Stakeholders urge EAC to engage in regulation of the oil and gas sector

Agather Atuhaire

Players in the oil, gas and mining sector have called on the East African Community to formulate a protocol to regulate developments in the sector and their implications on the East African citizenry.

At a regional multi-stakeholder meeting organized by Oxfam and the African Media Initiative in Nairobi, the shared sentiment among the stakeholders who included Civil Society actors, government officials and the media was that the EAC needs to help governments to mitigate potential dangers that come with the extractives sector.

Oxfam Deputy Regional Director Peter Kamalingin says East African Countries can only manage the issues that come with the sector if through a more coordinated approach.

“The Extractives industry is gaining a lot of traction in East Africa and Africa.” Kamalingin said, “We think that there is a need to exchange knowledge, information and experience to build momentum towards a more coordinated regional approach particularly also because it involves trans-boundary investments.”

The major oil and gas companies operating in the region operate in multiple countries. Tullow, Total and Barrick Gold for instance have operations in more than one country in the region and some of the Petroleum infrastructure projects being developed are cross boundary.

Many speakers agreed that the risks and high costs that come with the sector have the potential to impact on social, economic and environmental aspects of the communities. They say these risks and costs must be fully weighed and addressed not just by governments but by the regional leadership.

The Ugandan Representative to the East African Legislative assembly who also sits on the committee on integration and conflict resolution George Odongo assured the gathering that the Community was working towards enhancing collaborative action to strengthen the region to effectively address these issues.

“The East African Community considers the extractives industry as an integral part of our regional development.” Odongo says. “We are working on a protocol on the industry to enhance collaborative action and for the region to strengthen its position and become one of the major players in the sector.”

But some like the Executive Director of Great Lakes Institute for Strategic studies (GLISS) Godber Tumushabe don’t have much faith in the Community to solve these problems.

“The regional integration architecture is missing in action or increasingly becoming irrelevant,” Tumushabe says.

According to Tumushabe, the integration process doesn’t seem to present anything new other than the ceremonial meetings and documents that come out of Arusha (the community Headquarters).

The EAC, Godber says has failed to become a stabilizing force and an oversight organ over member states.

While Odongo recognizes the Community’s shortfalls, he says the process has registered progress.  He however warns that the desired policy outcomes require a lot of political will and efficiency of institutions.

Almost all the East African Community member states are moving towards developing their extractive resources, with oil in the Albertine graben and Turkana area in Uganda and Kenya respectively, in South Sudan and large volumes of gas in Tanzania. With all these countries facing issues in the sector, players have realized there is need to come together and exchange views and experiences on how to develop the sector with minimal threat.

While the extractives sector presents vast benefits to both the host governments and local communities, it also poses negative social and environmental impacts.

The dominant concerns in all these countries regard the contentious agreements signed between the governments and the oil companies, the displacement of the communities where these resources are discovered and the inequitable share of benefits and opportunities.

For others like Oxfam’s Regional Extractives advisor Titus Gwemende, there is need for not just a regional bloc but a wider Pan African platform if governments are to competently negotiate with the giant oil companies.

“We are in a phase called state capture which is the privatization of policy making by a few companies.” Gwamende says. For instance, Malawi is a 15-20 billion dollar economy but it is negotiating contracts with a company worth $200 billion.  We have to move beyond our sectarian interests, we have to think of this issue in a Pan African State. There should be consensus among pan African leaders for us to come up with a pan African platform where we negotiate as a bloc.”

The speakers however warned against high expectations saying that the sector will not solve all their problems.

“We need to shape the right narrative because our people and governments tend to think that now that we have oil, all our development problems are over.” Kamalingin said. “We want to tamper that with a bit of realism that extractives are good but come at a cost and that for us to maximise our benefits, we must redirect our efforts to the most important sectors like agriculture and health.”

Veteran Journalist Charles Onyango Obbo also emphasized the need to manage the expectations that. He said that even Saudi Arabia which is the biggest oil exporter hasn’t had all its issues solved by the sector.

He says that for instance the sector only employs 62000 of the Saudi Arabian workforce which represents less than 1%.

Saudi Arabia is the leading oil exporter with about 18% of the world’s proven petroleum reserves.The oil and gas sector accounts for about 50% of the country’s gross domestic product (GDP), and about 70 per cent of export earnings.

The country’s unemployment rate has been rising and currently stands about 13%.

The story, Obbo says, is not any different in Nigeria- the biggest oil producer in Africa where the sector employs a paltry 0.01% of the country’s workforce.

Tumushabe says they are alive to this fact but pay more attention to the extractives sector because of the potential risks it possesses.

“The reason we put a lot of focus on oil, gas and mining is because they have the potential to reshape the political, economic and ecological geographies of any country or region. The scale of investments to explore, exploit and develop them and their potential impact on social, economic and ecological environment can be profound.”

The other problem, Tumushabe says, is that the development of these resources is taking place in fragile democracies and a crisis of leadership within the region.

He says with the exception of Kenya the other East African countries are at a risk of facing major problems arising from the sector because of the politics.

“The politics of regime survival in most of these countries are likely to continue to have influence on the interstate relations with regard to the development of the extractives in the region.” He says.

He adds, “Kenya still holds the lead position among the five East African countries in emerging as a potential success story in building democratic practice necessary to ensure the progressive exploitation of these resources.”

He says while many are worried about the “resource curse”, the biggest issue of concern should be governance.

“The narrative about a resource curse and how to avoid it also distorts public policy,” he says, “what countries face is a governance curse and not a resource curse. The biggest obstacle to prudent development and management of these resources is the failure and distortions in government.”