Government to make oil, gas mining dealings public

Oil. Containers of crude oil at the test drilling site of the China National Offshore Oil Corporation on January 24. Government expects to make public its dealings with oil and mining companies following its admission to the Extractive Industries Transparency Initiative on Wednesday. PHOTO | AFP 

In Summary

• The extractives officer at Water Governance Institute, Ms Diana Taremwa, described the move as a “big win” and a stepping stone to “tracking company payments made to government and that is the only way gas and resources are going to benefit Ugandans.”

By ARTHUR ARNOLD WADERO & FREDERIC MUSISI

Following its admission to the Extractive Industries Transparency Initiative (EITI) on Wednesday, the government has said it expects to make public its dealings with oil and mining companies in a report to be published within the next 18 months as a step to validate this membership.

EITI is a global standard to promote the open and accountable management of the extractive industry. It necessitates the disclosure of information in the different value chains, from point of extraction to the receipt and sharing of revenues, of the oil and gas, and mining industry sectors.

The head of the EITI Uganda multi-sectoral group, Mr Moses Kaggwa, who is also the director of economic affairs at Ministry of Finance, told Daily Monitor that a work plan has been put in place to guide the next processes.

“We already have a 23-member multi-stakeholder group, comprising three government agencies, civil society, and oil, gas and mining companies. We now have 18 months to publish our first report for validation and once this is done, we will then become a full member,” Mr Kaggwa said.

He added: “This is a significant and an important step in our transparency and accountability processes. Before we even reached the stage of applying and joining, we had put in place the legal framework such the Public Finance Management Act, which has a whole section on governance of oil revenues which some countries do not have. It shows how committed we are.”

Standards
By joining EITI is not in itself a magic wand to the opaqueness in the extractives sector but member countries are held to certain standards to make public information to strengthen public and corporate governance and inform reforms for greater transparency and accountability.

Midwifed in the late 1990s and launched in 2003, the transparency initiative now has 54 member states of which 26 are African, including Uganda. From as far as 2008 when government enacted the National Oil and Gas Policy, as its guide to managing the oil and gas sector, civil society actors and a section of donors pushed government to sign up to the initiative but the latter said was not in a hurry.

But in January last year, Cabinet approved the country’s candidature application culminating into the admission on Wednesday.

Uganda’s admission comes at a time when the country is gearing for the next phases of development and production with expected investments of at least $10b (Shs36 trillion) among others development of the oil fields, the proposed East African Crude Oil Pipeline, and a refinery in Hoima District, by the oil companies Total E&P and Cnooc.

The start of commercial oil production, according to the World Bank, offers Uganda long-term prospects to diversify the economy and catapult it to upper middle income status by 2040.

With commercial oil production at peak, the Bank estimates show that Uganda could earn up to $3b (approx. Shs7 trillion) in revenues from exports of up to 60,000 barrels of oil per day. These revenues have the potential to propel the economy between 7-10 percent forecast up from the current stagnation of 4 per cent.

However, like countless other actors have chorused, the World Bank says this is only possible if revenues don’t just end up in people’s bank accounts but rather if channelled to development of human capital—education, institution building, good governance and transparency, properly managed through an efficient and transparent strategy, and if an effective sharing formula is ensured for revenues to trickle down to local government entities.

CIVIL SOCIETY SAYS..
Civil society actors and oil companies yesterday welcomed Uganda’s joining EITI as a step in the right direction.

Ms Winnie Ngabirwe, the executive director of Global Rights Alert, a non-governmental organisation, said this will bring about accountability, improve revenue and tame illicit money-related activities that will lead to a better investment climate in Uganda’s extractives industry.

“We expect that the government will provide information about contracts signed with oil and other extraction companies. Uganda will create a website and will publish all these contracts [and] once they fail to do that it means they will fall short of the expectations,” Ms Ngabirwe said.

The extractives officer at Water Governance Institute, Ms Diana Taremwa, described the move as a “big win” and a stepping stone to “tracking company payments made to government and that is the only way gas and resources are going to benefit Ugandans.”

editorial@ug.nationmedia.com