Timor-Leste left in the dark as one billion dollars snatched from its petroleum fund

FRETILIN

MEDIA RELEASE

DILI, 25 January 2011

Timor-Leste left in the dark as one billion dollars snatched from its petroleum fund

Without public consultation and in the face of widespread public opposition, Timor-Leste's de facto government is seeking to grab nearly US$1 billion from the country's petroleum fund, of which US$342.3 million will be allocated for a new agency, The National Development Agency to be established by decree and operate without parliamentary scrutiny.

This year’s budget of US$985 million represents 14.2% of the US$6.9 billion fund - virtually Timor-Leste's only source of income said FRETILIN MP and parliamentary party spokesperson Jose Teixeira.

Teixeira said the de facto government was evading its constitutional obligations to treat the budget discussion process in an accountable, transparent and democratic way.

"They are leaving us all in the dark, literally and figuratively. The televised parliamentary debate on the budget is accompanied by frequent power cuts of up to six hours and more, right around the country.  This prevents people from following the debate and learning how State funds are being misused.

"We know budget debates attract a wide audience because budget discussions are often interspersed with points of order from MPs from all sides of parliament transmitting complaints from constituents around the country that their power is off and they are unable to continue viewing or listening to the debate.

"All this despite the de facto government spending more than US$219 million since 2007 to allegedly fix the power sector," Teixeira said.

A letter to the International Monetary Fund on 14 December 2010, from the national development watchdog Lao Hamutuk, highlighted the extent of public concern over lack of government transparency. Lao Hamutuk wrote in part:

"The processes of transparency and public consultation have gotten worse than the IMF reports indicate. For example, the many items listed as available to the public in the Summary have not been made available. In fact, until today the Ministry of Finance website did not contain a single document about the mid-year budget that was promulgated last July or about the 2011 budget currently being discussed in Parliament……….the Ministry (of Finance) has been totally uncooperative."

Lao Hamutuk continued: "The amount of information provided in the state budget has declined significantly. In particular, there is no information on costs of new initiatives, and multi-year capital projects are not costed beyond the current year. Although the Government secretly increased the contract cost of the national electricity grid from $367 million to $629 million last September, they did not inform Parliament of this and the budget documents ignore it. The Annual Action Plans in 2011 Budget Book 2 say nothing about the cost of each item, and the Ministry no longer provides a list of multi-annual capital projects which had been Annex 4 to Budget Book 1 in past years."

Jose Teixeira said the de facto government was trying to create two large funds, the Infrastructure and Human Capital Development Fund, totaling US$342.3 million to be managed by a so-called National Development Agency, apparently under the de facto Prime Minister's responsibility and effective control.

"However it is totally unclear at this point how this will occur and whether best practice in management, transparency and accountability will be adopted," he said.

"The government is asking to transfer a huge amount from the petroleum fund to one agency, which has not been legally established as required by the Budget Management Law. We have been told very little about how this agency will be run, or who will run it. The prime minister has provided the scantest of details on it thus far," Teixeira said.

Lao Hamutuk agrees. Its letter to the IMF said:

"The imminent establishment of several new independent agencies (including the PETRONATIL national oil company, the Institute for Petroleum and Geology and the National Development Agency) by decree-law evades budgetary accountability, transparency and democracy, as the budgets for these agencies will be outside the state budget and not subject to Parliamentary approval or oversight. Those in the petroleum sector also contravene the Petroleum Fund by intercepting oil income before it is deposited into the Fund. The expansion of the Decentralized Development Package (PDD) further erodes accountability and oversight. Budgeting and procurement is proliferating both above and below ministries."

Jose Teixeira accused the government of evading dealing with the details and making it up as they go along without proper planning. 

He cited a recent IMF report evaluating Timor Leste's public finance management which said "fiscal and budgetary policies lack a solid medium-term perspective," and "the Ministry of Finance lacks the time and capacity for adequate review of rationale, costing and impact of public investment."

Teixeira added: "Our concerns about this very large budget are not being answered. We ask in the committees but no one answers our questions. We then ask in the plenary and our questions are not answered. In the case of the Prime Minister's own Ministry, Defence and Security, he delegates annually his secretary of state for defence to attend committee hearings, but he in turn declines to answer questions because they are matters the minister himself should be answering. But when we ask those in plenary they are ignored. This is not how this parliament or the people of Timor-Leste are used to being treated because former Prime Minister Dr. Mari Alkatiri took great care to come to parliament even during committee hearings to answer parliament's queries and never evaded questions from the plenary. As our democracy develops and we have greater amounts allocated for advisors etc, governments should become more transparent and be more accountable, not less."

FOR FURTHER INFORMATION PLEASE CONTACT JOSE TEIXEIRA M.P. ON +670 728 7080