Oil bills ready for debate but activists not impressed

Source: The Observer
Date: 14 Sep 2021

Parliament’s committee on natural resources recently submitted its recommendations on contents of various oil bills to Rebecca Kadaga, the Speaker, for debate and adoption by the House, but not everyone has been thrilled by the work done thus far.

The bills – Upstream (Exploration, Development and Production Bill 2012) and Mid-stream (Refining, Gas Processing and Conversion Transportation and Storage Bill 2012) – are now going to be scrutinised by Parliament before green light can be granted.

Michael Werikhe Kafabusa, chairperson of the Natural Resources committee, said the ball is now is in the hands of the entire house “to debate and pass the bills.”

The committee has made several recommendations on the bills. For Instance, it has recommended the introduction of model contracts (Production Sharing Agreements), which will provide a template for all future deals with oil companies. While some stakeholders have welcomed these recommendations, they also want Parliament to consider including a clause in one of the bills that would compel government to make public all contracts to promote transparency and accountability.

The committee also recommended that the Energy and Finance ministers be shareholders in the National Oil Company (NOC). The Energy minister would hold 99% and the Finance minister only 1%. This contradicts the view of religious leaders who had proposed that ownership of shares in NOC be amongst government, faith based organisations, cultural institutions and other stakeholders.

Some stakeholders fault the committee for doing little to curtail excessive ministerial powers in the bills. They also cite lack of guarantees on contract, no financial transparency as well as lax environmental and social safeguards. The minister, according to the bills, has the power to open up new areas for exploration, pre-select companies, negotiate contracts and appoint members of the Petroleum Authority, among others.

Not good enough

Henry Bazira, chairperson of the Civil Society Coalition on Oil, notes that whereas the committee made some commendable changes, majority of the views of stakeholders were left out. Bazira further observes that the committee’s suggested changes do not go far enough to address the weaknesses in the current legislation.

“Some of the proposed amendments, including the introduction of model contracts agreed by Parliament, will help ensure Uganda gets a good deal for its oil. However, we [civil society] are concerned that areas highlighted in the submissions by all stakeholders, such as excessive executive control, seem to have been ignored,” Bazira noted.

Winfred Ngabiirwe, chairperson of Publish What You Pay Coalition of CSO, said: “These new petroleum laws will decide how oil is managed in Uganda for years to come, including how people and the environment will be protected and the kind of deal Uganda will get for its oil. In short, they will be crucial in dictating whether Uganda avoids the resource curse or not.

“A robust legislative framework built on the principles of transparency and accountability is a vital step in ensuring that oil wealth benefits Ugandans”.

Ngabiirwe concludes that if Parliament passes the bills in their current form, the country’s future prosperity and stability could be compromised. Global Witness, an oil and gas watchdog, in a report released on Monday, also asks Parliament to trim the minister’s powers.

The organisation wants Parliament to place day-to-day management of the petroleum sector in the hands of the Petroleum Authority. The minister and board members of the petroleum authority, Global Witness advises, should be approved by Parliament.

But committee chairman Werikhe says the committee discussed the minister’s powers and after wide consultations concluded that he/she can be a custodian of Uganda’s natural resources.

Opaque and vague

Stakeholders are also concerned that the committee’s recommendations on the national oil company are vague. They cite the absent relationship between NOC, the state and the public. The bills also don’t state how NOC will be funded.

Details regarding where its funds and profits are to be held, what payments it is likely to receive and whether it will publicly disclose the receipt of payments or details of its financial management are also not clear.

“The laws as they stand potentially create a very opaque and unaccountable quasi-state institution, which poses a substantial corruption risk,” Global Witness says, adding that MPs should consider calling for a separate law to govern the NOC, clarifying its management, governance and transparency provisions.

“The government of Uganda should also join the EITI (Extractive Industries Transparency Initiative) and publish all incoming payments, particularly now that the US has passed legislation [Dodd-Frank Act] which requires all US listed extractive companies to disclose the payments they make to foreign governments,” Global Witness further proposed.

Both CNOOC and Total are listed on the New York Stock Exchange, meaning that both companies involved in Uganda’s oil will be required by the act to disclose their payments to government. This may allow citizens to hold government accountable.

By  Edward Ssekika

The Observer