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Analysis: New law fails to ease oil concerns in Uganda


IRIN NEWS

KAMPALA/NAIROBI, 13 December 2012 (IRIN) – Uganda’s parliament recently passed a law to govern the exploration, development and production of the country’s estimated three billion barrels of oil, a resource whose extraction will directly affect the livelihoods of tens of thousands of people.

While the law streamlines the burgeoning industry, analysts have raised concerns over transparency and over who controls the sector.

“The new law helps set clear guidelines under which the oil sector is to be run and managed, and makes clear who is in charge of what roles,” said Tony Otoa, director of Great Lakes Public Affairs (GLPA), a Uganda-based think tank focusing on oil and governance. “However, there are some concerns about transparency and too much power within the oil industry in the hands of the president.”

The bill was passed on 7 December after weeks of wrangling over its controversial Clause 9, which gives the energy minister wide-ranging powers, including authority over the granting and revoking of oil licenses, negotiating and endorsing petroleum agreements, and promoting and sustaining transparency in the petroleum sector. Many members of parliament (MPs) felt these powers should be held by an independent national oil authority.

“Essentially, the standoff, which has ended, was about the withdrawal of trust from a government that is battered by corruption scandals. Also the way the cabinet operates is that, in the past, the feeling has been that some key ministries, like finance, are effectively run by the presidency after being stuffed by yes-men or -women. The pushback against Clause 9 also comes as the Central Bank opened its vaults to a large withdrawal in 2010 [US$740 million to buy six fighter jets] only for approvals to be sought retrospectively,” said Angelo Izama, a Ugandan journalist and oil sector analyst.

“Loss of trust”

“This loss of trust is behind the resistance to greater control by the executive,” he added. “The executive has not been a bad shepherd of the process so far. Uganda’s negotiating position has been tougher with the oil companies, ironically, without the oversight of parliament. However, public scandals elsewhere have negatively affected the ability of the president to convince lawmakers – especially of his party – that he means well.”

A number of donors – including the UK and Ireland – recently suspended aid to Uganda following allegations of deep-rooted corruption in the Office of the Prime Minister. The prime minister, the former energy minister and the foreign affairs minister were all accused of taking kick-backs from oil companies in 2011, charges that remain unproven but that nevertheless damage the reputation of the government.

“The country lacks trust in the state… Institutions and officials have lost legitimacy, and for such an important bill to vest too much power into a political appointee is a recipe for disaster,” said Stephen Oola, a transitional justice and governance analyst at Uganda’s Makerere University Refugee Law Project.

“Granting and revoking licenses and negotiations are technical in nature. We need an independent commission or authority made up of people of good competence, technical ability and experience, and good morals to guard our oil,” said Frank Gashumba, a local businessman and social activist.

Proponents of Clause 9 say licensing powers are safer in the hands of the cabinet than under an oil authority. “The authority is open, easy to bribe and manipulate. Cabinet is bigger than the authority – members of the executive are answerable to Ugandans because they are elected leaders,” said Kenneth Omona, a ruling party MP.

Those opposed to it say they will challenge the law, which was passed with 149 votes in favour and 39 against; some 198 MPs did not turn up to vote.

“The fight is not complete; the passing of the bill is liable to be challenged in courts of law,” said Theodore Ssekikubo, ruling party MP and chair of the parliamentary forum on oil and gas. “If we fail to go to court, we shall subject the matter to a referendum for all Ugandans to pronounce themselves on this strategic resource. We want to ensure transparency and accountability in the oil sector.”

Transparency

There are also concerns about the law’s confidentiality clause, which limits the amount of information accessible by the public.

“The law is lacking transparency – it imposes confidentiality on officials working within the sector, even after they leave office, so there is no opportunity for whistle-blowing or for the public to have access to information on, say, production-sharing agreements,” GLPA’s Otoa said.

He noted that Uganda still hasn’t joined the Extractive Industries Transparency Initiative (EITI), an international scheme that attempts to set a global standard for transparency in oil, gas and mining, further compounding the sector’s lack of transparency. As a member of the EITI, Uganda and oil companies involved in the country would be required to publish all payments and revenues from the industry.

