Sunday 10 April 2011

Why secrecy is bad for Uganda's oil sector

By Yasiin Mugerwa  (email the author)
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Posted  Monday, April 11 2011 at 00:00

In the discovery of oil and gas, Uganda, one of the poorest nations in the world at least has a chance to redeem herself.
The country is said to clutch up to 2.5 billion barrels of oil, an amount that could place us among the world’s top 50 oil producers.
Indeed, this resource has the potential to generate billions of dollars that can be used for poverty reduction, infrastructural development and improved service delivery. But this dream as we’re going to see in this column can only come true if as a country, we are more ingenuous, open, organised and less corrupt than we are today.
While Ugandans have become vulnerable in a cosmetic war against corruption, if the government dares to sit back, instead of doing something to change the current situation, managing oil revenue in a corrupt system will definitely be very difficult.
For instance, even before putting in place the necessary laws to regulate the oil and gas sector, a friend in the Ministry of Finance told me last week that our government had already earmarked 9.2 per cent in oil revenue to finance the 2011/12 budget.
In my view, it’s extremely dangerous for us to pick oil money and inject it in the budget just like that. For transparency purposes, there must be a legal framework establishing a collection account for easy monitoring and supervision of the funds if this oil money is to change the lives of the poor Ugandans suffering with inflation and other economic ills. Secrecy in oil and gas sector has allowed corruption to thrive in countries such as Nigeria, Guinea, Angola as well as Cambodia.
Theft
For instance, in West Africa, Nigeria’s anti-corruption office, says at least $400 billion of oil revenue has been stolen or wasted over the years. This grand theft perhaps explains the volatility in Niger Delta, a fragile region where effects of oil on communities and environment have been enormous. But for Uganda, it’s not yet too late. we can still pick lessons from these hard realities.
That said, last week in Parliament, for once in a blue moon, our legislators were united in pushing government to stop the secrecy and once again demanded that oil deals be tabled in Parliament. Whereas Energy Minister Eng Hillary Onek said some Production Sharing Agreements (PSAs) were tabled in Parliament last year, lawmakers one after the other confessed ignorance, prompting Speaker Edward Ssekandi to demanded that all the oil deals be brought to the House for scrutiny.
Faced with the choice between disclosing the multi-billion oil deals and convincing Parliament that there is no need to do so, the government finds itself tangled in a no-win situation. But in a crafty society like ours, everybody knows that corruption thrives in secret places and for oil and gas, secrecy means impropriety. Obviously, the country cannot be run in the press and some information has to remain privy to the state for proper administration.
This is so, especially when it comes to matters of national security. But in a perfect democracy, every single citizen would have full participation in every single governmental decision made on behalf of the people. Nonsensical as it seems, in our case, participation of the citizenry in key decision making remains a figment of your imagination.
For instance, how many decisions has the government taken over the years without consulting the people? More so, often such key decisions are taken without the knowledge of Parliament. But as a country, we cannot afford to mess up things in the oil and gas sector. We can still put things right before it’s too late. Surprisingly, five years after the discovery of oil and gas, there is no legal framework in place. The Bills have not come to Parliament.
Unfortunately, the absence of the law has not stopped government officials from signing deals with oil companies, whose bona fide shareholders they don’t even known. Disjointed interventions in the oil sector, ignorance of the public and the lawmakers, mistrust and suspicion should be addressed.
Ignorance of House
To succeed in life, you need two things: ignorance and confidence. But I didn’t realise until last Tuesday that when it comes to oil and gas, this philosophy is not only a risky gamble but a recipe for acrimony.
It was shameful for lawmakers to begin confessing ignorance of what goes on in the oil sector. This time, MPs should be debating policies on how to ensure transparency in this nascent sector. But you can’t blame them; the government has over the years denied them information for reasons unknown.
In a bothersome debate that lasted several hours, the veil of ignorance and secrecy coating Uganda’s nascent oil and gas sector took centre stage as an oblivious Parliament began gambling on the future of Uganda as an oil producing nation.
Even though Eng Onek insisted that in December 2010, he tabled some of the production sharing agreements, he also conceded that not all the oil deals were disclosed.
Watching legislators confess ignorance was mind-boggling. To some of us who keep an eye on the good, the bad and the ugly in Parliament, the conclusion was somewhat apparent: despite the discovery of huge deposits of oil and gas in the country, lack of a legal framework to regulate the sector and the absence of a clear-cut communication strategy seem to have cluttered the sector as secrecy takes charge.
It should be clearly understood that the need to guarantee public access to official information is indispensable for any democratic society. This is the foundation for national development. For that matter, if government makes public only what it wants Ugandans to know, then disclosure becomes a sham and accountability meaningless.
Uncertain future
By keeping Parliament in the dark, as a country, we might get away with it for a while, but sooner or later this combustible mixture of secrecy, ignorance of the members, big money deals and power is likely to blow up in our faces.
The extractive industry can be explosive if not handled with honesty and shrewdness. But we can still do the right thing.
The right thing to do here is for Cabinet to expedite the Petroleum Bill before it’s too late. As for keeping oil deals secret, the right to do something does not mean that doing it is right.
ymugerwa@ug.nationmedia.com

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