CRITICAL REFLECTIONS ON OIL GOVERNANCE DISCOURSE IN UGANDA Godber Tumushabe Executive Director/Policy Analyst Advocates Coalition for Development and Environment (ACODE) www.acode-u.org Africa Centre for Media Excellency Kampala: November 21, 2011
Structure of the presentation o Theoretical Underpinning of the presentation o Consensus issues in the current oil discourse o Outstanding concerns of public interest o Responsibility o Accountability and transparency o The BIG PICTURE SYSTEMIC FAILURES- failures militate against responsible exploitation of oil.
Key Elements of governance Critical for Transparency in the Oil Sector o State Capacity – related to a states‟ power and ability to enforce rules that are consistent and predictable. o Rule of law – that establishes among other things property rights and limits the states‟ discretion in manipulating those rules. o Democratic institutions – that further limit exercise of state discretion by holding governments accountable to their citizens. o An active citizenry - devoid of fear and manipulation that acts as front line defenders of democracy [modified from Francis Fukuyama]
Causes of Governance Failures Low Public Sector Bad Laws Capacity Political Market Imperfections Uninforme d Citizenry Political Polarization Credibility
Consensus Issues on Oil Governance in Uganda o Oil discovery is Estimated consumption -10,000 a tremendous barrels of oil/day. economic Estimated petroleum opportunity for import bill of Uganda. UGX30 billion annually AND THEN the export of excess.
Consensus Issues on Oil Governance in Uganda o The potential revenue windfall could help the country address major production infrastructural constraints.
Consensus Issues on Oil Governance in Uganda Government and “Be transparent on industry are less than oil exploitation” – transparent in their New Vision editorial, current dealings on Feb. 19, 2010. oil. “Spare Ugandans the In this debate, it is „Oil Curse‟” – only GoU officials Saturday Monitor who believe that they editorial, Feb. 20, are more than 2010. transparent! Pending court cases.
Consensus Issues on Oil Governance in Uganda And then the BIG IF - BUT public funds have been “Oil revenues will not used to buy cars and pay be used for salaries and build the current political patronage consumption and network! importing perfumes, wines, cars and paying “If Museveni keeps his salaries. We shall use it word, the nation that has as a finite resource to long been content as an create infinite capacity economic underdog could for Ugandans,” level the playing field.”
Outstanding Concerns of Public Interest Responsibility and Accountability The current institutional architecture blurs lines of responsibility and accountability. Until recently, the parliament has taken a spectator role and has consistently been ignored on details concerning oil exploitation activities. The fusion between the political, legislative and administrative responsibilities are inconsistent with accountability and transparency. [Best illustrated by the CHOGM Case]
Transparency and Access to Information o Contestation over the disclosure of PSAs – disclosure the key pre-condition to mobilizing citizens and CSOs around a common national objective o Failure to conclude subscription to the Extractive Industries Transparency Initiative – in spite of the policy commitment (objective 6 of the policy). o Access to drilling sites by environmental inspectors and relevant legislators.
GoU-Corporate blackout conspiracy! o Government of Uganda:- confidentiality clauses militate against release of the PSAs. o Oil Companies:- we can release the agreements if only GoU consented? o The big brother syndrome- Government knows what is best for you!
