São Tomé Government Accused of Mismanagement and Corruption in Oil Sector

Lisbon, Portugal - In a shocking revelation, the government of São Tomé has been accused of mismanaging and corruptly handling its oil sector. The allegations have sparked widespread concern among international observers and local residents.

Allegations of Mismanagement and Corruption

According to reports, the government failed to attract bids for several oil blocks due to unsatisfactory bidders or lack of interest from companies. As a result, the government was forced to negotiate with only a few companies, raising suspicions of corruption and favoritism.

Investigation Reveals Irregularities

The São Tomé National Assembly launched an investigation into the second licensing round in 2004-2005, which revealed several irregularities. The report criticized:

• The inclusion of small Nigerian companies with little expertise or capacity to develop the blocks
• The lack of transparency in the negotiation process

Misuse of Funds

Furthermore, the government has been accused of misusing funds received from oil companies. Specifically:

• A quarter of the signature bonuses paid by companies that finalized production sharing contracts was used to repay debts to Nigeria
• The rest was spent on current expenditures

Lack of Institutional Capacity and Political Will

The situation is further complicated by a lack of institutional capacity and political will to adhere to commitments made under the 2004 Abuja Declaration, which aimed to promote transparency and good governance in the oil sector. Despite promises to publish information on the Joint Development Authority’s website, including payments from oil companies and data on Nigeria and São Tomé’s use of funds, no action has been taken.

Residents’ Concerns

Residents of Príncipe island are also expressing resentment over their exclusion from decision-making processes regarding the Exclusive Economic Zone (EEZ) and the Joint Development Area (JDA).

Stalled Process

The government’s failure to implement reforms has led to a stalled process, with only a few companies enjoying first pick on oil blocks and holding pre-emptive rights. ERHC and Exxon continue to hold significant interests in several blocks.

Failed Candidacy for EITI

São Tomé’s failed candidacy for the Extractive Industries Transparency Initiative (EITI) has also raised concerns about the government’s commitment to transparency and accountability.

Call for Reforms

The situation highlights the urgent need for reforms in São Tomé’s oil sector, including the establishment of a transparent and accountable governance structure. The government must take immediate action to address these concerns and ensure that its natural resources are managed in a responsible and sustainable manner.