By Keith Myers
On February 25-26, 2010, Revenue Watch and the Kampala-based Africa Institute for Energy Governance (AFIEGO) held a training on petroleum and gas governance for parliamentarians and civil society in Entebbe, Uganda. Approximately 35 members of Parliament (MPs) from the Natural Resources, Public Accounts and Finance, and the Planning and Economic Development Committees of the Parliament of Uganda, as well as five leading Ugandan civil society organizations attended the event.
This training was the first time the Ugandan Parliament received a comprehensive training on petroleum governance. It was also the first step in a joint pilot project that RWI and AFIEGO will be implementing throughout 2010 in order to support parliament (as well as media and civil society) in making informed policy decisions on, and ensuring adequate oversight of, Uganda's nascent petroleum industry. The pilot program will particularly emphasize the review and ratification of the new petroleum legislation being introduced by the government for parliamentary review in mid-2010.
RWI and AFIEGO asked Dr. Keith Myers of Energy Richmond Partners, the lead expert facilitator for this training, to share his views on the session and the progress being made in Uganda and its Parliament.
As I was leaving Uganda, my return plane to London was delayed for 28 hours by a technical failure. My fellow stranded passengers represented an array of development and aid groups working in Uganda. Notably, there was only one businessman present: an accountant from a Scottish company that provides the diesel generators that supply Kampala with electricity when hydroelectric power is low. (The diesel generators are currently running 24 hours a day on imported diesel; fortunately the World Bank is paying the bills.) While waiting for a necessary part to arrive from the U.K., I and the other travellers discussed our impressions of Uganda, and our perception of the frustration and anger felt by many of its citizens.
As my driver to the airport had remarked in response to the reason for my stay in Uganda, "Corruption is life in Africa, and we Ugandans are not a happy people. We are unhappy politically, we are unhappy economically."
President Museveni is from a minority tribe in the west of the country—a source of resentment in a society where tribal allegiances run deep. Economic power is concentrated among a small elite close to the president and corruption blights everyday life. Kampala is also bristling with men carrying guns—more even than I saw in Luanda at the height of the Angolan civil war. But when I asked the driver if he thought there could be conflict, he said, "No, despite the anger we are too tired of war."
By now you have the picture. Uganda is a country that struggles to meet its citizens' basic needs. The total government budget for its 32 million citizens is only around $2.5 billion. To put this in perspective, the U.S. is spending $1 billion on its new London embassy for 500 diplomats. Uganda is dependent on foreign aid and charity and its infrastructure is poor. Its people are frustrated, angry and fearful of more conflict.
It is also a country where oil was discovered in 2006, and the petroleum may start flowing, at modest rates, later this year. The oil discoveries, located in the remote Lake Albert region on the border of the Democratic Republic of Congo (DRC), are estimated to contain more than 800 million barrels. The total prospective area for oil exploitation covers some 9,000 square kilometers, split roughly 60/40 between Uganda and the DRC. Only the Uganda side has been explored so far, but the potential resources in Uganda's side are estimated at more than two billion barrels.
While the Lake Albert Basin is exceptionally prolific in hydrocarbon discoveries, its limited area and Uganda's large population means the per capita endowment is a relatively modest 50-60 barrels of oil per person, to be produced over a 20-30 year period. Translated into production, this equates to around two barrels per capita per year (at 175 thousand barrels per day), or approximately $100 per person each year in government revenue (at today's oil prices).
Uganda's Parliament is a fairly new body, with over 300 MPs and overwhelming majority support for President Museveni's ruling party. Thirty percent of MPs are women, an extraordinarily high number that reflects people's belief that women are less likely to be corrupt than men. In my training for the Natural Resources Committee of the Parliament, the aim was to increase MPs' understanding of oil and gas sector governance to better enable them to fulfil their legislative and oversight roles. Two new bills, a new resource management law and a petroleum revenue management law are being drafted by the Ministry of Justice and will be presented to Parliament soon. The training provided a basic overview of the key issues in petroleum governance meant to empower MPs and civil society to understand topics that will be covered more in greater depth by RWI and AFEIGO in follow-up training sessions on the texts of the draft bills.
The curriculum was similar to that undertaken in an RWI training with the Ghanaian Parliament in late 2009, covering upstream potential, state participation, regulation and revenue management. However, in the Uganda session, there was less emphasis on local content and more on revenue sharing and social and environmental impacts.
We began the training with the MPs sharing their hopes and fears regarding Uganda's oil. The hopes centred on oil being a catalyst for transforming the lives of ordinary Ugandans, providing cheap fuel and better infrastructure. Conversely, some MPs were aware of the "oil curse" and feared the potential of oil sparking renewed conflict. There were also concerns about the impact oil extraction would have on tourism and the environment, given the location of large discoveries in an important national park on the banks of the Nile. Some feared that the oil might not even be real; in a country in where rumors of an oil bonanza loom and expectations run high, very few citizens will ever see this mysterious resource in the flesh. (Tullow Oil provided a sample which was passed around to training participants.)
There was evident frustration with the executive over the release of individual Production Sharing Agreements for parliamentary review, which some members of the Natural Resources Committee had not yet received. Exasperation with the lack of transparency over the contracts has been further fuelled by the lopsided $1.2 billion profit Heritage Oil made on its $150 million investment in Ugandan upstream assets. The assumption of many MPs at the start of the training was that Uganda was being ripped off by the oil companies and the government was withholding information because it had negotiated a bad deal.
Widespread anger over oil management and lack of transparency was clearly shared by members of Parliament. As one MP told me at the close of the training, "I know you think we are aiming at the wrong target, but we have to shoot at something." While parliamentarians and civil society in Ghana also had cause for anger, the debate there was less heated; perhaps that's the benefit of a functioning democracy where governments change hands.
Ugandn MPs have a key role in good governance of the oil sector, but they need much more support in order to succeed and aim at the right targets. There is cause for optimism in that many MPs who attended the training have committed to learning more and sharing that knowledge with their constituents.
Perhaps, with work, in 10 years time the development and aid workers traveling the London-Entebbe "do-gooders express" will be replaced by businessmen looking to set up shop in a diversified and growing economy.
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