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How to ensure transparency in Uganda’s oil and gas sector

 

 

Uganda’s oil extraction plans are in advanced stages, and includes transporting crude to the coast. Transparency will be key to the success of the project

COMMENT | Hillary Turyatunga | Uganda’s efforts to join the Extractives Industries Transparency Initiative (EITI) that were first expressed in the 2008 National Oil and gas policy recently saw Uganda joining the initiative, making it the 54th country in the world and 26th in Africa to subscribe.

EITI is a global standard for the good governance of oil, gas and mineral resources. EITI therefore seeks to improve transparency and governance of natural resources in the member countries around the world.  It requires information along the extractive industry value chain from the point of extraction, to how the revenue makes its way through the government and its contribution to the economy of the member country.

With the mystery surrounding Uganda’s 6.5 billion barrels of proven crude oil reserves that were confirmed as the 4th largest in the Sub-Saharan Africa by the international monetary Fund in 2013, implementation of the EITI standard in Ugandan oil and gas sector could save the country the effects of an oil curse syndrome.

Many oil producing countries in sub-Saharan Africa always suffer the paradox of poverty amidst plenty that results from poor management or investment of oil revenue by government.

EITI can therefore promote transparent, accountable and sustainable development; and ensure both political and economic stability for a country. However it should be noted that subscribing to the EITI alone doesn’t guarantee these benefits. The different stakeholders still have to make several interventions especially in bridging the different gaps in the EITI processes to ensure the already made efforts are not futile.

For example, EITI will require the disclosure of Revenues received from oil companies, and contracts & agreements signed between government and companies. This will help the general public and other stakeholders to ask well informed questions on any discrepancies identified.  Through its reporting, EITI can also disclose corruption evidence and other irregularities. If well and effectively implemented, EITI surely has the potential; to guarantee accountability by government.

Whereas EITI processes do not in themselves involve prosecution for corruption or mismanagement of revenues, other relevant government Ministries, departments and agencies are called upon to play their role. Therefore law enforcers have a big role to play to ensure EITI claims are taken serious and victims made to face the law. If the law enforcers allow being side-lined by elite political actors, EITI’s efforts to fight corruption will yield no fruits as proved by  Benjamin Sovacool’s 2016 study on EITI effectiveness.

Furthermore, it’s clear that EITI’s strength is in the disclosure of wide set of information with in the extractives sector. However it’s very possible for sector corrupt actors to structure deals in a way that avoids EITI reporting process just as they avoid other checks in the system. For example according to a 2019 EITI discussion paper on its fight against corruption, Nigerian officials set up a special account to receive controversial payment made by Shell for their rights over an oil block rather than routing the funds to a government agency account. For this reason, the payment didn’t appear in the country’s EITI reports.

As stated by the representative of the Minister of Energy and Mineral Development while officiating at last month’s National Multi-stakeholder dialogue on EITI organised by Civil Society Coalition on Oil and Gas (CSCO), all stakeholders have to make sure that the path to transparency is smooth by cooperating with each other, both with-in government and with-out since no agency can single handily ensure transparency in the extractives industry. EITI presents us with a number of benefits, but these will only be achieved if every concerned stakeholder performs his role towards promoting transparency and accountability.

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Hillary Turyatunga is an Oil and Gas intern, Environmental and natural resource governance program ACODE

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