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Iraq government to OK draft law on sharing
oil revenues: Official
25.6.2007
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June
25, 2007
BAGHDAD, -- Iraq's central government is
expected to approve shortly a draft law on the
distribution of oil revenues after it had reached
agreement with officials from the Kurdistan Regional
Government last week, a senior government official
said Monday,
"Prime Minister Nouri al-Maliki will soon announce
that the draft financial resources law is reviewed
by the cabinet and submitted to parliament for final
approval", the official told Dow Jones Newswires.
However, the proposed law solves only one of the
sticking points facing Iraq's controversial and
long-awaited hydrocarbon law, that would open up
Iraq's vast oil fields.
Iraq has proven reserves of up to 115 billion
barrels of crude oil. Oil revenue accounted for
around 90% of the federal budget last year. Iraq
currently sells about 1.6 million barrels of oil a
day.
The draft financial resources law, which is crucial
to regulating how wealth from Iraq's huge reserves
will be shared by Iraq's sectarian and ethnic
groups, needs to be approved by the Iraqi
parliament.
Under the proposed law, two accounts would be set
up, into which external and internal revenues would
be deposited.
The external account would include items such as oil
export earnings and foreign donor money, while the
internal fund would consist largely of customs and
taxes. The federal government in Baghdad would take
what it needed, and the rest would be automatically
distributed to the Kurdistan regional government and
to Iraq's governorates.
Revenues would be distributed monthly, the law
stated.
"Financial resources shall be distributed according
to the following - funding the quota of the region
of Kurdistan which amounts to 17% of the remaining
revenues after subtracting expenditures " the draft
law states. The amount distributed to governorates
would be calculated "according to their
entitlement."
The draft law also states the finance ministry in
Baghdad must ensure the flow of funding to the KRG
and to governorates. The Kurds have complained
remittances to their region have been being held
back by up to six months in Baghdad.
Under the proposed law, an independent commission to
monitor revenues deposited in these accounts should
be set up, headed "by an employee with the grade of
a minister.
"The commission shall monitor all funds deposited
into and withdrawn from the financial resources fund
to ensure the proper use and justice in allocating
and directing these funds," the draft states.
The draft also calls for appointing an international
accounting firm to audit the external and internal
activities of the Fund and to file reports about
these activities.
Kurds still oppose some provisions of the draft law.
Central government and Kurdish officials are still
at loggerheads on issues such as who should control
untapped oil fields and the powers that should be
given to yet-to-be-established national oil company.
Also, the annexes haven't yet been discussed. The
Kurds say these are unconstitutional because they
wrest oilfields from regional governments and place
them under a new state oil company. They also cover
control over discovered and undiscovered oilfields
and who would have the power to negotiate contracts
with international oil companies.
The U.S. administration has been pressing Iraq's
leaders to speed up passage of the oil law and other
measures it views as crucial to spurring national
reconciliation and ending sectarian violence between
Shiites and Sunni Arabs.
A senior Iraqi government official said last week
that Baghdad and Kurdish negotiators need up to four
weeks to resolve their disputes on the law.
Iraq sits on the world's third-largest oil reserves
and officials have been struggling since last year
to finalize the draft hydrocarbon law, which is
vital for Iraq to attract investment from foreign
firms to boost its oil output and rebuild its
economy.
nasdaq com
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