Boye pleads guilty -- must repay TL $3.5 million

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On 28 April 2015, former Ministry of Finance petroleum tax adviser Bobby Boye admitted in U.S. Federal Court that he conspired to defraud Timor-Leste of $3.51 million in 2012. Boye, who could receive up to 20 years in prison, will be sentenced on 13 August.  More information about his crimes, his false background, and his long history of nefarious activities is on La'o Hamutuk's website.

Boye was arrested in New Jersey, USA in June 2014 and has been under house arrest while prosecutors and defense attorneys negotiated the plea bargain. Last November, he fired his private attorney and obtained a taxpayer-paid lawyer due to his "financial inability." Public Defender K. Anthony Thomas represented Boye through the plea agreement in which Bobby Boye admitted the charges and promised to repay Timor-Leste.

On 28 April, Boye applied to the Court for permission to enter a guilty plea to one count of conspiracy to commit wire fraud. After Boye's formal waiver of his rights to indictment and trial, he pled guilty in a 40-minute hearing before Judge Freda L. Wolfson, as described in an FBI press release.

The ten pages of accusations, which Boye agreed to, describes his work in Timor-Leste, including creation of the sham "established, multinational law and accounting firm" Opus & Best, of which Boye was the sole member. It says that in 2012-2013, Boye "did knowingly and intentionally conspire and agree with others, known and unknown, to devise a scheme and artifice to defraud [Timor-Leste] by means of materially false and fraudulent pretenses, representations, and promises ...".  Their objective was "for defendant BOYE and others to enrich themselves by fraudulently obtaining lucrative consulting contracts from [Timor-Leste]." No co-conspirators in Timor-Leste are mentioned.

Boye "caused" his (now ex-)wife Ediltruda Kalikawes (who is not named or charged) "to create Opus & Best email accounts, including one for a purported partner" 'Dominic Lucas' (also not named or charged -- it's unclear if he actually exists).  O&B's bids for contracts with Timor-Leste "contained a number of false statements and material representations that were intended to give [Timor-Leste] the misimpression that Opus & Best was a legitimate, established firm" operating in several continents for many years with "first class talent of attorneys, accountants and economists."

However, the prosecutor writes, "In reality, defendant BOYE created Opus & Best for the purpose of submitting the fraudulent Bid Documents. Moreover, Opus & Best employed no one other than defendant BOYE..."  Boye also "paid his [wife] to create a website for Opus & Best which contained numerous misrepresentations ..."  Boye "exploited his membership on the Bid Review Committee" to "steer" contracts to Opus & Best and then caused Timor-Leste to wire $3,510,000 to Boye's bank account from June to December 2012.

In April 2013, Boye tried to get $250,000 more from Timor-Leste for "Opus & Best Hong Kong."  [Timor-Leste] did not accept the proposal, and defendant BOYE left [Timor-Leste] shortly thereafter." At the end of May, 'Dominic Lucas' unsuccessfully invoiced Timor-Leste for a $630,000 "final payment."

The prosecutor describes how "BOYE diverted" the $3.5 million wired by Timor-Leste to Opus & Best "for his own personal use," including purchase of four properties, three luxury cars and two designer watches.  As part of the plea bargain, Boye will forfeit these properties, cars and watches, as well as "$4,233,015.42, representing the amount of proceeds obtained as a result of the offense of conviction."

Boye admits one count of conspiracy to commit wire fraud, which carries a maximum sentence of 20 years in prison and a fine of up to twice the amount of either his ill-gotten gains or the victims' losses, whichever is greater.  "In addition, BOBBY BOYE agrees to make full restitution for all losses resulting from the offense of conviction or from the scheme, conspiracy, or pattern of criminal activity underlying the offense, to [Timor-Leste] in the amount of $3,510,000."

La'o Hamutuk believes that the "pattern of criminal activity underlying the offense" could include payments to Boye for jobs he obtained here under false pretenses. Furthermore, if some of the tax assessments he initiated against oil companies turn out not to be valid, Timor-Leste's legal and other expenditures for them could also be part of this pattern, including interest and/or legal costs that the arbitration panel could order Timor-Leste to pay to the oil companies. Boye may have initiated these cases as part of his confidence game to ingratiate himself with Timorese leaders, knowing that the companies were likely to pay and then appeal. These losses could add up to much more than $3.51 million, and Boye should be ordered to pay all of them.  The Plea Agreement does not prevent further administrative or civil cases -- we wonder if Boye will be disbarred from legal practice or if Timor-Leste will file a civil suit against him.

Although the crime of conspiracy to commit wire fraud carries a 20-year maximum sentence, the plea agreement grades it as "offense level 24" under the Sentencing Guidelines, giving him credit for "accepting responsibility." According to the Sentencing Table, and depending on whether Boye's 2006 guilty plea is considered, he could serve 4-6 years, which a judge will decide on 15 October.

