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Monday, March 21, 2011

Uganda should have transparent legislation in extractive industries

By Esther Nakkazi
Future oil payments made to Uganda may be made public as civil society campaigners mount pressure in the UK and the rest of Europe, for transparency legislation in extractive industries. Last week over 200 activists from Uganda wrote to Prime Minister Cameron telling him “the only losers [from the law] would be those who plan to steal the revenue.
Uganda has so far cloaked its nascent oil industry in secrecy, keeping the Production Sharing Agreements (PSA) it signed with participating oil companies under wraps despite the information Bill laws that would allow access.
European leaders have in recent weeks lent their backing to the law with President Sarkozy of France and Chancellor Osborne of the UK both arguing that Europe must now act on this issue.
In the UK Parliament, two weeks ago, a backbench bill was introduced suggesting all oil, gas and mineral companies listed on the London Stock Exchange (LSE) would have to start reporting their payments to all governments where they operate.
LSE has more than 80 extractive companies listed, representing more than 1 trillion pounds of capital. Tullow oil, Uganda’s main operator in the extractives industry is listed on the LSE.
Civil society activists argue that if legally binding measures for transparency in Europe and Uganda were passed; there would be a big impact in the information available to Ugandan citizens to demand for proper use of oil resources.
“Having access to this information challenges vested interests. Ultimately it is in the interest of all our citizens that there is access to this information,” said Winnie Ngabiirwe, the executive Director, Global Rights Alert and Chairperson, Publish What You Pay – Uganda.
Dickens Kamugisha, CEO, African Institute of Energy Governance says everything in the oil industry has been done in secrecy despite the fact that there exists the access to information laws.
“If transparency rules come in place, they will enhance the desired public debate and enable citizens to make decisions based on the information available.”
The US, already has legislation to force extractive industry firms listed on the New York Stock Exchange engaged in the extractive industries abroad, to be more transparent. This came in the form of the Dodd-Frank Act passed last July. However, as Tullow are not NYSE listed the law will not currently impact Uganda. CNOOC and Total are listed in the US and would have to report their payments if as expected they enter Uganda formally later this year.
The US listed firms, engaged in extractive industries, are required by law to report how much they pay to governments on a country and project basis, in an annual report to the Securities and Exchange Commission.
“The US passed a law but for countries like Uganda this law can only help if it is also implemented in the EU,” said Albert Charles Okello Oduman, a legislator in Uganda.
Some companies listed in the US like China’s CNOOC and Petrochina will shortly begin disclosing under the law, but also there are those that do it on a voluntary basis like Talisman Energy in Canada, Statoil Hydro in Norway and Newmont Mining in the US.
Civil society activists under the ‘Publish what you pay’ coalition are at the forefront of this campaign. Joe Powell, a policy analyst at coalition member ONE, said, “Transparency is the first step to better oil governance in Uganda. If Europe passes this law it will empower people with information needed to hold the Government’s leadership accountable.”
Some companies have opposed the law. Peter Voser, CEO of Shell, argued at a recent conference that it would undermine the national sovereignty of countries where natural resources exist. However, Henry Banyenzaki MP, Chair of Uganda’s Parliamentary Forum on Oil and Gas disputed this claim. In a letter to Voser seen by the East African says: “This oil belongs to the people, not to political and business elites. Sovereignty can only be enhanced by empowering people with the type of information which the Dodd-Frank Act will provide”.
Africa is well endowed with resources that do not seem to be beneficial to it. Data from the BP statistical Review of World Energy 2010 shows that, for over two decades, proven oil reserves in Africa have increased by 112 percent while the total value of known deposits is $40 trillion.
Also, Foreign Direct Investment (FDI) into the developing countries is largely from the extractive industry, which if well managed can have a transformative effect on Africa.
NB: This story has also been published in The EastAfrican of March 21-27

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