Landmark legislation currently before the US Congress could force oil, gas and mining companies to disclose information about payments to governments of countries in which they invest around the world, including Burma.
If passed, the US Energy Security through Transparency Act will require all oil, gas and mining companies registered with the Securities and Exchange Commission to disclose data on payments made to foreign governments.
The NGO Earthrights International (ERI) said that “this will impact nearly every major oil and gas company around the world,” given that foreign companies must register with the SEC to do business in the US.
ERI’s Matthew Smith told a press conference in Bangkok today that this would also put pressure on Chinese and other Asian companies investing in Burma’s natural resources to comply.
Heightening pressure on Total, Chevron and Thailand’s PTTEP —three companies involved in the Yadana gas project and pipeline in Burma—an initiative launched on Tuesday in Bangkok called on the companies to reveal payments made to the Burmese military regime over the 18 years since Total signed a production sharing contract with Myanmar Oil and Gas Enterprise (MOGE). The pending US legislation will not apply retrospectively, meaning that companies will only have to disclose payments going forward.
Backed by 160 NGOs, unions and policy figures such as former Norwegian Prime Minister Kjell Magne Bondevik and ex-President of Ireland Mary Robinson, the statement urged companies to publish “comprehensive data and information,” and “publish all payments made to the Burmese authorities since 1992.”
Separately, Chevron shareholders will vote next month on a proposal that would require the company to disclose payments to foreign governments, including Burma. Smith believes that revenue transparency is in the best interests of companies, helping avoid the appearance of complicity in mismanagement of Burma’s gas revenue and potentially boosting shareholder value. Chevron has already disclosed payments made to the Thai Government, with a given total of US $5 billion.
Since the Yadana gas first came on-stream in 2000, ERI estimates that it has generated $7.5 billion in sales to Thailand, where it powers electricity stations and keeps Bangkok lit-up and air-conditioned. Much of this revenue has been siphoned off by the Burmese junta into banks in Singapore, according to EI, whose report in September 2009 prompted two Singapore-based banks—Overseas Chinese Banking Corporation (OCBC) and DBS Group—to deny allegations that they function as “offshore repositories” for junta revenues accruing from the Yadana gas project.
Asked by The Irrawaddy if the disclosure of revenues would have any real impact on the junta’s economic policies, or on the immediate prospects for reform in Burma, Matthew Smith said, “We don’t think this will mean an immediate end to villagers being press-ganged into working as porters or land being confiscated for natural resource projects, but it is good practice for companies involved in the Extractive Industries Transparency Initiative and will highlight the need for better governance in Burma.”
“Disclosure on revenue spending is crucial for development in the country and for clearer and better management of the country’s vast natural wealth,” he said.
Analysts said that transparency might focus attention on the junta’s penchant for cooking the books, if the real and full figures are revealed. By using an outdated exchange rate, the military regime in Burma declares a small fraction of its oil and gas revenues to the State budget, enabling it to siphon off the balance. The junta calculates revenue at just 6 kyat to the dollar when the de facto rate is closer to 1,000. According to a confidential 2009 report by the International Monetary Fund (IMF), this revenue “contributed less than 1 percent of total budget revenue in 2007/08, but would have contributed about 57 percent if valued at the market exchange rate.”
According to Naing Htoo, an ethnic Karen working as project coordinator for ERI, “the Burmese people need to know the truth about their country’s resources.” The revenues from oil and gas sales could fund badly needed social spending. However, this money enables the junta to maintain what is believed to be southeast Asia’s largest army.
The country has low levels of health and education spending, amid widespread poverty. A 2006 estimate of the child mortality rate in eastern Myanmar was 221 per 1,000, higher than the 205 recorded in the war-ravaged Democratic Republic of the Congo. The World Health Organization ranks the nation’s health system as the second worst on the planet, while according to UNICEF, the United Nations Children’s Fund, more than 25 percent of the population lacks access to potable water.
Oil and gas investment enables the junta to counter the impact of Western sanctions, which though coming under question in recent months, are ostensibly in place to try to force the junta into political reform. The EU renewed its sanctions on the regime after discussing the bloc’s “Common Position” on Burma on Monday.
Yadana disclosure might have an impact on other current and future resource extraction projects in Burma. Speaking in Bangkok on Tuesday, Wong Aung of the Shwe Gas Movement outlined how human rights abuses often ensue due to resource extraction projects in Burma, while revenues from oil and gas enable the junta to remain immune from pressure to reform.
Wong Aung’s organization is seeking a postponement of the Shwe gas project, which will likely generate greater revenues for the Burmese junta than the Yadana counterpart. According the Shwe Gas Movement website, “Burma’s military regime would stand to gain $ 24 billion over the 20-year contract, or $ 1.2 billion per year.”Show