Ensure transparency in Uganda's Oil revenue tracking

By Maurice Enenu

Currently Uganda boasts of over 3.5 billion barrels of Oil and the country is steadily moving into the production phase. However, a lot of criticisms have emerged from a broad range of stakeholders in Government and the public domain over the poor and week national financial system of the country and its ability to manage oil revenues in a corruption free and adhere to principles of transparent accountability.

Of particular worry also has been the apparent failure of the Government of Uganda to disclose the negotiated oil deals (contracts). This raises questions whether the deals will deliver adequately for the rights and concessions being traded a way. The origin of all of this is arguably the lack of transparency regarding oil deals and associated documentation.

For that reason, Government needs to adopt the Extractive Industries Transparency Initiative (EITI) because it provides avenues for addressing the general failure to account, transform resource wealth into sustainable development i.e. (the “resource curse” or “paradox of plenty”) and the associated governance problems in the extractive sector.

Presently, a considerable number of African and foreign countries involved in oil production have endorsed the EITI and are applying its principles to numerous levels. It is worth stating that the initiative is very much focused on the oil and gas sectors transparent accountability.

The EITI aims to intervene in the middle of the value chain collection of taxes and royalties stage but neither upstream nor downstream. The EITI has grown into a worldwide initiative with more than 20 countries that have committed to its principles and criteria, the majority of them being African countries.

For example the Nigeria Extractive Industries Transparency Initiative (NEITI), operating the EITI “plus” model, is the most advanced and comprehensive of all the initiatives of participating countries. The NEITI was launched in 2004 and yielded the first-ever comprehensive financial, physical, and process audits of Nigeria’s oil and gas sectors for the 2004 period.

One of the indisputable impacts of the EITI process is that it has raised international awareness that transparency in oil, gas, and mining revenues is vital for preventing corruption in countries that depend on resource revenues and to ensure that the revenues are used to promote growth and development. The EITI brings together companies, investors, governments, civil society groups, and international institutions to promote a shared vision on transparency.

The regular publications of all material oil, gas and mining payments by companies to Governments and all materials received by governments from oil, gas and mining companies (revenues) to a wide audience in a publicly accessible, inclusive and comprehensible manner helps to facilitate and promote accountability as well as transparency in the oil sector and mining on a broader perspective.

I contend that Government has made positive strides towards laying down a supportive legislative framework needed to manage future oil wealth, and entering in agreements with oil companies. Contrariwise, the will power by those in Government to resist from financial and non-financial irregularities of oil wealth before and when production starts is very questionable

Uganda as a country remains poorly prepared to positively utilise the benefits that will accrue from oil wealth. Particular clauses in public finance bill especially chapter 7 are not clear on how the funds from petroleum will be managed in the wake of the poor and weak national financial system.

Hence the focus on Uganda’s oil sector should be to reduce its oil-dependence through a set of strategies that draw on national state-private sector initiatives, while also increasing state capacity to regulate, and compete against oil multinationals in the upstream and downstream sectors of the oil industry. There is a need to get various oil operators to act responsibly towards increasing financial transparency in the oil sector of Uganda.

The writer is a  Programme Assistant, Advocates for Natural Resources Governance and Development (ANARDE)

Email:mauriceenenu@gmail.com/mauriceenenu@yahoo.com