La'o Hamutuk's web page on the Bobby Boye case has much more information, and is updated regularly. Stay tuned.

Mina-rai no gas Timor-Leste nian besik hotu ho lalais

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Semana kotuk liu ba, Parlamentu Timor-Leste halo diskusaun lalais no aprova revizaun Orsamentu Estadu ba 2015 ho unanimidade. La’o Hamutuk no Deputadu balun sujere katak tenke hamenus despeza tanba haree ba reseita mina-rai nian ne’ebé menus ona, maibé ema uitoan de’it mak hatene katak razaun prinsipál ne’ebé halo Timor-Leste nia reseita ne’e tanba produsaun mina-rai no gas hahú menus daudaun. Ne’e diferente ho folin mina-rai ne’ebé tun sa’e, nivel produsaun sei la sa’e tan ona tanba rezerva besik maran ona. Artigu ida ne’e sei esplora faktu no implikasaun sira husi realidade ida ne’e.

Durante fulan hirak ikus ne’e, lider polítiku sira esplika beibeik katak sira sei la kalkula fila fali matadalan Rendimentu Sustentável Estimadu bazeia ba folin mina ne’ebé tun, maibé ignora maka’as asuntu fundamental ida, katak mina-rai no gas besik maran ona. Revizaun Orsamentu Estadu 2015 nian autoriza gastu biliaun $1.57, mantén nafatin ho montante ne’ebé mak aprova ona iha Dezembru tinan kotuk.  Bainhira orsamentu ne’e gasta ho nivel hanesan iha tinan kotuk nian, 2014, Timor-Leste nia gastu sei aas liu hotu iha 2015 kompara ho tinan sira liu ba. 

Ita moris hela iha nasaun ida entre nasaun sira ne’ebé depende maka’as ba esportasaun mina-rai iha mundu. Iha 2014, 73% husi reseita estadu nian mai husi konversaun riku soin naun renovavel mina-rai no gas ba osan, no 20% seluk mai husi retornu investimentu husi rendimentu mina-rai no gas ne’ebé ita simu iha tinan hirak molok ne’e nian.

Maski nune’e, reseita mina-rai no gas Timor-Leste nian kontinua mihis ho lalais, no ita simu menus reseita 40% hosi mina-rai no gas iha 2014 kompara ho 2013 nian, prinsipalmente tanba kampu Bayu-Undan no Kitan komesa maran daudaun ona.  Liu 75% hosi kampu rua ne’e nia riku soin naun renovavel ne’e ita supa ona- ne’ebé irreversível.

Gráfiku iha leten ne’e hatudu dadus istóriku, inklui mós projesaun sira ne’ebé demonstra ho pontus no liña, ne’ebé la korije ho inflasaun ne’ebé mosu:

• Montante produsaun mina-rai no gas (liña metan mahar), iha barríl tokon ba tokon kada tinan.[1] Produsaun hahú iha 2003, sa’e maka’as iha 2006 no aproksimadamente konstante to’o 2013, ho produsaun másimu liu mak iha tinan 2012. Total produsaun monu 24% husi 2013 ba 2014.

Projesaun sira ba produsaun hafoin 2014 (liña metan pontillada) ne’ebé Ministériu Finansas halo ne’e bazeia ba informasaun husi kompañia mina-rai sira.[2] Sira hatudu katak produsaun tun konstantamente to’o 2020, hafoin ne’e kampu sira ne’e la profitavel ona atu hala’o operasaun.[3]

• Folin ba mina matak Brent iha merkadu global (liña mihis mean), iha presu Dolar EUA kada barríl.[4] Timor-Leste nia sorte di’ak tebes iha 2003-2008; mina-rai no gas nia presu fa’an sa’e dala tolu tanba ita nia produsaun iha tempu ne’ebá aumenta. Signifika katak Bayu-Undan halo retornu ne’ebé aas ho kusta kapitál ne’ebé uitoan – momentu ne’ebá, karik kampu ne’e mak ida ne’ebé profitavel liu iha istória ConocoPhillips nian. Presu monu iha 2009 nudár parte husi krize finanseiru global, maibé rekupera fila fali iha 2011, no presu kontinua hanesan to’o tinan 2014 nia klaran, molok monu fali tan.

Liña mean pontillada (.......) ba 2015 no 2016 ne’e hatudu senáriu referénsia daudaun husi projesaun Administrasaun Informasaun Enerjia (EIA) Estadus Unidus nian, no liña kór kafé pontillada (-----) hatudu projesaun ‘prudente’ antigu ne’ebé Ministériu Finansas uza iha Jullu tinan kotuk atu prepara Orsamentu Estadu 2015 nian. Revizaun projesaun ne’ebé prudente maizumenus $10/barríl ki’ik liu ho EIA nia senáriu referénsia ba 2015, no sei ki’ik liu tan iha tinan hirak oin mai.

