21 August 2014

Uganda's Oil Sector Faces Criticism Over Transparency

Kampala — Uganda's oil sector is ramping up and many have high hopes for its economic impact on the country. But some in Uganda are noting concerns over the lack of governmental transparency and help for people affected by oil development projects.

The discovery of oil in Uganda in 2006 was followed by a largely positive response. Oil has been heralded as a chance for Uganda to build its economy, and improve development sectors. Known reserves are estimated at 2 billion to 3.5 billion barrels. Government ministries and oil companies expect oil production to begin in 2018.

But some groups have voiced concern about oil revenues in Uganda undermining residents. In Kabaale Parish, in western Uganda, where a refinery is being built, the government has been evicting local villagers.

The evictions have driven communities into national parks where they must compete with animals for natural resources. Although the government is supposed to compensate affected persons for their land, only half of the more than 7,000 villagers have received money, and most of them received only a portion of what they were owed.

When Uganda's national budget for 2014/2015 was revealed in June, rights groups noted there was no provision for those waiting on compensation.

Global Rights Alert legal officer Belinda Katuramu explains the situation.

'There is no allocation for them, people who have not been paid yet or people who have resettled. They have to build modern villages, they have to build assets, and boreholes and schools and hospitals and all that is lacking in the document. And yet, there is a provision for beginning the refinery project which is next year. ... So I think it is that lack of a balance that made the budget and whoever drafted it that made it impractical," said Katuramu.

Critics say Uganda lacks a cohesive petroleum policy, with poor local governance, a lack of transparency, and limited local access to oil resources.

Skepticism over benefits

A 2012 survey found 50 percent of Ugandans are not confident oil revenues will have any impact on their lives. But Ugandan lawmakers are readying a Public Finance Bill to try to restore confidence. The bill will focus largely on the national petroleum fund and financing training programs created to employ welders and drivers.

Katuramu says there is still skepticism of the Public Finance Bill.

"The independence of URA, Bank of Uganda, because they will be handling the oil money their independence will be paramount, because now in the Public Finance Bill you do not see that, you see that all these independent institutions are dependent on the minister. And also the vagueness of different clauses on procedure, it is very important that it is clear," said Katuramu.

The Bank of Uganda has agreed to regularly publish figures on the Petroleum Investment Fund while all withdrawals must be made public, but those like Katuramu say the lack of an independent oversight committee to manage the oil sector remains a problem.

Total, Tullow Oil, the Ministry of Energy and Mineral Development, and the Petroleum Exploration and Production Department declined to be interviewed for this story.


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