Somalia: Controversy Rears Ugly Head in Somali Oil Deals

Published: February 11, 2021

Somalia’s sale of offshore oil blocks has hit a rock following the dismissal of the chief executive of the petroleum authority amid claims of political interference only six months into his tenure.

Petroleum and Mineral Resources Minister Abdirashid Mohamed Ahmed, announced on January 21 that the Cabinet had dismissed Ibrahim Ali Hussein as chairman and chief executive of the Somalia Petroleum Authority (SPA) and replaced him with Asha Osman.

The move to dismiss Mr Hussein, a former advisor on petroleum, was not made public.

Members of Parliament say the dismissal is suspect coming so close to elections. On February 2, the Lower House Committee on Natural Resources and Environmental, which had been investigating the matter said Mr Hussein was dismissed after he rejected interference from the parent ministry that had “conducted negotiations with oil companies knowing that the Somali Petroleum Authority is in charge.”

In a detailed report sent to Somalia’s Prime Minister Hussein Roble and Mr Ahmed, the committee said the dismissal must be reversed to safeguard the integrity of the oil regulation in the country.

“The removal of the SPA chairman is not justified in accordance with the law and therefore the Prime Minister of the Federal Government is required to rectify the matter and reinstate the chairman as there is no legal basis for both his removal and withdrawal from membership of the Board,” the Committee chaired by Abdifattah Mohamed Ali said.

The dismissal was done just as the bidding process of the oil blocks was concluding.

The petroleum authority was created as part of Somalia’s reforms to attractive investors to tap into its fossil fuels. Formed as an independent body that markets Somalia’s oil blocks to investors by tallying the oil stock and signing production agreement, the Authority’s creation caused friction with the parent Ministry, seeking to stamp its mark on the country’s oil politics.

The Environmental Committee claims it found that the parent ministry had diverted part of the money meant for the authority, and didn’t account for it. Moments after Mr Hussein was fired, together with his board were denied access and were barred from communicating with investors the Authority was dealing with.

“The committee realised that a few hours after the announcement of the removal of the chairman, the minister had shut down the SPA website and e-mail accounts of the SPA board of directors while the bidding round process was taking place and the purchase of seismic data.

“This reckless action has badly disrupted the licensing round process of the seven oil blocks in the market.

Somalia has about 58 oil blocks dotting its 3,000km coastline. In the past six months, it put up seven oil blocks, promising investors lucrative returns. Part of the agreements are expected to include upfront payments to the government of Somalia.

The authority was created on July 30, 2020 and the country’s first licensing round opened on August 4, 2020, six months after the country passed its first petroleum law. The licensing round is currently set to end on June 30, 2021. But it is unclear if Somalia would have held elections by then.

By Aggrey Mutambo

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