Media Frenzy in the Face of State-Corporate Conspiracy of Silence Tullow eyes two partners for Uganda oil 19 Feb 2010 12:30 GMT ... Tullow eyes two partners for Uganda oil Tullow Oil may choose both China's CNOOC and ... and France's Total as partners to develop oil fields in Uganda , where output will be around ... Tullow: Uganda oil output could double 19 Feb 2010 16:15 GMT ... Tullow Oil said today it could end up producing more than ... twice as much oil as expected in Uganda in the coming years if the right ... in the DJ Stoxx European oil and gas sector index. Chief Executive Aidan Heavey said ... Rights group criticises Ugandan oil deals 15 Feb 2010 23:16 GMT ... 15 - Production sharing agreements signed by Uganda with oil explorers give the firms too many protections ... surge in investor interest in its nascent petroleum industry. According to the report by Platform, ... Tullow says will buy Heritage's Uganda oil assets 19 Feb 2010 15:12 GMT ... Tullow says will buy Heritage's Uganda oil assets An oil exploration tower in Tonya on ... Tullow by itself also owns a separate oil field zone. Under a previously negotiated contract, Tullow ... Oil Giants Rush to Get Foot in Door 15 Feb 2010 13:50 GMT ... Russian, Chinese, French, Italian, Indian and other oil companies are among firms that have already expressed ... have already expressed interest in investing in Uganda 's oil reserves estimated at 2 billion barrels ... expressed interest in joining Uganda 's oil and gas sector by partnering with Tullow. It quoted ... Did Tullow Oil Short-Change Uganda? 15 Feb 2010 13:54 GMT ... which suggests that Tullow must have short-changed Uganda in the negotiation of its oil contract in that country. The report affirms ... gas potential, with contracts signed with Hardman Petroleum , Energy Africa, and Heritage Oil . Exploration Area ... Peak oil review - Feb 15 15 Feb 2010 16:10 GMT ... Oil prices rose modestly last week on conflicting news. ... to buy a stake in a big Uganda field also fell through. The opposition also ... #8) Turkmenistan, holder of the world’s fourth -largest gas reserves , is seeking bids from foreign producers ... Latest Oil Finds Amount To Spit In The Bucket 16 Feb 2010 05:30 GMT ... The oil industry was on a hot streak in ... For example, a new field found in Uganda last year is anticipated to yield two ... years. Dalton Garis, of the Abu Dhabi-based Petroleum Institute, warned of the possibility that "prices ... Oil Pipeline Project Cost Hits Shs 600 Billion 17 Feb 2010 21:06 GMT ... the fate of its plan, jointly with Uganda , to extend the oil pipeline from Eldoret to Kampala. It cites ... account in any future investments on the petroleum infrastructure," said an analyst in the Business ... Govt sets terms for oil companies 17 Feb 2010 21:36 GMT ... new companies intending to invest in the oil production in the country. The permanent secretary ... of the resources, value addition, training of Ugandans and paying taxes. � In order to approve ... bigger player expresses interest in joining the petroleum industry, it signifies benefits to the country, � ... Tullow says Uganda output could be double target 19 Feb 2010 16:14 GMT ... target DAKAR, Feb 19 - Explorer Tullow Oil said it could end up producing more ... twice as much oil as expected in Uganda in the coming years if the right ... in the DJ Stoxx European oil and gas sector index <.SXEP>. A Tullow spokesman said ... Uganda needs $8 bln to develop oil industry -govt 17 Feb 2010 22:47 GMT ... invited to pitch plans to government * Uganda to earn $300 mln-400 mln in tax ... next decade to develop its newly discovered oil and gas resources and bring them to ... surge in investor interest in its nascent petroleum industry. Uganda needs the money to finance ... Source: World News Report [Sunday Feb. 21, 2010 at 06:15 hrs] http://www.einnews.com/uganda/newsfeed-uganda-oil
Revenue Sharing and Balance of Power Central government control of oil revenue will increase the imbalance of power between the centre and local governments. Under the current budget architecture, app. 70% of the national budget is spent by central government and only app. 30% by district. This dependence is the foundation for building political patronage, undermines democracy and local accountability. A new revenue sharing structure must target at destroying and eliminating the big brother mentality.
Revenue Sharing and the Balance of Power: Sharing What? o Chinese join Tullow, Eni SPA tug of war o Activists drag UK govt to court over aiding Tullow o Eni to invest Shs25 trillion in Uganda o Tullow sells oil wells to Chinese company o Tullow Oil to put 80 million shares in company o Uganda uncertain of tax benefits from Heritage sale
Environmental and Livelihood o The environmental safeguards process has been relegated to Security & Sustainability the back seat – or at least there is no reliable information on the progress of the Strategic Environmental Impact Assessment (SEIA) process. o A selected review of the current EIA‟s show that they do not adequately address social and environmental security concerns in the event of destruction of the environment and biodiversity.
Environmental and Livelihood Security & Sustainability o Environmental oversight agencies have either taken a back seat or just adopted a silent posture. o No specific corporate commitments on environmental performance deposit bonds or other environmental restoration commitments. Oil flaring by Shell near Warri in Nigeria
BIG PICTURE SYSTEMIC FAILURES 6 Reasons Why Uganda Could Catch the Dutch Disease
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