Timor Leste Petroleum Fund one of the best in the world
Timor-Leste’s much praised Petroleum Fund, which was established in 2005 by the Alkatiri FRETILIN government, has been ranked No. 3 in the world out of 32 similar state-owned funds in 28 countries, evaluated by the renowned Washington think tank, the Peterson Institute for International Economics.
Dr Mari Alkatiri, the former Prime Minister of Timor-Leste and Minister responsible for petroleum development when the fund was established, said, “This has placed Timor-Leste in reality as No. 1 in ASEAN, having ranked higher than even Singapore, which is renowned as one of the top most transparent nations in the world, and above even countries like Australia, Canada and the USA internationally”.
The Peterson Institute analysed the Funds using a set of criteria based on the Structure, Governance, Transparency and Accountability and Behaviour of the funds, awarding them points under a system with a maximum 25 points, to determine their “corporate citizenship” ranking.
“Timor-Leste scored a total of 21.75 points. Just behind Norway with 23 and New Zealand who topped the ranks with 24. But what was especially pleasing is that on the vital criteria of transparency and accountability Timor-Leste’s fund ranked second with 11.75 points from a maximum of 12 points (which New Zealand’s superannuation fund attained), and ahead of Norway whose pension fund with 10.5 points.
“Now that is truly something for us to be proud of,” said Dr Alkatiri. “After all it was the Norwegians whom we invited to be the main source of advice because they had many years ago established a petroleum fund of their own with a sound track record for transparency and accountability. They themselves said that what we had established was a “Norway Plus” petroleum fund model, that is Norway’s best practice but with the added safeguards and measures they would like to have added with the benefit of their extensive experience”, said Dr Alkatiri.
“What is even more impressive is that the funds were evaluated on their actual operational capabilities and on information and data publicly available, which also indicates a high level of transparency. It means this is an extremely valuable objective international measurement of the political will and determination we showed in legislating to protect this most valuable non human/non renewable natural resource for our people’s future and for future generations,” added Dr Alkatiri.
“To be ranked number three in such a few years is an astounding feat. President Ramos-Horta recently remarked to the UN General Assembly that the international community has to show more patience because Timor-Leste is only five years old and it takes more than five years to establish a Chinese restaurant in Manhattan!
“All jokes aside, we have shown the world and now we can see what was possible over the last five years when the political commitment and determination was there to deal with such high stakes matters as the prudent, responsible, transparent and accountable management of our petroleum wealth, to help us avoid the ‘petroleum curse’ many oil rich nations have unfortunately experienced”, said Dr Alkatiri.
“During the election campaign, and even now, some sections of those parties opposed to FRETILIN speak of ‘making changes’ to the Petroleum Fund. We say, ‘don’t make too many changes unless we can all agree they are for the best and make the fund No. 1 and does not take back from No. 3.
“I am concerned that this has already happened but it hasn’t shown up in this report from the Peterson Institute. I am talking about the parliament’s decision to authorize a transfer of US$40 million without first consulting the Independent Petroleum Fund Consultative Council as required by the fund’s law despite loud FRETILIN’s protestations.
“When the next Peterson Institute ranking is done, I think we will find that the actions of parliament will affect the transparency and accountability ranking of the operation of our fund. That would be very, very, sad indeed. But FRETILIN will not just stand by and allow its good work to be undone. That we can guarantee. We will make sure the Fund remains the high quality model which the world has recognized it to be, for the benefit of this and future generations.”
“Mr. Gusmão and Mr. Horta always speak of needing to spend more money from the fund, because we need to spend the money today not save it for tomorrow. They show a gross misunderstanding because Fund money is being spent today, but it is being spent sustainably – because we also have to look at our needs tomorrow. There will be more than enough money than we can spend without waste and corruption this year and next year”, Dr Alkatiri said.
“What they don’t tell you is that we have many limitations as to how fast and how much money we can spend. They think that we can just get foreign consultants and foreign companies to come and do work that we or our business sector is not yet capable of doing. I disagree with that approach and I believe most of our people do too. You cannot pour more than one litre of water into a one litre bottle. The water will just run out and waste.
“With our money it will mean that big international companies and fat cats will benefit from that spilling over, at the cost of our people, to whom that money belongs. That is the difference between them and us, and that is why it is dangerous to open up or free up the Petroleum Fund more, as they want to,” Dr Alkatiri said.
Timor-Leste’s petroleum fund today has a credit of over US$1.3 billion accumulated in just a few years. By 2010 it could be in excess of US$10 billion, the current value of the highest ranking fund – New Zealand’s superannuation fund – which started decades ago. “This is the value of this third place ranking. We are starting with the benefit of the experience of countries who experimented and lost part of their funds in the process. We must protect our fund and how it operates,” concluded Dr Alkatiri.
For further comment: Jose Teixeira MP +670 728 7080 / 0407 293 365