ENFR

AFIEGO’S communiqué on Government’s selection of RT Global Resources to build a refinery, 18th Fébruary 2015

AFIEGO

AFIEGO and partners call on Government to stop secrecy in the oil production processes 

A  communiqué on Government’s selection of RT Global Resources to build a refinery, 18th Fébruary 2015

  1. Introduction

On 18th February 2015, AFIEGO convened a meeting of partners at its offices in Kampala to discuss concerns surrounding the selection by the Government of the company to build the oil refinery in Hoima district. Ugandans will painfully recall that on 10th and 11th October 2011, the national Parliament was recalled from recess and spent two full days discussing the mismanagement in the country’s oil sector. Among other things, the Parliament pointed out that the sector was being run based on outdated laws, the Production Sharing Agreements (PSAs) had unfair stabilization clauses, that there were no special competent institutions to regulate the sector and manage oil business on behalf of the government and that some government ministers had engaged in bribery to favour some oil companies against others.

After the above discussions with determination to restore transparency in the sector, the Parliament made a number of recommendations for proper governance of the sector including resolutions stopping all oil transactions until new oil laws were put in place and for three ministers (the then Prime minister, the minister for Foreign Affairs and the Minister for Internal Affairs) to step aside to allow investigations.

Unfortunately, the government ignored the resolutions. As a result, in 2012, the government entered into an MoU with Tullow Oil effectively authorising the sale of two thirds of oil assets in Uganda to CNOOC and Total at a price of $2.9 billion. In effect, the executive connived with the Companies against the Parliament. The reasons given then by the executive to reject the recommendations of the Parliament were among others (1) that the Parliament had no powers over the executive, (2) that their resolutions were based on speculation and in bad faith and most importantly (3) that implementing the resolutions would delay the process for oil production and in turn increase the costs for oil operations in the country. Then, many Ugandans believed the government. They did not know that these were acts of impunity and would continue to haunt the sector. It should be noted that nowhere in the world has any country succeeded in managing the oil sector for the common good through undermining institutions such as a Parliament. Indeed, since the firm down in 2012, a process that was meant to facilitate the oil production, Ugandans have been waiting for the production to commence in vain. They are feeding on endless deadline promises. They are waiting to see how a government that ignored the parliament is prepared to implement the upstream and the midstream laws that were put in place in 2013 for the benefit of Ugandans. The meeting noted that since 2006 to date, over $800 million dollars have been paid to the government by the oil companies in Signature Bonuses and Capital Gains Tax but there is no information in the public on how such revenues are being used. After appreciating the current state of affairs in the sector, the meeting made the following

observations:

  1. Observations

to maximize the oil benefits:

  1. Recommendations

i. Conduct the bidding and all contractual processes for the refinery, pipeline and other oil projects in the open to show the citizens that you are committed to effective transparency.

ii. Make public the criteria and results for the selection and determination of the preferred bidder for the building of the refinery.

iii. Conduct a feasibility study to determine the value for money for investing in two development options as compared to using one option of a refinery or pipeline. This should be done before the commencement of any of the projects.

iv. Prepare and put in place a comprehensive medium and long term oil development master planindicating the total land required for all the oil and other related projects. The master plan should include how many people are likely to be affected, the routes for all pipelines, how much money is required to compensate the affected people and identify the safe areas to relocate vulnerable communities. This will help the government to plan for land acquisitions in time to reduce negative impacts on the affected communities.

v. The Parliament should use her oversight powers to review and monitor all the oil development processes by the executive before they are signed as contracts to avoid unfair transactions that have continued to undermine all Uganda’s big projects.

vi. Urgently establish and operationalize the Oil Authority of Uganda (OAU) and the National Oil Company (NOC) to ensure effective oil regulation and oil business management in the country.

vii. Urgently put in place the upstream and midstream regulations for effective implementation and enforcement of the 2013 new oil laws.

viii. Amend the oil laws to legally constitute a national multi-stakeholder group comprised of eminent persons from the government, cultural institutions, religious institutions, elders, civil society and other relevant groups to monitor the operations in the oil sector including contracts, collection and use of oil revenues.

ix. To Ugandans, the Constitution gives you the powers; use it to hold the government and all other actors accountable in the management of the oil sector.

x. To the youth, you are the most energetic segment of the population and most educated, use your numbers, skills and energy to ensure that there is transparency in the management of the oil sector. This way, the oil will generate necessary revenues to create opportunities such as jobs, quality education, health, clean water, affordable and reliable electricity, roads and others which will reduce your current misery.

xi. To NEMA, urgently complete the review of the environmental laws to ensure effective conservation amidst oil production activities.

xii. To UWA, urgently work with the government to put in place strict guidelines for oil operations in the protected areas.

xiii. Lastly but important, urgently compensate and resettle all the refinery project affected people of Kabaale as a measure to secure the land for the commencement of oil production.

Thank you.

For God and My Country.

Signed by: Africa Institute for Energy Governance (AFIEGO), Centre for

Constitutional Governance (CCG), National Association for Professional

Environmentalists (NAPE), Ecological Christian Organisation (ECO), Pro –

biodiversity Conservationists in Uganda (PROBICOU), Lake Albert Children and

Women Advocacy and Development Association, BIRUDA, BUCAWA, Kakindo

Orphans, KWATANISA, Women and Youth Associations of Butimba, Kidoma,

Kinogozi, Kabaale, Mbiko, Komamboga, Makerere, Mukono, Kyambogo, Nkumba,

Bugema and Kigumba.

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