• Reseita mina-rai no gas ne’ebé Timor-Leste simu (liña matak duplu), iha biliaun dolar kada tinan, hanesan hatudu iha eskala iha liman los ne’e. Kreximentu ida ne’e lalais liu bainhira  produsaun no presu mina-rai nian aumenta sa’e to’o 2008, monu iha 2009 tanba mina folin tun, no sa’e fila fali iha 2012 bainhira presu no produsaun aumenta fila fali. Maski nune’e, to’o 2014 reseita tun to’o besik metade husi nivel reseita másimu iha 2012 nian. Maski presu no produsaun menus hotu, impaktu ne’ebé boot liu mai husi produsaun menus. Maski karik presu sei sa’e fali ba liu $100/barríl, produsaun sei kontinua atu tun, no nune’e mós reseita.

Liña trasejada kór matak (.....) hafoin 2014 hatudu projesaun reseita husi Orsamentu Estadu 2015 nian, maibé ida ne’e bazeia ba projesaun presu tinan kotuk nian (liña trajesada kór kafé) ne’ebé aas liu realidade atuál ninian. Durante tinan tolu oin mai, reseita sei signifikamente menus liu duke ida ne’ebé mak Ministériu projeta ona, no liu tinan tolu ne’e, sei la iha tan mina-rai no gas barak mak hela.[5]

Osan barak liu mai husi Bayu-Undan

Bainhira halo análize ba reseita ho detallu liu ne’e sei fó hanoin kle’an liután hanesan hatudu husi gráfiku ida ne’e. Liña matak, total reseita petroleum ne’ebé tinan tinan ita simu, mak hanesan ho gráfiku ida uluk liu, ne’ebé inklui projesaun antigu Ministériu Finansas nian ne’ebé halo (projesaun) ba 2015 ba oin.  Barra sira ba kada tinan hatudu reseita ne’ebé simu husi kada kampu mina no gas:

• Bayu-Undan (majenta) fornese porsaun maioria no nudár kampu mesak ida ne’ebé sei kontinua produsaun hafoin 2016. Reseita husi kampu ne’e to’o nia másimu iha 2011 maibé iha posibilidade atu kontinua to’o maizumenus 2021.

Maski mina-rai (líkidu) mak fornese maioria reseita molok 2013, liu metade rendimentu agora husi kampu ida ne’e mai husi gas natural. Gas (bolha) ne’e fura ho volume konstante atu mantén kapasidade kadoras no planta LNG, iha tempu hanesan produsaun mina-rai komesa menus tanba presaun husi kampu ne’ebé menus. Bara ho listras diagonal hafoin 2014 mak projesaun ‘prudente’ La’o Hamutuk nian ba mina-rai Bayu-Undan no hanesan kombinadu. 

• Kitan (kinur) hahú nia produsaun mina-rai iha 2011. Reseita Kitan nian tun 85% iha 2014 tanba mina ne’ebé hela iha rezerva la dun barak ona; produsaun ne’e sei hotu iha 2016.
   
• Elang-Kakatua (mean) hahú nia produsaun mina-rai iha 1999 no fó reseita uitoan los to’o maran iha 2006. Timor-Leste la konsege atrai kompañia seluk ida atu halo operasaun iha kampu ne’e hafoin ConocoPhillips deside katak kampu ne’e la profitavel ona.
  
  
• Impostu sira ne’ebé atrazadu (listras vertikál metan) foin halo avaliasaun no rekolla husi Ministériu Finansas husi kompañia sira hahú husi 2011; tuir loloos kompañia sira tenke selu taxa sira husi projetu oin oin iha tinan sira molok 2011. Kompañia sira la konkorda ho avaliasaun sira no konsege selu maski ho protestu; karik kompañia sira manán sira nia rekursu, Timor-Leste sei tenke fó fila fali tokon $350 ka liu, ba kompañia sira.

Husi 2003 to’o 2014, Timor-Leste konverte ona ninia riku soin mina-rai no gas ba osan biliaun $20.1 ne’ebé ita gasta ona biliaun $6.0. Restu ne’ebé mak seidauk gasta rai hela iha Fundu Petróleu (FP), no investe ona iha títulu no asaun sira iha fatin sira iha mundu. Investimentu sira ne’e fó fali retornu biliaun $2.5 durante tinan 12 ikus ne’e, ne’ebé depózitu ona iha FP. Iha fin 2014, riku soin iha FP mak biliaun $16.5, menus tokon $95 kompara ho balansu iha fulan neen kotuk liu ba.     

