Mauritius dispatches: new corporate-friendly oil bill raises corruption and climate change concerns
© WikiMedia (Karsten Ratzke)
Mauritius dispatches: new corporate-friendly oil bill raises corruption and climate change concerns

A Staff Correspondent for JURIST in Mauritius says that a new petroleum bill advancing in that Indian Ocean country off the coast of Africa has significant implications for climate change and raises concerns about corruption, conflict of interest, and government mismanagement. For privacy and security reasons we are withholding his name and institutional affiliation.

Last week, the Offshore Petroleum Bill (“the bill”) was unveiled at the National Assembly with relatively little fanfare. The object of the bill is to create an “appropriate regulatory regime for the conduct of petroleum activities in the seabed and subsoil areas of the maritime zones of Mauritius.” While this move was not unexpected to most political observers given that the cabinet approved the introduction of the bill to parliament earlier during the month, it took most ordinary Mauritians by surprise.

Since its introduction, the bill has been sailing through the legislative process with a remarkable speed having been stamped with a “certificate of urgency.” Such a designation hastens the legislative process by putting it on a fast-track allowing the bill to be passed on the same day it is introduced. With legislative sessions being held weekly and debates on the bill being adjourned before its passing, this is an appropriate time to bring attention to the legal aspects of the bill.

However, it might be helpful to review the events that led to the bill’s introduction. From the Prime Minister’s speech in parliament, it can be understood that the raison d’etre of the bill was the identification of four potential sites for petroleum exploration by a French company tasked with conducting geo-scientific studies on the possibility of oil reserves in the economic zone of Mauritius . Following such finding, the government seems to be convinced that the time is ripe for updating the nation’s exploration laws, which dates back to the 70s, in anticipation of signing oil agreements in the future.

While much has been said about the bill such as its impact on climate change and its untimely introduction coinciding with the departure of the Mauritian delegation to Glasgow for the COP26 talks, little attention has been drawn to the substantive provisions of the bill, which highlight potential areas of concern. As such, it might be useful to to look at the salient aspects of the bill, with hopes that they could be changed before its ultimate passing.

One of the main features of the new bill is the creation of a new department under the aegis of the Prime Minister’s office, dubbed as the “Department for Continental Shelf, Maritime Zones Administration and Exploration” (“the Department”). The Department will be in charge of regulating all aspects of potential offshore petroleum activities, including but not limited to negotiating agreements, regulating and monitoring petroleum activities, and developing policies applicable to the management of petroleum activities. The sheer breadth of powers allocated to the Department can be a cause for concern as it creates a sort of bureaucratic trifecta of judge, jury and executioner for anything connected with petroleum activities.

There is also a concern that the Department, given its wide-ranging and conflicting powers, would prioritize some objectives over others. For instance, the Department is responsible for “facilitating the conduct of petroleum activities and developing policies to enhance petroleum activities,” while simultaneously being in charge of setting and upholding “standards and guidelines for petroleum activities such as an Environmental Code of Practice and a Safety Code of Practice.” This places the Department with a clear conflict of interest, whereby one priority cannibalizes another. Given the general framework of the Act, the losing interest could not be more obvious.

The second main characteristic of the bill concerns the governing instrument between the State and the parties involved in offshore petroleum activity in Mauritian waters—i.e. the “petroleum agreement.”

While many countries have incorporated transparency in their licensing process by resorting to an open bidding process to award exploration and production licences, the framers of this bill have preferred to adopt a system where the Department would have broad powers to negotiate and enter into petroleum agreements with a potential exploration, retention or production licensee.

This is alarming, given the very legitimate potential for corruption and mismanagement and the well-documented effects of such systems in jurisdictions that have opted out of an open process. With the bill highlighting that any benefit that the State derives from a petroleum activity in the form of royalties or taxes would be determined not by any law or regulation and instead by the terms of the petroleum agreement, the lack of an open process is all the more disturbing.

Additionally, unlike the neighbouring island-State of Seychelles, the bill not only fails to provide for a model petroleum agreement, but also allocates the power to draft a model agreement to the Department. Notably, the bill also contains confidentiality and nondisclosure clauses, making it a corporate-friendly one in possible detriment of public interest.

A third main feature of the bill involves long-term financial concerns. The bill, in contrast with sustainable and long-term practices adopted by oil producing States such as Norway, allocates all funds derived from petroleum activities to a “petroleum fund” under the control of the Ministry of Finance, which has the discretion to determine when and how the monies derived from petroleum activities may be used. Thus, there is no obligation to use the funds so derived to finance the green transition of Mauritius or to invest in the future of Mauritians.

Since the government previously displayed interest in pursuing a long-term carbon-free future, one would have hoped for the bill to frame its long-term plan concerning proceeds derived from oil along those lines rather than open venues for the misusing of such funds to satisfy political ends. Climate change has arguably become the most significant concern today, especially for the younger generation, and any senseless government expenditure would only bring more harm by pushing the country toward an “oil trap economy.”

A fourth attribute of the bill is contained in § 78, which interestingly protects the Department and its officers from any civil or criminal liability with respect to “any act done or omitted in good faith” while discharging their responsibilities. Such expansive protection goes much beyond what is already allocated to officers of civil service through the Public Officers’ Protection Act, which itself has been criticized as providing unnecessary and excessive protection to civil servants through its strict limitation provisions for any civil suit.

The extension of such a provision with this bill to encompass civil and criminal liability, combined with its opaque nature and the lucrative market associated with oil production only raises additional concerns. It also remains to be seen whether such a broad liability protection provision is even consistent with the Constitution.

The final and most concerning aspect of the bill is its establishment of a very secretive and nontransparent framework favoring commercial interests over those of the general public. There is an implication that the bill superimposes all aspects of the licensing process. Section 79 imposes a confidentiality obligation on all officers of the Department, violation of which can subject them to large fines and a two-year prison term. This obligation forbids officers from disclosing any information relating to the Department or its activities, unless ordered by a Court or authorized by law.

The bill also provides for a general duty of nondisclosure on the Department, preventing the dissipation of any “record, return, plan, map, accounts, sample, information, data collected,” or data relating to petroleum activities, even if such information may be in the public interest. Exceptions include disclosures made with the written consent of the title holder or disclosures occurring 10 years from the date of receipt or until the expiry of any title, whichever is longer. As if that was not a sufficiently high bar, the bill also imposes an obligation on the Department to consult with any title holder and give due consideration for the impact to the titleholder where such information might prejudice its commercial interests.

This is in direct contrast to the transparent practices adopted by other oil-producing States such as Norway, which through its regulations obligates licensees “to make information about petroleum activities publicly available to the greatest possible extent as and when such information becomes available…”

There are only a few weeks left before this bill is passed and there continues to remain legitimate concerns. Failure to address these concerns will ultimately determine whether Mauritius joins nations that have fallen to the oil trap or those that have not.