Why Uganda needs CSR policy guidelines in the oil and gas sector

COMMENT | Daniel Abowe |  Corporate Social Responsibility (CSR) is a business approach that contributes to sustainable development by delivering economic, social, and environmental benefits for all stakeholders during project implementation. It also refers to the corporation’s initiatives to assess and take responsibility for the company’s effects on environmental and social well-being.

Oil Companies (OCs) operating in Uganda have been and are still making social investments in the Albertine Graben as a way of obtaining social license to operate in communities. However, there is no detailed legal framework that regulates oil companies’ social investments. This is likely to undermine the intended positive impacts and sustainability of these social investments in communities. 

The fact that the impact of oil companies on local communities in the Albertine graben is both negative and positive, should compel Uganda and the entire oil sector to take the notion of corporate responsibility seriously.

It should be noted  that in all communities, where multinational and local corporations have set up businesses, human rights abuses and violations have been registered.

In the Albertine region of Uganda where oil exploration and developments are taking place, there are already several environmental, social, economic, and cultural issues emerging from the petroleum sector activities.

Amidst the aforementioned issues, oil companies have carried out CSR projects in different areas but they are often scattered and not planned with the communities where they are implemented.

In addition, the main principles of CSR governance like transparency, accountability, participation, and equity are often neglected by the Joint Venture Partners (JVPs) in the planning and execution of CSR projects.

For instance, on 19th August 2019, a football game was stopped just 20 minutes into the game in Nwoya by the district chairperson, after it was found that Total E&P hadn’t put local content into consideration.

The JVPs have implemented CSR in the Albertine rift, however, according to a recent report on Ugandan perspectives on oil and gas by Maendeleo Ya Jamii (MYJ), there is a great mismatch between community needs and aspirations and what the Oil Companies have actually provided in form of CSR in the major oil districts of Uganda.

What good CSR governance means

Successful CSR implementation starts with a common but strategic understanding of what CSR means to the company.

CSR implementation should yield benefits that are tangible, and have a sustainable development impact because these two aspects form CSR implementation benchmarks. Additionally, company top management should be involved in CSR implementation, but with clear reasons, means, and policy guidelines.

Currently, Uganda doesn’t have a policy specifically regulating and guiding CSR implementation. Instead, there are several legal provisions relating to CSR scattered in different statutes. There is no regulation of CSR and most interventions are voluntarily done without considering the main principles of good CSR governance.

These scattered provisions related to CSR exist in the 1995 constitution of the Republic of Uganda and the National Oil and Gas Policy (NOGP) of Uganda (2008).

For instance, objective 10 of the policy is To ensure mutually beneficial relationships between all stakeholders in the development of a desirable oil and gas sector for the country, and strategy (f) under this objective is to encourage the implementation of CSR by oil companies.

The Petroleum (Exploration and Production) Act, 2013, and the Petroleum (Refining, Conversion, Transmission, and Midstream Storage) Act, 2013 also have scattered provisions on CSR. Other oil and gas sector relevant policy guidelines and Acts like Public Finance Management Act, 2015, Uganda’s Model Production Sharing Agreement, and Individual petroleum agreements do not have clear provisions to guide CSR implementation.

Regarding Joint Venture Partners  (JVPs) integration of CSR projects in development planning, there is no evidence of integration of CSR in the National Development Plan or District Development Plans for the sustainability of CSR projects in Uganda.

For this reason, a health facility in Buliisa constructed by Tullow did not operate for a period of time because it was constructed without considering district development priorities.

CSR activities are determined by the specific oil company and they depend on the level of business the company operates in a given place. That is why some CSR interventions have been stopped in the major oil districts. In Hoima district, CNOOC stopped awarding the best candidates at all levels in 2019 due to low activity.

It is therefore imperative that Uganda develop CSR policy guidelines incorporating good governance principles.

All CSR project interventions should feed into NDP, DDPs, lower local government, and community-driven development priorities depending on the size and scale of operation of the company.

This will compel petroleum companies to engage in sustainable CSR activities. Uganda should benchmark on oil-producing countries with good CSR policies like Norway and Botswana as the country prepares for oil production, now projected for 2023.

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 Daniel Abowe is Researcher at CSCO/ACODE  daniel.abowe@acode-u.org