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Oil bills give too much power to minister, say Global Witness and U.S. researchers

Bills to regulate Uganda’s oil and gas sector, tabled in parliament in February, leave too much power in the hands of the minister in charge of petroleum and fall short on transparency, accountability and environmental protection, according to international NGO and academic critics.

“Tight ministerial control, absence of parliamentary oversight and a lack of guarantees on contract and financial transparency remain key features of both Bills,” according to the UK based NGO, Global Witness in a new report, Uganda’s petroleum legislation: Safeguarding the sector.

A research team led by Jenik Radon, an adjunct professor at New York’s prestigious Columbia University, has reached similar conclusions.  The Petroleum (Exploration, Development and Production) Bill, they say, in comments dated February 1, “fails to respect the spirit and principles set forth in the February 2008 National Oil and Gas Policy for Uganda in that it does not adequately protect the economic and environmental interests of Uganda and its people.”

A key point for both groups is that the Bills give the minister powers to “direct” a new Petroleum Authority and National Oil Company, and the power to appoint their board members, despite other clauses describing these new institutions as “independent.”  The minister will also have the discretion to grant and suspend exploration and production licences. “Hence,” says the Columbia University team led by Professor Radon, “All aspects of regulating the petroleum industry—from commercial, to environmental, to public health—ultimately fall on the minister, which is an excessive burden if not an impossible one.”

Radon and his colleagues urge that, rather than concentrating so much power in the minister’s’ hands, “the functions of licensing, monitoring and enforcement must be structurally separated.”

They go on to call for stronger enforcement mechanisms and tougher penalties for international oil companies that break local laws.  Proposed fines for unlicensed “petroleum activities,” they say, are trivial compared to the revenues of the companies–comparable to a “parking ticket.”

Whilst echoing these concerns, the Global Witness report also points out that the “upstream” Petroleum (Exploration, Development and Production) Bill and “downstream” Petroleum (Refining , Gas Processing, Transportation and Storage) Bill make no reference to revenue management. “Without the revenue management legislation,” the report says, “It is not possible for parliamentarians or other stakeholders to conduct a thorough analysis of the legislative framework governing the petroleum sector or understand its implications.”

The petroleum bills, which were tabled when parliament convened in early February, are now being reviewed by a standing committee, the Natural Resources Committee.  In accordance with Uganda’s parliamentary procedure, this Committee has a period of 45 days to review the bills, consult with stakeholders and propose amendments before the Bills are presented to parliament for a second reading.

Stakeholder consultation

Ugandan civil society organisations have been making their own assessments of the bills, and had an opportunity to present their initial findings to members of the Natural Resource Committee at a March 6 meeting convened by the Parliamentary Forum on Climate Change.

Some 20 MPs who sit on the Natural Resource Committee attended the meeting and heard presentations from the Civil Society Coalition on Oil and Gas, and the Advocates Coalition for Development and Environment (ACODE)

Representatives of these organisations emphasised many of the points raised by the Global Witness report and the comments of Professor Radon’s research group.  The Columbia University researchers serve as consultants to ACODE.