Open Contracting in Hydrocarbons (TN0042)

Applying the principles of open contracting in the hydrocarbons field
Beginning of October 2018 – End of August 2020
Lead implementing agency/actor
Ministry of Industry and Small and Medium-Sized Enterprises
Commitment description
Applying open contracting principles in the hydrocarbons field represents one of the most important initiatives adopted at the international level as a criterion for transparency and governance of natural resource management. To further support the launched initiatives that aim to promote extractive industries transparency, this commit- ment is intended to facilitate Tunisia's joining of the open contracting project in the hydrocarbons field through completing the following actions:
- Including open contracting principles in the draft of Hydrocarbon Code revision, such as improving transparency in selecting investors by resorting to competition if necessary, clarifying and disseminating criteria adopted in the selection process and generally publishing all necessary documents and information that explain the contractual process since starting negotiations with investors to the end of contract, including Meetings Minutes of the advisory Committee on hydrocarbons;
- Developing an electronic platform to apply the open contracting principles through publishing all concluded contracts in an open format accompanied by all annexes and associated decisions, in addition to the dissemination of documents about contracts that explain the contracting process with investors;
- Preparing a benchmark study and drawing on international experiences in the open contracting area:
- Developing and executing a training program on Open Contracting Data Standard (OCDS) for the benefit of
officials.
Problem/Background
The contractual process in the hydrocarbon sector is characterized by the complexity and overlap of its procedures, which led to continued campaigns questioning the good governance of the oil and gas resources due to the lack of information and the expansion of the discretionary margin of the ministry in charge of this sector. The open contracting principles represent an appropriate reference to carry out the necessary legal reforms to promote transparency in the hydrocarbon management system. This commitment will serve to enact the Head of the Govern- ment's decision to restructure the natural resources sector.
Identification of commitment objectives/expected results
- Promoting transparency in the energy and mining sector through revising the hydrocarbon legal framework to adopt transparency best practices such as competition and recognizing the need to publish the required data that explain the selection process and its results;
- Initiating effective data dissemination based on open contracting principles such as ongoing publication of contracts in an open data format and the meeting minutes of the Advisory Committee on hydrocarbons, as well as publishing the data on companies contracting with the State and the Tunisian Enterprise of Petroleum Activities,
- Facilitating data reuse, analysis and comparing it with other data from various sources on concluded contracts in this area, which will enable strengthening accountability and oversight in this sector.
How will the commitment contribute to solve the public problem?
- Reinforcing sector transparency and reducing the criticisms and protests faced in this sector, which may lead to the disruption of production and work,
- Enshrining sector integrity and fighting against corruption through providing access to data on petroleum contracts and allowing its study, analysis and comparison, Relevance with OGP values
Transparency: Applying the right of access to information on the energy wealth management through publication of data included in Petroleum contracts,
Accountability: publishing petroleum contracts in an open format that enables citizens and civil society to pursue the management of energy resources and thus to identify and address corruption risks and hold perpetrators accountable
Source of funding /Relation with other programs and policies
Source of funding : Budget of the Ministry of Industry and Small and Medium-Sized Enterprises / Natural Resources Governance Institute
Steps and execution agenda
Beginning of October 2018
End of October 2018
Contact Information
Name of the responsible person from implementing agency
-
Title and Department
Ministry of Industry and Small and Medium-Sized Enterprises
E-mail address
-
Other Actors involved
State actors involved
Access to information Authority
CSOs, private sector, multilaterals, working groups
- Natural Resource Governance Institute - Tunisian Association of Development
Law,
- Tunisian Coalition for Transparency in
Energy and Mines

7. Applying the Principles of Open Contracting in the hydrocarbons field

Language of the commitment as it appears in the action plan:

"Applying open contracting principles in the hydrocarbons field represents one of the most important initiatives adopted at the international level as a criterion for transparency and governance of natural resource management. To further support the launched initiatives that aim to promote extractive industries transparency, this commitment is intended to facilitate Tunisia's joining of the open contracting project in the hydrocarbons field."

Milestones:

• Including open contracting principles in the draft of Hydrocarbon Code revision, such as improving transparency in selecting investors by resorting to competition if necessary, clarifying and disseminating criteria adopted in the selection process and generally publishing all necessary documents and information that explain the contractual process since starting negotiations with investors to the end of contract, including Meetings Minutes of the advisory Committee on hydrocarbons;
• Developing an electronic platform to apply the open contracting principles through publishing all concluded contracts in an open format accompanied by all annexes and associated decisions, in addition to the dissemination of documents about contracts that explain the contracting process with investors;
• Preparing a benchmark study and drawing on international experiences in the open contracting area.