Liña metan duplu iha gráfiku leten ne’e hatudu reseita annual husi investimentu Fundu Petrolíferu (FP), ne’ebé hatama fila fali ba  FP. Maski iha esperansa balu katak rendimentu hirak ne’e bele troka fali reseita husi mina-rai no gas hafoin kampu sira maran ona, klaru katak sei ki’ik liu no, tanba balansu iha FP la iha kreximentu tan ona, iha posibilidade ki’ik atu bele kontribui ba aumentu signifikante iha FP. Durante 2014, Fundu Petrolíferu nia investimentu fó fali reseita tokon $502, uitoan liu kompara ho tokon $932 ne’ebé Governu hasai husi FP atu finansa Orsamentu Estadu 2014 nian. Retornu real husi investimentu FP nian iha tinan kotuk mak 2.5%, ki’ik liu fali asumsaun ne’ebé mak halo iha matadalan Sustentabilidade Fundu nian.[6]

Orsamentu estadu 2015 sei hasai tokon $1,327 husi Fundu Petrolíferu, boot liu dala rua husi retornu ne’ebé hetan iha 2014. Maski rendimentu rendimentu husi investimentu FP nian depende ba merkadu finansiál global, La’o Hamutuk fiar katak tenke iha prudensia ba projesaun hirak ne’e, no liña pontillada metan ne’e hatudu ami nia estimativas. 

Senáriu ida husi La'o Hamutuk nia modelu Sustentabilidade.

Karik estadu kontinua ho tendénsia gastu hanesan agora daudaun ne’e, ho projetu sira ne’ebé planeia ona, no empréstimu sira ne’ebé sei selu fali iha futuru, klaru katak rendimentu husi mina-rai no retornu husi Fundu Petrolíferu sei la sufisiente, no balansu iha FP sei komesa atu monu. Haree ba reseita naun petrolíferu ne’ebé uitoan liu, La’o Hamutuk nia projesaun hatudu katak Fundu Petrolíferu tomak bele mamuk hahú husi 2025, ho implikasaun sériu ba atividade estadu nian hafoin tempu ne’ebá. Oinsá mak ita sei selu eskola sira, ospitál sira, polísia no manutensaun – sá tan pensaun sira, viajen sira no funsionáriu públiku sira – bainhira ita nia riku soin la iha ona?

Posibilidade katak sei iha tan riku soin mina no gas

Ema hotu hakarak atu Timor-Leste iha mina no gas barak liután, liu fali kampu tolu ne’ebé temi iha leten. Bainhira disputa kona-ba fronteira maritima ho Australia no fatin atu prosesa gas natural ne’e resolve ona, nune’e dezenvolvimentu kampu Greater Sunrise bele komesa la’o ona, no Timor-Leste bele komesa simu reseita husi dezenvolvimentu ne’e hafoin tinan lima tan. La iha ema ida mak hatene gas natural ne’e sei iha folin hira iha dékada sira oin mai ka riku soin Sunrise ne’e hira mak sei fahe ho Australia, maibé Timor-Leste bele iha total reseita husi Sunrise atu hanesan ho saida mak ita sei simu husi Bayu-Undan – entre biliaun $20-$25 – ne’ebé sei lori durasaun tinan 15-20 mak bele hetan.

Ofisiál sira iha setór petróleu iha Timor-Leste fiar maka’as tebes katak nasaun ida ne’e sei iha rezerva mina-rai no gas adisionál ne’ebé seidauk deskobre. Maski buat hotu iha posibilidade, maibé susar tebes atu hetan tan kampu ida ne’ebé boot hanesan Bayu-Undan ka Sunrise, hanesan kompañia mina-rai sira, durante kuaze metade tinan atus ida nia laran, buka ona iha ita nia area tasi okos no rai maran ne’ebé limitadu, hala’o estudu sizmiku oin-oin no koko ona esplora mós kampu 50 resin. Kitan mak kampu mesak ida ne’ebé iha folin komersiál hafoin halo esplorasaun barabarak ne’ebé deskobre iha 1990-tal bainhira hamosu Tratadu ilegál Timor Gap nian iha tempu ne’ebá. Bainhira Timor-Leste koko fa’an kontratu foun ba esplorasaun iha tasi okos iha 2006, kompañia sira ne’ebé mak involve ona iha ne’e nein ida mak halo submisaun ba tenderizasaun sira ne’ebé refere. Ami hein katak sei iha espresaun interese barak liután (husi kompañia sira) iha tenderisasaun ne’ebé sei loke iha tempu oin mai (maski prosesu ida ne’e adia bei-beik ona dezde 2010), no katak kompañia sira sei deskobre rezerva foun sira ne’ebé la hetan husi esplorasaun anterior, maibé la matenek atu halo polítika sira bazeia ba mehi sira hanesan ne’e. 

