Substantial amounts of oil have been discovered in the Albertine graben and there is potential for discovery of more oil deposits in other parts of the country.
Oil exploitation will generate very large and sudden revenue inflows, yet oil and gas administrative and financial systems are ill-equipped to handle such flows.
The uncertainty associated with volatile oil prices will further strain an already over-burdened system. This raises challenges on how to handle the new-found wealth so as prevent outright misuse of public funds and corruption.
In Africa, oil discovery has bred conflict, poverty and civil strife, examples are Nigeria and Angola. In the Middle East, democracy has failed to materialise. The above attributes lead to the resource curse or the “Dutch Disease.”
The task is preventing the resource curse in Uganda. There is an international movement aimed at doing this, the Extractive Industries Transparency Initiative (EITI). This is a coalition of governments, companies, civil society groups, investors and international organisations aimed at improving transparency and accountability in the extractives sector. Extractive industries comprise mining, oil and gas sectors, but of recent, there have been attempts to include forest resources in the extractives sector.
The major component of the initiative is the publication of; on one hand, the revenues that extractive companies (oil companies) pay to governments and, on the other hand, revenues the governments receive from such companies. Essentially, the concepts of accountability and transparency must take firm root in Uganda’s oil sub-sector.
A number of countries have stood up to adopt the initiative. they include Nigeria, Angola, Azerbaijan, Belgium, Canada, and United States. Extractive companies, multi-lateral organisations such as the World Bank and the International Monetary Fund, NGOs including Publish What You Pay, Revenue Watch Institute, Open Society Institute and Africa Institute for Energy Governance (Uganda) have not been left out.
In Uganda, EITI bears its roots in the recently approved Oil and Gas Policy.
under objective number six, the following strategies are employed in order to ensure that oil becomes a lasting value to society:
1 Ensure collection of the right oil revenues due to Government.
2 Publish the revenues received from oil and gas activities regularly.
3 Formulate a law to regulate the payment, use and management of revenues accruing from oil and gas activities.
4 Participate in the processes of EITI.
The major advantages come with the EITI and publication of oil revenues strengthens accountability, transparency and public confidence in the legitimacy of the state.
Increased transparency attracts foreign direct investment and encourages an enterprise culture.
Citizens will be able to hold the relevant authorities accountable from an informed stand point. It also ensures trust between the Government and the citizenry, hence social coherence.
The major stakeholders in implementing EITI are: the Government, oil companies, civil society organisations and the public.
Although each stakeholder is charged with their obligations, the task of making EITI a success primarily rests with government like putting in place the necessary mechanisms; these include an independent judiciary, free media and harmonising the existing laws such as the Public Finance Act with tenets of the EITI. Other stakeholders will then get the impetus to go EITI.
