Civil Society Urges On Oil Regulatory Environment Top story

3328 Views Kampala, Uganda

In short
Civil society organisations advocating for good governance in Ugandas oil industry have expressed concern over plans by government to license a new oil block bidding process in absence of regulatory institutions and mechanisms as required by law.

The organisations in a joint CSO statement calls on the Government of Uganda to put in place regulations and institutions for the oil sector before proceeding with round six of licensing new oil blocks. 
Government  on 11th August this year the announced the shortlisting of 16 international firms eligible to bid in the next licensing round for the six new oil blocks in the Albertine Graben.
The bid round officially begun on August 20, 2015 but the civil society say many of the regulatory and oversight mechanisms and institutions necessary to oversee the bidding round have not been put in place.
It says while the government has decided to move ahead with the new allocation round, the refinery and pipeline development, it has failed to pursue the implementation of the Petroleum laws with the same vigour.
They say institutional and regulatory environment is lacking in many aspects and that they do not have confidence that the new bidding round can executed in accordance with the obligations of the law or international standards for  free, fair and competitive allocation.
Government is urged to fully operationalize the National Petroleum Authority responsible for overseeing the bid round.  
The civil society groups which include, Global Witness, Transparency International Uganda, Global Rights Alert and Water Governance Institute among others want the model production sharing agreement published.
They are concerned that since appointing board members to the National Petroleum Authority in 2014, no information has been shared regarding progress to establish the body.
Parliament's Appointments Committee in July last year rejected the appointment of Makerere University Lecturer Dr. Immaculate Ssemmanda Nakimera to head of the National Petroleum Authority of Uganda (NPA) and Naomi Lumutenga as one of members of the Authority.

The committee allegedly noted the Dr. Immaculate Ssemanda was not assertive enough even when she had the requisite qualifications for the job.

The committee approved eleven members for both the National Petroleum Authority and National Oil Company. Kampala City Businessman and entrepreneur, Emmanuel Katongole was approved chairperson National Oil Company.

The committee approved the National Petroleum Authority of Uganda members who included former Director of Petroleum Exploration Department, Reuben Kashambuzi, Doreen Kabasindi Wandera, City Lawyer Kiryowa Kiwanuka and Professor Sunday Steven Tokodri Togboa. Professor Sunday Steven Tokodri Togoboa has since been appointed State Minister at Education ministry.

Those appointed on National Oil Company of Uganda included;  Godfrey Andama, Francis Nagimesi, Stella Maris Biwaga, Grace Tubwita, Engineer Irene Pauline Batembe and Francis Twinamatsiko as members.

The National Petroleum Authority and National Oil Company are provided for under the Petroleum (exploration, development and production) Act, 2013.

Civil society organizations are concerned that the two bodies though very important remain more on paper than practice. According to section 10 of the law,  the Authority is mandated to "advise the Minister  in the negotiation of petroleum agreements and in the granting and revocation of licenses"
The Civil society group says if  the Authority is not operationalised soon, it will miss an important part of its mandate and it risked becoming yet another shell oversight body  referred to only on paper but  not utilized in practice.

The Government has refused to publish contracts citing confidentiality issues. It is required under law to present the model  production sharing agreement (PSA) to guide the bidding process.  
Winnie Ngabirwe , the Executive Director Global Right Alert and her colleagues in the civil society believe that oil is a natural resource belongs to all citizens, as per the 1995 Constitution and that citizens deserve to know how government is negotiating contracts on their behalf.
Experts argue that contract transparency, not only builds greater public trust, but also strengthens the government's position during negotiations because of the added pressure of public disclosure.
Efforts by Uganda Radio Network to seek comment from Energy and Mineral Development Minister, Irene Muloni were futile because her phone was switched off.
But information obtained from Directorate of Petroleum website indicates that government had concluded the process of incorporating the Uganda National Oil Company by June this year.
Gloria Sebikari, the Senior Communication Officer at the Directorate of Petroleum  in a statement  quoting Energy Ministry Permanent Secretary,  Dr. Kabagambe Kaliisa saying that government was set to take up its position on the business side of the oil and gas industry.

According to the statement, the Production Sharing Agreements that government between government and the licensed oil companies provides for government's participation through a carried interest of up to 15% and that the licensed Oil Companies carry that interest for government during the exploration and development phases of the petroleum value chain.

This carry according to Kalisa ends upon commencement of production when government starts to take full care of its interests through the National Oil Company.

The National Oil Company is also expected to handle government's interests in the refinery through a subsidiary. The state according to Kabagambe hold a 40 percent share in the oil refinery planned to be built on a Public Private Partnership.

Members of the National Oil Company were yet to be formally appointed by the time of filing this report. Both the Ministry of Energy and Mineral Development Ministry and Directorate of Petroleum headed by Earnest Rubondo were silent about National Petroleum Authority operations.