Sei lori maizumenus tinan sanulu tan atu Sunrise ka kampu sira ne’ebé seidauk identifika bele prodús reseita ruma. To’o tempu ne’ebá, Timor-Leste sei iha ema barak liu tan, no sira sei hein no presiza atu iha kualidade servisu no infrastrutura ne’ebé di’ak. Bainhira Estadu Timor-Leste bele duni fornese ida ne’e ba ninia sidadaun sira entre tempu agora ba tempu ne’ebá, no liu tan ida ne’e, entaun ita presiza hahú ho planu sira, estratéjia sira no implementasaun ne’ebé realístiku no efetivu hahú husi tempu agora.

Polítika na’in sira iha ona informasaun iha artigu ida ne’e, maibé la mosu atu hadalan desizaun orsamentál no ekonómiku sira. Asuntu importante liu mak la’ós tanba viola beibeik matadalan RSE nian, maibé oinsá Estadu Timor-Leste bele servi nia povu sira ba dékada oin mai. Promesa Lei Fundu Petróleu nian ba jerasaun sira iha futuru ne’e sei susar tebes atu bele kumpre.[7]

Notas

Timor-Leste’s oil and gas are going fast

Download a printable PDF of this article ka liga ba blog ida ne'e iha Tetum

Last week, Timor-Leste’s Parliament briefly discussed and unanimously approved a revision to the State Budget for 2015. La’o Hamutuk and some Members of Parliament suggested that expenditures be reduced in light of falling petroleum revenues, but few pointed out that the main reason Timor-Leste is getting less money is because oil and gas production are declining. Unlike the volatile oil price, production rates will not go back up because the reserves are running out. This article will explore the facts and implications of this reality.

During the last couple of months, political leaders repeatedly explained that they would not recalculate the Estimated Sustainable Income guideline in light of the falling oil price, but they have largely ignored the more fundamental issue of running out of oil and gas. The revised 2015 State Budget authorizes spending $1.57 billion, unchanged from last December. If the budget is executed at the same rate as in 2014, Timor-Leste will spend more in 2015 than ever before.

We live in one of the most petroleum-export-dependent countries on earth. In 2014, 73% of state revenues came from converting nonrenewable oil and gas wealth into cash, and another 20% was from returns on investing oil and gas income received in earlier years.

However, Timor-Leste’s oil and gas revenues are dropping rapidly, and we received 40% less revenues from them in 2014 than in 2013, mainly because the Bayu-Undan and Kitan fields are being used up. More than 75% of their non-renewable wealth has already been extracted – and this is irreversible.
The above graph shows historical data followed by dotted or dashed projections, not corrected for inflation:

• Amount of oil and gas produced (thick black line), in millions of barrels per year.[1]   Production began in 2003, increased rapidly until 2006, and was approximately constant until 2013, with the highest level in 2012. Total production dropped 24% between 2013 and 2014.

Production projections after 2014 (dotted black line) from the Ministry of Finance are based on information from oil companies.[2]  They show a steady decline until 2020, after which the fields will no longer be profitable to operate.[3]

• World market price for Brent crude oil (thin red line), in US dollars per barrel.[4] Timor-Leste was very lucky in 2003-2008; the selling price of oil and gas tripled as our production ramped up. This meant that Bayu-Undan generated high revenues with low capital costs – for a time, it may have been the most profitable field in ConocoPhillips history. Prices fell in 2009 as part of the global financial crisis, recovered by 2011, and were steady until the middle of 2014, before falling again.

The dotted red line for 2015 and 2016 shows recent reference case projections by the U.S. Energy Information Administration, and the dashed brown line shows the outdated ‘prudent’ projections (halfway between last year's low and reference cases) that the Ministry of Finance used last July to prepare the 2015 State Budget. Revised prudent projections would be at least $10/barrel below EIA’s current reference case for 2015, and even lower for subsequent years.

• Oil and gas revenues received by Timor-Leste (double green line), in billions of dollars per year, as shown on the scale at right. This increased rapidly while production and prices were going up until 2008, dropped in 2009 due to the oil price drop, and climbed again until 2012 as prices and production rose. However, by 2014 revenues had descended to about half of 2012 peak levels. Although both prices and production fell, the larger impact is from waning production. Even if prices go back up to more than $100/barrel, production will continue to decline, taking revenues with it.

The dashed green line after 2014 shows revenue projections from the 2015 State Budget, but these were based on last year’s price projections (dashed brown lines) which are much higher than current reality. During the next three years, revenues are likely to be significantly lower than the Ministry projected, and after that there won’t be much oil and gas left.[5]

Bayu-Undan provided most of the money

Analyzing the revenues in more detail gives additional insights, as shown in this graph. The green line, total petroleum revenues received each year, is the same as in the first graph, including the Ministry of Finance’s outdated projections from 2015 on. The bars for each year show the revenue received from each oil and gas field:

• Bayu-Undan (magenta) provides the largest portion and is the only field which will be in production after 2016. Its revenues peaked in 2011 but could continue until around 2021.

