effective checks on the licensing and budgetary process.
However, Cambodia’s oil and mineral reserves are still underdeveloped, currently accounting for only a small fraction of government revenues and less than one per cent of exports, the report said. No large-scale extraction by international mining companies is expected before 2015, and Cambodia’s oil and gas potential remains untapped.
“So far, there is no extractive [oil and gas] industry in Cambodia,” Total’s managing director, Martin McCarthy, said.
Asked about the transparency of the ongoing negotiations between Chevron and the Cambodian government, he told the Post: “Presumably the outcome [of these negotiations] will be made public . . . on the taxation of offshore resources.”
Sim Sokhari, director of the Mineral Resources Department at the Ministry of Industry, Mines and Energy, said: “We are continuing our efforts to enact and establish regulations and law in order to [improve the] government [of] the mining sector.”
According to the report, none of the 10 ranked Asia and Pacific countries earned a satisfactory grade on resource governance. Myanmar scored lowest of all 58 countries.