Let us not misguide the oil debate

By Ibrahim Kasita

The energy ministry finallytabled two oil Bills - the Petroleum (exploration, development and production) Bill 2012 and the Petroleum (refining, gas processing and conversion, transportation and storage) Bill 2012 - in Parliament in last week.

The third Bill - the Petroleum revenue management Bill - is expected to be tabled before Parliament soon by the finance ministry.

The three bills are critical because they will provide a legal and regulatory framework to handle the development, production and utilisation of the oil and gas resources.

Uganda has about 2.5 billion barrels of oil, regarded as commercially-viable. This means that the industry is fast-moving from exploration to appraisal, development,production and exploitation.

The development has raised excitement and high expectations and environmental concerns. The management of the oil revenues and the need to update the legal and regulatory framework have also been raised by a cross section of stakeholders.

The three bills, if passed into law, will handle all these worries.

Previous laws
The tabling of the two Bills before Parliament last week does not mean the nascent petroleum industry has been operating in a vacuum. The success registered in the exploration stage was guided by an established legal and regulatory framework.

Let us not misguide the oil debate The Petroleum (exploration and production) Act of 1985 (revised in 2000) and the Petroleum (exploration and production and conduct of exploration operations) regulations of 1993 were key in this.

The production sharing agreements signed with Heritage Oil and Gas, Hardman Resources (now Tullow Uganda), Dominion and Neptune also guided the operations of the petroleum industry.

Other relevant statutes and guidelines on important aspects such as environment,wildlife and water have been used to manage the exploration phase of the industry. The income tax Act (as amended in 2010) was enacted primarily to cater for taxation of petroleum operations.

This is contrary to various claims that there were no laws to regulate the petroleum sector. Therefore, an informed debate on the draft Bills to be realised, Parliament must consider all the facts first.

Need for new legislation

Everyone agrees that the existing laws are not adequate to manage the appraisal, development, production and exploitation of the petroleum resources.

When the Government formulated the oil and gas policy for Uganda in 2008, its broad goal was to use the oil resources to contribute to early reduction of poverty and improve society’s welfare.

The guiding principles of the policy included using the oil resources to create efficient resource management,transparency and accountability, competitiveness and productivity, protection of environment and conservation of bio-diversity, spirit of co-operation and capacity and institutional building.

The implementation of the policy started with the drafting of new petroleum laws, two of which, have already been tabled in Parliament for debate.

To ensure that there is access to information and participation in the oil and gas industry debate, a communication strategy has been put in place to provide a platform for managing stakeholder expectations and promoting transparency and accountability through engagement, information exchange and sharing.

Further, a national local content strategy policy that ensures Ugandans participate in the oil and gas industry has been developed. It will ensure that priority is given to the employment of Ugandans and local goods and services are procured.

To protect and manage the environment and bio-diversity, the Government has come up with a policy document on environment management in Uganda’s oil and gas sector.

This is all in line with the national oil and gas policy of 2008.

Missing link
There is a need to understand the way the oil and gas industry operates to put into context the various issues arising.

Access to correct information on the sector will greatly facilitate an informed debate and decision-making.

The good thing is that this information is available.