Uganda’s new oil law is silent on transparency

 

A worker at an oil rig. Photo/FILE  Nation Media Group

By GOPAL RATNAM Special Correspondent

In Summary

• While the law streamlines the running of the burgeoning industry, analysts have raised concerns over transparency

Uganda's parliament recently passed a law to govern the exploration, development and production of the country’s estimated three billion barrels of oil.

While the law streamlines the running of the burgeoning industry, analysts have raised concerns over transparency.

“The new law helps set clear guidelines under which the oil sector is to be run and managed, and makes clear who is in charge of what roles,” said Tony Otoa, director of Great Lakes Public Affairs (GLPA), a Uganda-based think tank focusing on oil and governance.

“However, there are some concerns about transparency and too much power over the oil industry in the hands of the president,” he added.

The Bill was passed on December 7 after weeks of wrangling over its controversial Clause 9, which gives the energy minister wide-ranging powers, including authority over the granting and revoking of oil licences, negotiating and endorsing petroleum agreements, and promoting and sustaining transparency in the sector.

Many MPs felt these powers should be held by an independent national oil authority. “Essentially, the standoff, which has ended, was about the withdrawal of trust from a government that is battered by corruption scandals. In the past, the feeling has been that some key ministries, like Finance, are effectively run by the presidency after being stuffed by “yes” men or women."

The pushback against Clause 9 also came as the central bank opened its vaults to a large withdrawal in 2010 ($740 million to buy six fighter jets) only for approvals to be sought retrospectively,” said Angelo Izama, a Ugandan journalist and oil sector analyst.

“The executive has not been a bad shepherd of the process so far. Uganda’s negotiating position has been tougher with the oil companies, ironically, without the oversight of parliament. However, public scandals elsewhere have negatively affected the ability of the president to convince lawmakers — especially of his party — that he means well.”

Proponents of Clause 9 say licensing powers are safer in the hands of the Cabinet than under an oil authority.

“The authority is open to manipulation. Cabinet is bigger than the authority — members of the executive are answerable to Ugandans because they are elected leaders,” said Kenneth Omona, a ruling party MP.

Those opposed to it say they will challenge the law, which was passed with 149 votes in favour and 39 against; some 198 MPs did not turn up to vote.

Theodore Ssekikubo chair of the parliamentary forum on oil and gas said, “We shall subject the matter to a referendum for all Ugandans decide on this strategic resource. We want to ensure transparency and accountability in the oil sector.”

There are also concerns about the law’s confidentiality clause, which limits the amount of information accessible by the public.

“The law lacks transparency; it imposes confidentiality on officials working within the sector, even after they leave office, so there is no opportunity for whistle-blowing or for the public to have access to information on, say, production-sharing agreements,” Mr Otoa said.

He noted that Uganda still hasn’t joined the Extractive Industries Transparency Initiative (EITI), an international scheme that attempts to set a global standard for transparency in oil, gas and mining

As a member, Uganda and oil companies involved in the country would be required to publish all payments and revenues from the industry.

IRIN