Responsible institution: Ministry of Industry and Small and Medium-Sized Enterprises

Supporting institution(s): Natural Resources Governance Institute

Start date: October 2018                               End date: August 2020

Editorial Note: This is a partial version of the commitment text. For the full commitment text from the Tunisia National Action Plan, see here.

Context and Objectives

This commitment is another step undertaken by the government to address transparency issues in the hydrocarbon sector. The government aims to adopt international standards to prove its willingness to address corruption in the hydrocarbons and reassure investors.

The first milestone includes a commitment to consider open contracting principle in the drafting of hydrocarbon contracts, tender process, and publication of related documents. Although overall the milestone is specific, the use of the word “if necessary” makes the milestone ambiguous, since it does not clarify what standard would be used to hold competition for selecting investors. The two remaining milestones cover the launch of an online platform and publication of the contracts and other related documents in it, as well as conducting a benchmark study to draw international experiences in the open contracting area. These milestones are specific and can be verified.

Adopting open contracting in the hydrocarbon sector is relevant to the OGP values of Access to Information and Technology and Innovation for Transparency and Accountability. It aims to publish the contracts of oil and gas firms in an open and exploitable contract, and to amend the law to include this formatting. Development of a platform to apply open contracting principles makes the commitment relevant to technology and innovation. 

This commitment could offer significant progress for Tunisia’s hydrocarbon field and could be a blueprint for other extractive industries. According to the Natural Resource Governance Institute (NRGI), the commitment to disclose extractive contracts is a critical step in promoting improved governance of Tunisian natural resources sector as well as an important move toward improving trust between the government, investors, and extractive project-affected communities. ^[30] However, this commitment may not address wider challenges faced by the sector. According to Mr Achraf Aouadi, President of I-Watch and representative of Transparency International in Tunisia, the problem with the hydrocarbon industry is the lack of state control of drilling and exploitation sites. Companies provide inputs and data, but the government does not verify their accuracy. Also, the government does not publish the revenue it receives, and therefore civil society does not have necessary tools to verify government revenue against the data provided by the private sector. ^[31]

In terms of the planned electronic platform, this commitment may replicate ResourceContracts.org, launched in 2016. ResourceContracts.org was developed by NRGI, the Columbia Center on Sustainable Investment, and the World Bank, in partnership with Tunisia’s Ministry of Energy, Mines and Renewable Energies, to publish hydrocarbon investment contracts and associated documents. ^[32] Documents on this website are available as open data in a text-based format, and are therefore easily searchable. ^[33] The contracts also come with comprehensive metadata. ^[34] The website currently includes 297 contracts. ^[35]

Next steps

If this commitment is carried forward in future action plans, it could bolster access to information by publishing government revenue to provide civil society with the tools to verify government revenue against the data provided by the private sector. The IRM also recommends that the MSF contributes to ensure that legislators are on board in reforming the hydrocarbon legislative code, while the government could publish additional information to address the gaps identified by civil society groups that would facilitate oversight activities. Additionally, the IRM recommends ensuring that contracts reveal the names of companies’ owners, published publicly to prevent conflict of interests.

7. Applying the Principles of Open Contracting in the hydrocarbons field

Limited:

Implementation of the crucial and ambitious reform of the Hydrocarbon Code to include open contracting principles was limited and thus defines the level of completion for this commitment. In June 2019, after a national dialogue on energy and mines, the government prioritized revising the Hydrocarbon Code. [53] The Natural Resource Governance Institute drafted and published an analysis of the governance of hydrocarbon and mining sectors in August 2020. [54] However, after the government changed in early 2020, the new government has not picked up the effort to reform the law. [55]

The Ministry of Industry and two CSOs [56] launched the e-platform Resources.tn. According to Wissem Heni, Tunisia Country Manager for the Natural Resource Governance Institute and one of the two partnering organizations, [57] the e-platform remains underdeveloped: it lacks information on extraction companies; it does not publish all the information on the contracting progress; nor does it publish selection criteria for extracting companies. Hence, implementation of the second milestone is not full, but substantial. The third milestone was completed by an August 2020 publication of a study drafted by civil society. [58]