“The Mirror for the People”



 Proposal on:
 Draft Act on Petroleum Fund for Timor-Leste

Members of the Commission C of the National Parliament of Timor-Leste

 Submitted by


 Thursday, 2 June 2005


Re: Comments on Final Draft Act on Petroleum Fund for Timor-Leste

Members of the Commission C, of the National Parliament,

Thank you for giving LABEH the opportunity to contribute its ideas on the final “Draft Act on Petroleum Fund for Timor-Leste”.

The Petroleum Fund Steering Group should be commended for the Draft Act to establish a Petroleum Fund for Timor-Leste (the “Draft Act”).   The Executive Summary provides a very clear and important statement of principles, and the Draft Act provides in general a sound basis for a strong petroleum fund.   Nevertheless, the government may wish to further refine certain particulars to provide additional transparency protection and to further assure the regularity of the fund’s operations.

As from the very first beginning of the public consultation of establishing Petroleum Fund for Timor-Leste our organization has followed its developments. 

Now, that the draft Act on Petroleum Fund for Timor-Leste is waiting its approval by the Parliament, nothing would be more important to the future of our people than the proper management of the petroleum fund. The government estimates that petroleum income will contribute over 75% of fiscal revenue and over 50% of gross domestic product (GDP) in the coming years.

The law needs to spell out that all payments made by petroleum companies, their agents and representatives to the government should be publicly published by the companies as well as the government publish what it receives from these companies. The law needs to establish a “One Stop Information Center” for all related activities of the petroleum fund where ordinary citizens could get information on the fund. 

Composition of the Consultative Council

The idea of former President, Prime Minister, Speaker of Parliament, and Minister of Finance and others to automatically become members in this council and serve for 10 years after their mandate in the affairs of the state is strongly discouraged by LABEH; consider reducing the time frame to at least 5 years.

The Petroleum Fund Consultative Council under the Draft Act appears to be limited to providing policy advice and acting as a medium of communication with the public.   This is important but limited role contrasts sharply with the powers and functions given to the analogous entity, the Petroleum Oversight Commission, under the Saotomean law.    The Petroleum Oversight Commission has broad responsibilities to monitor and ensure compliance by the government with the law, and it has independent administrative powers to investigate allegations of misconduct.   See STP Oil Law, Art. 24.   The Draft Act appears premised on the belief that regular government processes to ensure compliance with the law are adequate and that no additional or separate supervising authority is required.   Certainly, in a properly functioning governmental environment, there is much to recommend the approach of Timor-Leste in the Draft Act.   Human resources are scarce and one should be careful not to overburden them by creating additional administrative authorities.  

Questions like, what if the one or more “formers” do not want to sit or be a member of the Council? What if, since the law may be in force this year and we do not have a former President, PM, SP and MF? Etc, would the positions be vacant until we have “formers” The Consultative Council should include the four organs of sovereignty with some certain amount of powers to investigate an act of corruption not just as a Consultative Council as the draft Act suggests.  Their powers will need to be clear and how it will be applied. And to whom will it be accountable. Will be the other questions that will necessarily require clear answers

Confidentiality and Accountability

Our people feared that confidentiality in the management of the fund may grow to cover accountability and transparency. What is considered to be confidential should be clearly spelt out in the law so that our people would know what is confidential in the management of the fund. Confidential Information should be defined

We noted that the law has no provisions for a public information office or web facility where those documents which are to be made public will be available.   This subject may be treated in other legislation.   In any case it is important to have both web access and access to physical copy in local languages.   This access should not only include reports which are readable and understandable in summarizing data but should also include access to the underlying data so that independent checks can be made.

Although not specifically required in the Saotomean law, it has been envisioned having the custodial bank holding the oil fund provide the public with direct web access to the oil fund much in the same way that individuals have direct access to their private accounts.  This would provide complete transparency regarding receipts, holdings and expenditures and would do so without any intermediation of the government.   Such access would not only provide complete transparency, but it would help provide individual citizens a sense of ownership that would further sustain the independence and maintenance of the oil fund.

Questions like, how would our people know what is confidential, if it is not spelt out in the law. What activity in the fund can be considered to be confidential and how would the government grantee accountability if the government chooses the auditor?

How could our people be confident in the transfer and the use of the fund since the court is not involved in the selection of the auditor for the fund? What is the need of the office of the Ombudsman, Inspector General and the High Court if they are not involved in the crosschecks and balances of the fund?

The questions like, how will our people be able to follow the process of revenue and the mechanism of management of the Petroleum Fund. Transparency and accountability are not limited to information on what has been done or is being done, but also includes what is intended to be done next, what is intended to be done in each phase of petroleum development. More of that is demanded when dealing with the question of Petroleum fund which without doubt is an issue of a national interest.

Yours truly,

Dr. Christopher Henry Samson
Executive Director LABEH

No. 30 de Agosto Depan SDN 07 Malinamoc, Comoro, Dili Timor-Leste
Tel. 3322125 or 724 0795, E-mail: