Wanted: Genuine oil investors

EITI benefits

But the next three years will be critical to gauging the government’s commitment on EITI. The government must start work on the procedural formalities of joining the EITI, including formally notifying the EITI Secretariat in Oslo, Norway of the resolution.

Thereafter, at national level, a multi-stakeholder group consisting of the government, industry and civil society representatives will be constituted to form what is technically called the “national multi-stakeholder group.”

With the multi-stakeholder group in place, the government will approve an administrator who will be charged with the day-to-day activities on EITI such as ensuring participation of all stakeholders; receiving data on revenue payments by companies and receipts by the government, facilitating the multi-stakeholder group to develop a report, and disseminating the report, among other roles.

Such project-by-project reporting, experts argue, helps investors improve their ability to assess risk and make decisions about the allocation of capital, as well as fostering more stable operating environments that enhance prospects for investment return.

Winfred Ngabiirwe, the former coordinator of Publish What You Pay and the current head of Global Rights Alert told The Independent on Feb.01 that she hopes Uganda’s joining the EITI will bring an end to the secrecy that surrounds the deals in Uganda’s extractives industry. She said the endless disputes between the government and oil companies such as Tullow over Capital Gains Tax are partly due contracts done in secret and kept a secret.

“With the EITI requiring disclosure of such transactions, it will certainly help,” she said, “What we now need is action. The working group (on EITI) must be well constituted and we hope the government will afford it the necessary goodwill and we look forward to being part of the process.”

Advocates of the EITI mechanism have always urged the government to adopt the international voluntary initiative citing its multiple benefits.

They have, for instance, argued that project level disclosures provide communities that live near extraction sites with details of the financial contributions that the industry makes and enable citizens, MPs, civil society groups including media to hold governments to account for how the revenues are spent.

They have also argued that transparency over oil and mineral revenues can contribute to the prevention of natural resource-related conflict.

Project-by-project reporting under EITI, experts say, is beneficial to the companies because it strengthens companies’ “social licence” to operate by showing host populations the financial contributions they make to public revenues which in turn reduces the likelihood of resentment and conflict. Local unrest can severely impact the reputation and finances of extractives companies, and cause interruptions to supply.

Big step forward

There is no doubt Uganda has made a big step towards rooting out the culture of secrecy in the oil and mining sectors. This is the general view of donors and civil society activists following cabinet’s approval on Jan.28.

Government spokesperson, Ofwono Opondo, announced the cabinet decision on Jan.29 saying it is intended to minimize oil, gas and mining revenues being mismanaged or lost to corruption.

James Muhindo, the national coordinator of the Civil Society Coalition on Oil and Gas (CSCO), a consortium of local and international NGOs told The Independent on Jan.31 that Uganda’s intention to join the transparency initiative is a “big milestone” on Uganda’s path towards transparency and accountability in the oil, gas and mining sector.

In a statement released on Jan. 30, the EU also applauded the Cabinet for the public pronouncement saying this was a positive step towards improved financial management and accountability of Uganda’s natural resources.

“The European Union Delegation to Uganda welcomes the Government of Uganda’s decision to formally join the Extractive Industries Transparency Initiative (EITI) as a member state,” said Attilio Pacifici, the EU Ambassador to Uganda, “Uganda’s decision to become a fully-fledged member state is an important step for improved accountability particularly as the country continues to prepare for oil production.”

Publishing and reconciling data on oil, gas and mining revenues ensures transparency but government officials have often said the mechanism is not all that necessary and it makes foreigners interfere with Uganda’s internal affairs.

In 2008, during the formulation of the national oil and gas policy, the government put joining the EITI as its sixth objective but it later appeared as though it had a “change of heart” on the voluntary transparency mechanism.

At one time, President Museveni sounded dismissive of the EITI arrangement saying he would prefer a continental mechanism. But civil society and donors have often reminded the government of joining the mechanism.

Ngabiirwe also told The Independent that she now hopes the government will work on structures to help people in the grassroots follow the important discourse in the sector. It is important to have the information but what you do with the information is another issue, she said.

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