Although oil (liquids) provided most income before 2013, more than half of the field’s income now comes from natural gas. Gas (bubbles) is extracted at a constant rate to keep the pipeline and LNG plant at capacity, while oil production is falling due to declining field pressure. Diagonally striped bars after 2014 are La’o Hamutuk’s ‘prudent’ projections for Bayu-Undan oil and gas combined.

• Kitan (yellow) began oil production in 2011. Kitan revenues dropped 85% in 2014 because there is not much oil left in the reserve; they will end entirely in 2016.

• Elang-Kakatua (red) began oil production in 1999 and provided a little revenue until it was exhausted in 2006. Timor-Leste was unable to attract another company to operate the field after ConocoPhillips decided it was no longer profitable.

• Overdue taxes (black vertical stripes) were assessed and collected by the Ministry of Finance from the companies beginning in 2011; they should have been paid in prior years from various projects. The companies did not agree with the assessments and paid under protest; if they win their appeals Timor-Leste could have to return $350 million or more.

From 2003 through 2014, Timor-Leste converted $20.1 billion of its oil and gas wealth into dollars, of which we spent $6.0 billion. The remainder is in the Petroleum Fund (PF), invested in bonds and stocks around the globe. These investments have earned $2.5 billion over the last 12 years, which was deposited in the PF. At the end of 2014, the PF was worth $16.5 billion, $95 million less than its balance six months earlier.

The double black line on the above graph shows the annual revenues from investing the Petroleum Fund, which are re-deposited into the PF. Although some hope that these earnings could replace oil and gas revenues after the fields are exhausted, it is clear that they are much smaller and, as the Petroleum Fund’s balance is no longer growing, are unlikely to increase significantly. During 2014, the Petroleum Fund’s investments earned $502 million, far less than the $932 million the Government withdrew from the PF to finance the 2014 State Budget. The PF’s real return on investment last year was 2.5%, lower than the Fund’s sustainability guideline assumes.[6]

The 2015 state budget will withdraw $1,327 million from the Petroleum Fund, more than double what it earned in 2014. Although future PF investment earnings depend on the global financial markets, La’o Hamutuk believes they should be projected with prudence, and the dotted black line shows our estimates.

One scenario from La'o Hamutuk's sustainability model.

If current trends in state spending continue, with planned projects and loans paid for in the future, it is clear that neither oil revenues nor Petroleum Fund earnings will be sufficient, and the PF balance will start to fall. In light of small non-oil revenues, La’o Hamutuk’s projections show that the Petroleum Fund could be entirely empty by 2025, with severe implications for state activities after that. How will we pay for schools, hospitals, police and maintenance – let alone pensions, trips and civil servants – after all our wealth is gone?

In late May 2015, we wrote another blog updating our modeling of How Long Will Timor-Leste's Petroleum Fund Last? which provides more information about the previous graph.

Possibilities for more oil and gas wealth

Everyone wishes that Timor-Leste had more oil and gas than the three fields discussed above. Once long-standing differences over the maritime boundary with Australia and where to process the natural gas are resolved, development of the Greater Sunrise field could proceed, and Timor-Leste could start receiving revenues about five years later. Nobody knows what natural gas will be worth decades in the future or what fraction of Sunrise wealth will be shared with Australia, but Timor-Leste’s total revenues from Sunrise may be around what we will have received from Bayu-Undan – $20-$25 billion – spread out over 15-25 years.

Petroleum officials in Timor-Leste are optimistic that the country has undiscovered, additional oil and gas reserves. Although anything is possible, it is extremely unlikely that another field as large as Bayu-Undan or Sunrise exists, as petroleum companies have explored our limited sea and land area for half a century, conducting many seismic surveys and drilling more than 50 test wells.  Kitan is the only commercially viable field discovered after the flurry of exploration in the 1990s when the illegal Timor Gap Treaty came into effect. When Timor-Leste last offered new offshore exploration contracts in 2006, none of the companies already involved here submitted bids. We hope there will be more interest in the upcoming bidding round (which has been repeatedly delayed since 2010), and that companies will discover new reserves missed by previous explorations, but it would be foolhardy to make policies based on such dreams.

It will take at least ten years before Sunrise or any yet-to-be-discovered fields produce much revenue. By that time, Timor-Leste will have many more people, and they will expect and deserve better-quality public services and infrastructure. If the State of Timor-Leste is to be able to provide for its citizens between now and then, and even after that, we need to begin more realistic and effective planning, strategies and implementation today.

Policy-makers already have the information in this article, but it doesn’t appear to guide budgetary and economic decisions. The most important issue is not the usually-violated ESI guideline, but how the state of Timor-Leste will be able to afford services for its people over the next decade. The Petroleum Fund Law’s promise to future generations may already be impossible to keep. [7]

Notes

LH sujere katak Timor-Leste tenke hamenus despeza iha Orsamentu Retifikativu 2015

Atu hetan submisaun ida ne’e no dokumentu sira seluk kona-ba Orsamentu Retifikativu 2015, iha lian Tetum no Ingles, bele vizita web ka download submisaun iha English ka Tetum.

