First extractive industry initiative report for Uganda recommends disclosure of oil contracts

The first Extractive Industries Transparency Initiative ( EITI) report has recommended that government makes oil contracts public as one of the ways to ensure proper accountability.

The EITI is a global standard that promotes revenue transparency and accountability in the extractive sector and also seeks to address the key governance issues in the extractive sectors.

Cabinet in 2019 gave a green light for Uganda to join the Extractive Industries Transparency Initiative, a move aimed at improving accountability in the management of natural resources.

On Friday, the EITI Ugandan secretariat released its first report for the extractive industry for the years 2019 and 2020.

According to the report, Uganda got shs436 billion in revenues from the extractive sector in the financial year 2019-2020 with shs374 billion got out of mining whereas shs48 billion was got from oil and gas.

In terms of minerals, the report indicated that limestone, pozollana, vermiculite, wolfram and gold respectively were the biggest minerals for Uganda between 2019 and 2020.

The report also indicated that during that period, oil and gas sector employed 178 people directly, whereas the artisanal and small-scale mining sector created 300,000 jobs.

“The model production sharing agreement is publicly available at the UNOC website. However, the production sharing agreements signed with oil and gas companies are not currently publicly available. The Uganda EITI should set out a clear roadmap for the publication of all engagements in the extractive sector,” the report said.

The report therefore recommended the need to have the oil agreements made public.

Commenting about the report, Gloria Mugambe, the head of the Uganda National Extractive Industries Transparency Initiative (EITI) Secretariat said the report provides an overview of the extractive sector in Uganda

“The report is an independent assessment against the EITI standard for the management of extractive sector. Countries who are members of EITI are expected to disclose all contracts they have with companies in the sector,”Mugambe said.

Commenting on the recommendations, she emphasized the need to comply with EITI requirements.

“For example, in oil and gas, production sharing agreements that governments sign with oil companies are supposed to be public and in Uganda it has not happened.  Now that we are members of EITI, it is something we are going to work towards to make it happen because if we don’t, there will be penalties,”Mugambe said.

According to Winfred Ngabirwe, the Executive Director for Global Rights Alert government ought to work out ways to implement recommendations of the report by the EITI secretariat.

“There are issues of concern like the oil production sharing agreements that government must work on. The elgal advisor for government should work out with companies the extent at which to disclose these agreements. As long as you sign to EITI, you must now that you have to disclose these agreements. It is not an option but a matter of when and how to do it.,”Nagbirwe said.

Speaking at the same function, the Ministry of Finance Permanent Secretary, Ramathan Ggoobi welcomed the report, noting that Uganda is making great effort to achieve an economic status and living standard of middle income countries, adding that report provides useful data about the country’s extractive industry.

“The extractive sector has gradually started to pick up by attracting various investors. In the oil and gas sector for example, the Final Investment Decision (FID) was announced in February 2022. Such investment decisions are a result of the existing favorable fiscal regime, business climate and giant effort being made by government to develop support infrastructure for the benefit of the potential investors,”Ggoobi said.

“In the mining sector, investment decisions are being guided by the quality and availability of geo-scientific data. In order to attract investors, government has strengthened its effort to collect and avail these data to the potential investors.”

Ggoobi noted that through joining EITI Uganda has taken a giant step to ensure transparency in the management of its resources.

“I wish to emphasize that government will continue to prioritize EITI implementation and to create awareness among the stakeholders for the successful delivery and adoption of EITI as a planning tool for the sustainable development of the country.”

The State Minister for Energy, Peter Lokeris said government is committed to complying with the Extractive Industries Transparency Initiative requirements as a way of ensuring transparency in the extractives sector.

“I wish to assure the public that the government of Uganda is committed to complying with the requirements of EITI because this is part of the government strategy under the NDPIII as well as the domestic resource mobilisation strategy, to harness additional revenues in order to deliver services to the people. We shall work with all stakeholders to ensure that the concerns and recommendations in this report are addressed,”Lokeris said.