Wanted: Genuine oil investors

How pressure on oil refinery, pipeline pushed Uganda to agree to end secret deals

Kampala, Uganda | RONALD MUSOKE | For ten years, civil society has been trying and failing to push the government to join the Extractives Industries Transparency Initiative (EITI), a global mechanism that requires governments and companies to be open about their oil, gas and mineral deals.

Then on Jan.29, the government abruptly announced it was joining EITI. So what had changed?

Onesmus Mugyenyi, the deputy executive director of the Advocates Coalition for Development and Environment (ACODE), a Kampala-based think tank told The Independent that the government could have finally realised that for Uganda to gainfully exploit its oil, gas and mineral resources, it needs to build investor confidence by creating an environment that attracts genuine investors.

“Attempts to get investors to build an oil refinery, and other infrastructure have been a big challenge,” Mugyenyi told The Independent, “Government has perhaps realised that creating an environment that is conducive for investors is very important.”

Mugyenyi who also doubles as the manager of the environment and democracy programme at ACODE told The Independent that genuine investors do not like places where there are no clear mechanisms in doing business.

Mugyenyi told The Independent that by Uganda joining the EITI— a global standard for transparency in the extractives sector—it means the government has agreed to subject its management of oil, gas and mining revenues to scrutiny beyond the internal government mechanisms.

Whatever the reason, Paul Twebaze, a member of the Mineral Audit Committee of the International Great Lakes Conference Against illegal Exploitation of Natural Resources told The Independent that he hopes Uganda will now be viewed with favour in the region considering that it has severally been accused of frustrating efforts geared towards streamlining minerals trade in the region.

Twebaze told The Independent that DR Congo and Rwanda officials in charge of mineral certification have consistently blamed the lackluster performance of the regional mechanism on the laxity in Uganda in implementing the process.

“Since things will now be in the open, that accusation will now stop,” Twebaze told The Independent.

According to Global Witness, a London-based non-profit that advocates for transparency in the extractives sector around the world, over 50 countries are now implementing the EITI and 80 of the world’s largest oil, gas and mining firms also actively participate in the initiative.

The initiative has also won the support of over 80 global investment institutions that collectively manage assets worth over US$ 19 trillion. Global Witness has also noted that since its inception in 2002, companies have disclosed over US $ 1 trillion in revenue payments through EITI reports.

An August 2013 Global Witness paper titled, “The benefits for Uganda of joining the emerging global transparency standard for extractive industry revenues,” noted that the introduction of initiatives like the EITI were intended to bring about a new global transparency standard for oil, gas and mining revenues into being.

In 2013, the EITI standard was revised and strengthened to tackle corruption in the natural resource sector, boosting development and creating more stable investment climates.

For instance, Global Witness notes that the introduction of the Dodd-Frank Act (Section 1504) in the U.S, the new Accounting and Transparency Directive in the EU; government commitments to introduce similar mandatory rules in Canada and Norway, and a new implementing requirements for the EITI, have brought a new global transparency standard for oil, gas and mining revenue into being.

By 2016, EITI countries were required to publish information on the ultimate beneficial ownership of entities with oil, gas and mining rights. The standard encourages governments to publish contracts, production figures while state-owned companies and regional transfers are also covered by the disclosure requirements.