Iha loron 26 Marsu 2015, Komisaun C Parlamentu Nasional konvida La’o Hamutuk atu fahe hanoin kona-ba Retifikasaun Orsamentu Estadu 2015. Ne’e duni La’o Hamutuk halo submisaun ida ne’ebé haruka ona ba Komisaun C iha loron 30 Marsu. Iha karta ne’e La’o Hamutuk hato’o kona-ba oinsá Estadu Timor-Leste bele hamenus despeza no promove sustentabilidade fiskál iha nasaun foun ida ne’e.

Submisaun ida ne’e bazeia ba preokupasaun rua:

1. Orsamentu Retifikativu ne’ebé Governu aprova la refleta kondisaun real ne’ebé oras ne’e daudaun Timor-Leste enfrenta. Folin mina iha merkadu internasionál tun no ida ne’e fó impaktu ba reseita husi mina no gas. Iha tempu hanesan folin moeda dolar EUA nian sa’e, no nudár rezultadu, investimentu Fundu Petrolíferu ne’ebé Timor-Leste halo iha moeda seluk nia retornu sai menus mós.
   
2. Orsamentu Retifikativu ne’e la refleta Governu nia esforsu atu redús despeza no promove efikás no sustentabilidade fiskál. La’o Hamutuk hanoin katak iha tinan ne’e, Governu Timor-Leste iha oportunidade ne’ebé di’ak atu uza rikusoin povu nian atu hadi’ak liu tan povu hotu nia moris, liuliu ba futuru.

Oinsá mak Governu bele hamenus despeza públiku?  La’o Hamutuk hanoin katak bele hamenus despeza Estadu, tanba konsiderasaun ba asuntu hirak tuir mai ne’e.

• Halo kalkulasaun foun ba Rendimentu Sustentável Estimativu (RSE) iha Orsamentu Retifikativu 2015

Revizaun ida ne’e bele refleta katak folin mina ne’ebé tun maka’as iha merkadu mundiál, no ida ne’e hamenus estadu nia reseita. RSE atuál tenke tun hosi tokon $638 ba tokon $504. RSE tokon $638 ne’e prepara iha 2014 wainhira folin sei aas hela.  Iha tempu ne’ebá (2014) folin mina Brent kada barríl mak $108. Maibé folin mina iha merkadu tun ki’ik liu $50 kada barríl.

Governu deside ona sei mantén nafatin montante tokon $1,570 iha Orsamentu Retifikativu ba 2015. Bazeia ba total orsamentu ida ne’e, Governu planu atu foti tokon $1,327 husi Fundu Petrolíferu ne’ebé kompostu hosi tokon $638 RSE, no foti tan tokon $689 dala ida husi Fundu.

Tuir kalkulasaun RSE atuál La’o Hamutuk nian, ne’ebé bazeia ba folin mina ne’ebé tun, Governu tuir loloos tenke redús RSE ba tokon $504. Ida ne’e tanba Timor-Leste lakon tokon $71 husi impaktu folin mina ne’ebé tun, lakon tokon $13 husi investimentu tanba mudansa iha folin moeda Dolar EUA, no lakon tokon $50 husi produsaun iha futuru tan razaun komersiál.

Hodi redús RSE ba tokon $504 Governu sei foti de’it tokon $1,048 husi Fundu Petrolíferu ba tinan ida ne’e, no redús mós orsamentu ba maizumenus tokon $1,291 nune’e bele hamenus despeza Estadu nian kuaze tokon $279 iha 2015.

• Atualmente kustu ba bens no servisu reduzidu ona.

Orsamentu Retifikativu tenke refleta katak kustus ba bens no servisu sira redús ona tanba liu husi prosesu restruturasaun, númeru membru Governu oras ne’e hela 38 de’it ona.

Governu mós bele poupa maizumenus tokon $50 husi presu kombustivel ba jeradór no veíkulu sira, tanba folin kombustivel iha grosir ne’e tun besik metade kompara ho folin kombustivel tinan ida liubá.

Estadu mós bele poupa kuaze tokon $50 atu sosa servisu no sasán husi nasaun importadór sira ne’ebé la uza moeda dolar EUA tanba moeda ne’ebé oras ne’e Timor-Leste uza, nia folin troka boot liu moeda hanesan Rupiah no seluk tan. Ita labele fó ba importadór sira de’it mak atu hetan benefísiu husi folin Dolar ne’ebé forte.

• Revee fali kustu projetu atu nune’e bele protege liu tan rikusoin povu nian.

