In 2006, President Museveni of Uganda announced the discovery of oil. With commercial production expected to begin in 2009, President Museveni pledged to use the resources gained from the oil production to fund development in the country. While the commercial production of oil in Uganda could potentially bring some economic wealth to the country, it could also bring increased conflict and corruption. To avoid the “oil curse,” the government of Uganda, along with the oil companies, must commit to an open and transparent extraction and production system.
The Ugandan government recognized the need for transparency when it drafted the National Oil and Gas Policy. If implemented, the policy would strive to “promote high standards of transparency and accountability in licensing, procurement, exploration, development and production operations, as well as management of revenues from oil and gas.” Uganda has also expressed its intention to join the Extractive Industries Transparency Initiative (EITI), which offers independent verification of tax, royalty and revenue payments between governments and oil companies.
Uganda’s policies and intentions, however, have yet to transform into a reality. Uganda has not taken any of the preliminary steps required to become and official EITI candidate—steps that include the publication of a work plan that outlines how the country will comply with the transparency principles of the initiative.
Equally important, while the government has held public hearings, the documents and materials disclosed are limited at best. The government has systematically refused to publicly disclose the Production Sharing Agreements or contracts with the oil companies claiming confidentiality and protection of state commercial interests. Failure to involve local communities, directly and indirectly affected by oil production, will lead to a climate of mistrust. “The people feel they have been left out,” said MP Beatrice Byenkya (NRM, Holma District). “They might have been irrelevant during the initial stages [of planning], but once you go beyond this point, you must involve them. There’s a sense of mistrust now, a sense of negativity in their minds.”
MP Mr. Katuntu (FDC, Bugweri), who is the advocate for a public interest lawsuit which would require the government to make its agreements with the oil companies public, worries about profit-sharing and revenue distribution—two fundamental elements in avoiding corruption and the misappropriation of funds that can lead to national and regional conflict, which has plagued other oil producing countries such as Angola and Sudan.
In 1999, Global Witness, an international NGO that reports on the role natural resources play in funding conflict, published a report on the complicity of the oil industry in the plundering of state assets during Angola’s 40 year civil war. Global Witness found that the major multinational oil companies’ refusal to release financial information, aided in the mismanagement and embezzlement of oil revenues by the elite in the country.
In 2002, three years after this report was published, Global Witness along with other founding members, CAFOD, Open Society Institute, Oxfam GB, Save the Children UK and Transparency International UK, launched the worldwide Publish What You Pay (PWYP) campaign, calling for all natural resource companies to disclose their payments to governments for every country of operation. The small founding coalition of NGOs was soon joined by others such as Catholic Relief Services, Human Rights Watch, and many more including an increasing number of groups from developed countries including Norway.
This international coalition not only calls for multinational oil companies to disclose payments, but also calls on governments to fully disclose revenues from all resource extraction and to independently audit and verify the information is in line with international standards, which can be achieved by implementing the Extractive Industries Transparency Initiative. PWYP also calls on oil producing governments to establish open, participatory and transparent budget processes at local, national, and regional levels in order to consult with civil society on the effective allocation and management of the oil revenues. Not only would these policies create public confidence in the Ugandan government, they would also create a system of accountability and transparency—thereby curbing the risk of corruption, economic and institutional instability, and national and regional conflict.
Furthermore, if Uganda does not adopt these policies, it may also risk losing the funding that is needed for the oil extraction. The Norwegian government, which has provided funding for Uganda’s oil production, may withdraw these funds if the Ugandan government fails to show transparency in all matters relating to oil exploration and drilling. One Norwegian minister stated: “Transparency should be universal; Uganda’s oil business should be open even to the members of Opposition and the media.” Yet, it is not only the adoption of policy and laws that will create an open and transparent system, but their implementation and enforcement as well. This is one lesson that can be learned from oil producing in Sudan. The European Commission found that in Sudan there are over 150 laws that exist to curb the destructive effects of oil, but the government has been reluctant to create the implementing mechanisms needed to enforce such laws.
Uganda has an opportunity to not only strengthen its economy and stabalise its institutions, but it also has an opportunity to strengthen its democracy and promote sustainable development. With commercial production of oil to begin next year, it is important that Uganda adopt, implement, and enforce the policies and laws that are conducive to an open and transparent system.
