Gov’t embarks on process to review extractive laws

Kampala, Uganda |  THE INDEPENDENT |  All laws governing the country’s extractive sector will undergo a review by the government following the admission of Uganda to the Extractive Industries Transparency Initiative – EITI.

The EITI boosting of a membership of 54 countries worldwide lays a foundation for transparent and accountable management of a country’s natural resource wealth.

It sets out standards of disclosure of all information along the extractive industry value chain from the point of extraction, revenue generation and sharing, awarding of contracts and licenses, to final expenditure of all proceeds.

Uganda, whose membership was confirmed on 12th August, will now be required to publicly disclose information such as contracts, beneficial owners, revenues and payments to ensure public oversight.

Saul Ongaria, a senior economist in the Ministry of Finance says that they have now drawn up an 18 months’ work plan with several activities aimed at implementing the EITI requirements.

He says that the key activity they have now embarked on is a review process for the country’s legal framework, contract awarding process, register of licenses and others to ascertain closing of gaps that would deter transparency in the sector.

“The process will review, analyse and identify obstacles for alignment with the EITI standard, track and report on collected revenue and track and report on social and environment expenditures by companies”, said Ongaria as he explained the key issued to be implemented in the next 18 months.

Regarding the process of reviewing extractive laws, Siragi Magara Luyima the Civil Society Organisations (CSOs) representative on the EITI Multi-Stakeholder Group (MSG) specifically said that the Public Finance Management Act (PFMA), 2015 is one of the main legal frameworks that require urgent review.

The EITI Multi-Stakeholder Group (MSG) brings together officials from the Ministry of Finance, Energy, Uganda Revenue Authority (URA), representatives from CSOs and others.

The PFMA provides for the establishment of the Petroleum Revenue Fund which acts as a stabilization and deposit trust for all the revenues from the petroleum operations. Section 58 of the PFMA requires that all withdrawals from the Fund must be approved by an Appropriation Act of Parliament under the warrant of the Auditor General.

However, Magara says that there are gaps in the Petroleum Fund management since there is no guidance on the percentage of money to be appropriated from the Fund hence being depleted. He adds that there is also no guarantee that the money picked from the Fund is used for infrastructure development since it is merged with other funds under the Consolidated Fund.

“There is need to review PFMA, 2015 to create an expenditure ceiling on the petroleum revenues transferred into the Uganda Consolidated Fund, to avoid overdrawing the petroleum fund and appropriating huge sums of money that would end up in the economy and cause inflation,” Magara recommended.

He also notes that the appropriation from petroleum fund should clarify on infrastructure not only road and energy infrastructure projects but also health, agriculture and education infrastructure should be considered to ensure equity of benefits from oil resources.

Also considered is a review of the legal framework to establish an independent, multi-stakeholder oversight body to supervise transfers and disbursements from the petroleum fund.

“Also government should expedite the approval of the Petroleum Investment Policy and the operational agreement between Bank of Uganda and government to kick start petroleum revenue investment stipulated in PFMA,” Magara recommended.

Meanwhile, Magara notes the secrecy around oil and gas contracts created by the oil companies as opposed to the government. His statement comes on a backdrop of complaints and calls on the government to reveal the details of the agreements so that the stakeholders find it easy to demand accountability.

Magara says that the government has no reasons to keep the contracts secret.

But Ongaria notes that the agreements signed before Uganda’s admission to EITI has a confidentiality clause and there is no way details therein can be disclosed.

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