Gastus ba mega projetu sira hanesan Projetu Tasi Mane, Portu Tibar, ZEESM no seluk tan ne’e bele lakon osan de’it. Durante ne’e kustu operasional no vantajen husi projetu sira ne’e seidauk klaru, no Governu kontinua soe osan povu nian ba projetu hirak ne’e. Ita mós tenke konsidera katak implementasaun projetu sira ne’e iha Timor-Leste dala barak karun liu kompara ho iha rai seluseluk. Tan ne’e ami sujere atu labele gasta osan barak tan ba projetu sira ne’ebé seidauk hatene se sei fó benefísiu klaru ba Timor-Leste atu nune’e bele evita lakon osan barak liután.

• Evita dotasaun la nesesáriu sira.

Alokasaun orsamentu ba ZEESM porezemplu, Governu hakarak atu aloka tan tokon $10 iha Orsamentu Retifikativu nian, no fó mós tokon $1.5 atu selebra kolonizasaun Portugés nian ba povu Timor. Ida ne’e la nesesáriu, no horisehik Komisaun Eventual iha PN aumenta ho tokon $50 tan. La’o Hamutuk hanoin katak wainhira halo dotasaun foun Deputadu sira tenke hatene ona progresu balun husi osan tokon $82 ne’ebé aloka uluk ona ba ZEESM. La’o Hamutuk hanoin katak projetu ZEESM la iha klareza ba sistema aprovizionamentu, kontabilidade no viabilidade. Vantajen ba Timor-Leste mós ita seidauk hatene.

• Ita labele depende ekonomia Timor nian ba petróleu.

Iha relatóriu ikus ADB halo hatete katak “Ho produsaun mina ne’ebé hamenus daudaun no folin enerjia ne’ebé ki’ik indika nesesidade atu diversifika ekonomia [Timor-Leste nian] liu husi enkoraja investimentu privadu.” No sira bolu atensaun katak “Nu’udar reseita husi kampu sira ne’ebé iha komesa menus ona, presiza iha polítika fiskál ne’ebé prudente atu evita poupansa Fundu Petrolíferu atu mohu ho lalais.”

Investimentu ne’ebé boot tenke halo mós ba setór sosiál no ekonomia sira seluk hanesan edukasaun, saúde, agrikultura no indústria ki’ik sira.  Despezas boboot ba projetu hanesan Tasi Mane atu sai nudár báze indústria ba ekonomia Timor ne’e risku tebes.

La’o Hamutuk halo estimatizasaun katak se Governu kontinua ho lala’ok despeza ida agora ne’e, Fundu Petrolíferu sei bele finansa de’it orsamentu Estadu nian tinan 5 to’o tinan 8 hafoin 2020 wainhira Bayu-Undan maran ona. Tanba ne’e La’o Hamutuk husu atu desizaun sira halo ho prudente no matenek liután ba futuru Timor-Leste nian.

La’o Hamutuk konsidera katak retifikasaun orsamentu la’ós atu nune’e aumenta de’it despeza, maibé mós responsabilidade ida ba Governu atu hamenus despeza estadu. No hirak ne’e tenke tetu ho di’ak bazeia ba situasaun ne’ebé Timor-Leste hasoru oras ne’e daudaun no iha futuru. Ami hanoin katak tinan 2015 mak oportunidade di’ak ba Governu atu poupa osan, halo jestaun di’ak ba finansa públiku ho responsavel liu tan atu nune’e bele benefisia jerasaun Timoroan ohin loron no futuru.
 
Komunikadu Imprensa ne’e halo molok relatóriu husi Komisaun Eventual nian publika. Maibé tuir pareser ne’ebé iha, maski total orsamentu la muda maibé Komisaun Eventual deside aloka tan tokon $50 ba ZEESM no ko’a Fundu Infrastrutura balun.  Ami preokupa tebes kona ba kuak ZEESM nian, bele konsume montante boot husi povu nia rikusoin, no karik sei laiha benefísiu klaru ba povu Oekusi ka povu Timor-Leste tomak.

Hanesan ho prosesu orsamentu sira seluk iha pasadu, Komisaun Eventual ho jenerosidade ne’ebé boot ba ZEESM, aumenta dotasaun durante 2015 nian ba tokon $133.5. Maski kresimentu PIB iha Timor-Leste monu ona ba ‘mid-single-digits’, no reseita mina-rai nian tun, osan ZEESM nian ba 2015, ne’ebé aloka nudár ‘transferénsia públiku’ la ho espesialidade no kontabilidade, sa’e maka’as tebtebes:

•     Tokon $  9.9 iha Proposta Orsamentu Governu nian (Out. 2014)
•     Tokon $ 81.9 mak aprova iha Parlamentu Nasional (Dez. 2014)
•     Tokon $ 93.4 iha Governu nia Proposta Orsamentu Retifikativu (Fev. 2015)
•     Tokon $133.4 ne’ebé Komisaun Parlamentar nian rekomenda (Mar. 2015).