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EITI gives Uganda a positive score of 78, but calls for more transparency in the oil sector

EITI gives Uganda a positive score of 78, but calls for more transparency in the oil sector

Kampala, Uganda | THE INDEPENDENT | The Extractive Industries Transparency Initiative (EITI) says Uganda has improved transparency and accountability in its oil and mining sector.

In the latest findings, the EITI, a global standard for prudent natural resource management, commends Uganda for establishing what it described as a robust multi-stakeholder platform and undertaking reforms to its Minerals Act. Uganda recently enacted the Mining and Minerals Act 2023, which ushers in some of the aspects that promote transparency.
The EITI Board concluded that Uganda has achieved a moderate overall score (78.5 points) in EITI implementation.

“I congratulate Uganda for establishing a robust multi-stakeholder platform that facilitates public participation and data-driven debate,” said EITI Board Chair Helen Clark.

However, the board said greater efforts are needed to reveal contracts and beneficial owners and ensure that civil society can freely participate in the EITI process.

“Building on a solid foundation for sector governance, stakeholders should prioritize concrete measures to disclose oil, gas and mining deals and beneficial ownership information. Safeguarding the broader civic space will be crucial to sustaining transparent and accountable governance of natural resources in Uganda.”

Uganda joined the EITI in 2020 to leverage transparency to improve public trust, improve the investment climate and strengthen revenue collection.

As an emerging oil producer, Uganda has significant oil reserves and plans to begin oil production in 2025.

The East African Crude Oil Pipeline (EACOP), currently under construction, is set to transport 6,000 barrels of oil per day from Albertine Graben in Uganda to the port of Tanga in Tanzania, promising significant revenue streams for Uganda.

Two oil fields at CNOOC’s King Fisher and TotalEnergies’ Tilenga projects began drilling exercises ahead of first oil expected in 2025. Uganda established its EITI secretariat known as UGEITI under the Ministry of Finance. The UGEITI has a Multi-Stakeholder Group (MSG) chaired by the current Director of Economic Affairs, Moses Kagwa.

The Multi-Stakeholder Group has members from civil society, government agencies such as URA, Bank of Uganda, National Planning Authority, Ministry of Energy, Ministry of Justice and Constitutional Affairs and Ministry of Water and Environment , among others.

Why are contracts still confidential?

Some of the oil and gas companies have indicated that they are willing to have contracts signed with the government disclosed.

However, Saul Ongaria, National Coordinator of the Uganda Extractive Industries Transparency Initiative (UGEITI), told Uganda Radio Network that there is an ongoing discussion with oil and mining companies on the matter.

He said the outreach aspect is a process. Some of the contracts, such as production sharing agreements, were signed before Uganda joined the EITI.

Public service announcements still contain confidentiality clauses. Ongaria said disclosure of the contract must be done in a fair and orderly manner.

Uganda still has to work hard to ensure that the beneficial owners of oil and mining companies are revealed. It appears that Uganda has yet to comply with some of the EITI requirements on beneficial ownership of mining companies, as set out in the repealed Mining Act of 2003.

According to the EITI secretariat, the true owners of extractive companies, known as beneficial owners, often remain anonymous or hidden by a chain of shell companies. He says this can be a particular challenge in extractive industries, where knowing who has the rights to extract oil, gas and minerals is key to addressing risks of corruption or conflict of interest. The EITI says protecting anonymity can deter investment and make fighting corruption more difficult.

“Developing countries are estimated to have lost $1 trillion a year since 2011 as a result of corrupt or illegal deals, many of which involve anonymous companies. Investigations that used information on beneficial ownership culminated in data leaks such as the Panama Papers, the Luanda Papers and the Pandora Papers,” he says.

The EITI said it has been able to deliver practical results by including beneficial ownership information in business licensing and registration processes, as well as through EITI reporting.

“Publishing details about company ownership can help close channels of corruption, enable effective taxation, build fairer markets, encourage responsible investment and manage business risk. Addressing these issues will continue to be critical as the energy transition accelerates,” states a UGEITI report.

Gloria Kempaka Mugambe, head of the UGEITI Secretariat. She has said Uganda is willing to make the contacts public.

Setting the stage

In recent years, Uganda has instituted robust frameworks to manage its anticipated oil wealth and bolster the prospects of the mining sector. The passage of the Mining and Minerals Act, 2022 marked an important milestone, paving the way for better governance and transparency in the sector.

The establishment of the Uganda EITI multi-stakeholder group (UGEITI) has played a critical role in improving public oversight and governance within the extractive sector.

Using the EITI platform, the government has been addressing key issues such as Minerals Law reforms and beneficial ownership disclosure.

Civil society participation within the multi-stakeholder group has facilitated extensive outreach and public debate, focusing on areas such as contract transparency, beneficial ownership, tax justice and local impact. However, greater efforts are needed to ensure that civil society representatives can fully participate in the public debate on the EITI process and express their views without restrictions, coercion or reprisals.

shining a light

Amid heightened public expectations and concerns, particularly in relation to oil development, the EITI process has served as a vital diagnostic tool to assess extractive governance information and practices within Uganda’s extractive sector.

EITI reports have provided valuable information on the tax benefits derived from oil, gas and mining activities, including how revenue is allocated at the subnational level.

Additionally, the EITI has fostered debates on the environmental impacts of EACOP, enabling disclosures on the social and environmental impacts and contributions of extractive projects, which can address concerns raised by civil society. Moving Forward Despite notable progress, there are opportunities for UGEITI to improve transparency in areas such as gold refining and trading.

Uganda can further advance transparency by fully disclosing oil, gas and mining contracts, building on broad industry support for publishing extractive agreements.

It can also take steps to disclose beneficial rights owners and extractive companies, which will help close avenues for corruption and conflicts of interest. With the first oil exports expected in 2025, these steps will be imperative to build on transparency and ensure that Uganda’s extractive sector is managed in the interests of its citizens.

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