E. Guinea
- introduction
Equatorial Guinea has been ruled by President Teodoro Obiang Nguema Mbasogo
since 1979, when he seized power from the tyrannical Francisco Macias Nguema,
who
had controlled the country as a one-party state since 1968. It is a measure of
the
brutality of Macias' regime that President Obiang's government has been seen as
a relative success. There is very little democracy, but the country has made
progress in undoing the economic damage and the political terror of the Macias
years.
Equatorial Guinea's local content program is under-developed, reflecting the
youth of the industry (oil was first produced there in 1991) but also the
severe
lack of local capacity. Deep-rooted corruption and nepotism has also
contributed,
by encouraging the government to secure contracts which would ensure the most
money for their own pockets as fast as possible, rather than going to the
trouble
of putting together an in-depth strategy to develop the country's social and
technical capital.
Consequently, the legislation is in practice, if not in theory, focused more on
providing a useful income for officials than on building genuine local
capacity.
The most recent piece of legislation – the Hydrocarbon Law passed in November
2006 – does emphasise local content, and cites it as one of the “new horizons”
which forced a rethink of the existing legal framework.
However, the articles directly concerning local content are something of a mixed
bag. The meaning of 'local content' is not defined, as it is, for example, in
Nigeria, and no percentages or quotas are described. On the other hand some of
the
provisions appear to be quite strict: national personnel are to be integrated
into “all levels” of contractors' organisations, and the contractors are
required
to carry out any projects of “public benefit” designated by the government.
One of the few concrete figures available in the 2006 legislation is the
decision to increase minimum royalties on petroleum projects from 10% to 13%,
and
mandating that the government has a right to a 20% share in contracts with
foreign
operators.
Equatorial Guinea's economy has grown impressively in recent years and, despite
the poor governance and murky legal and political situation, has managed to
attract some big names – ExxonMobil and Chevron, to name just two. However, the
economic boom has been almost entirely based on oil exports, and the country
remains
hostage to fluctuations in the global oil price. Massive efforts will have to
be
made to diversify the economy and boost human capital to make growth
sustainable.
Useful Links
Production Sharing Contract Template
Hydrocarbon Law 2006
Marathon Local Content Policy
- Equato-Guinean GDP is ranked 4 in the world at $50,200 per-capita, yet in the Human Development Index, EG languishes at 127th of the 177 countries examined in 2007.