While Total and the China National Offshore Oil Corporation (CNOOC), two of Uganda’s major oil partners, are listed on Wall Street and are therefore subject to the Dodd-Frank Wall Street Reform and Consumer Protection Act – which requires disclosure of payments relating to the acquisition of licenses for exploration and production of oil, gas and minerals – the Irish firm Tullow Oil, another of Uganda’s main oil partners, is not under any similar obligations.

“I am worried we [legislators] and the public can’t access and scrutinize these agreements. You can imagine the recently negotiated and signed oil agreements have not been accessed by the public, not even by members of parliament,” Beatrice Anywar, former shadow energy minister, told IRIN.

The impact of the oil sector has so far been most acutely felt by communities around Lake Albert, thousands of whom have had to move – some willingly and some forcefully – to make room for an oil refinery, which is expected to take up 29sqkm and displace some 8,000 people.

Land issues

“The government is prosecuting the refinery resettlement by the book. However, managing public expectations and the process of multiple decision makers in Uganda’s complex land legal system [Uganda has multiple land systems, including customary, leasehold and freehold] has contributed some volatility to the process… What is adequate compensation? And who determines that? Is it the market or should this be done by the government?” said journalist Izama.

“As a partner to the oil companies, it’s questionable too if the government can make the best decisions for the affected people as it would look to keep project costs fairly low,” he continued. “It is still a dilemma which is jurisprudential as well as political.”

He noted that much of the oil is in game reserves and a sensitive basin with lakes, rivers and a rare biodiversity, and borders the Democratic Republic of Congo, which could also pose challenges for peaceful production; there has already been some tension between the two countries over their boundaries within Lake Albert.

“The process of consensus-building is still weak, and regardless of how it’s arrived at, displacements will create uncomfortable realities, including land and job pressure.”

According to Otoa, Uganda’s lack of a comprehensive land policy makes compensation issues more complex. “We need clear land policies to ensure people are properly compensated – there is a Resettlement Action Plan in place, but it has not been implemented, and a draft land policy has not been actualized, leaving these communities vulnerable,” he said.

He noted that the lack of education among the local population, both in the oil-rich areas and the rest of the country, had contributed to the continued problems in the sector.

“We have focused too much on educating MPs on the implications and importance of good oil governance. We need to move to people-centred approaches and encourage dialogue in the public sphere, which will lead to people demanding accountability from their MPs and the government,” he added.

Ultimately, Izama said, responsible actions by the government will be the difference between Uganda’s oil making a significant impact on the country’s economy or causing conflict and greater poverty.

“Pressure on public institutions prior to commercial oil production is an effective way of counteracting the resource curse. If this public engagement falters, if the transition [from President Museveni to his successor] is volatile, some of the scenarios of the so-called oil curse are possible,” he said. “Overall the tensions are high, but responsible actions by public and political institutions like the past debate show progress is possible.”

Kenya: Procurement law set for review


 

Sunday Nation

By  TOM MOSOBA tmosoba@tz.nationmedia.com

August 18th, 2012

IN SUMMARY

  • The review is in response to a spate of court cases and controversies that continue to plague tendering for major public projects, including those in critical areas such as the forthcoming General Election, national security and infrastructure development, he said.
  • Local suppliers also want to use the window to seek legal protection against stiff competition from established foreign firms while a stringent appeals formula is being proposed as the best way to escape prolonged litigation among querulous bidding parties.
  • But the law society says corruption and lack of capacity in public entities, rather than the flaws in the law itself, were to blame for the procurement gridlock.

The procurement law is finally to be reviewed to remove bottlenecks in tendering for public projects and make it easier for private entities to transact business.

The ministry of Finance is spearheading the process to amend the Public Procurement and Disposal Act 2005 and attendant regulations, ostensibly to align it with the new Constitution, but there is the view that it is largely to fix growing tendering nightmares.

However, the Law Society of Kenya has cautioned against mutilating the law and has asked the government identify ways to address tendering loopholes and confront corruption which it says is the main issue.

Public Procurement Oversight Authority director-general Maurice Juma told the Sunday Nation in an interview that the agency and other parties have started on the review.

Mr Juma said the amendments would help plug a number of shortcomings and incorporate lessons learnt over the five years that the Procurement Act has been in force.

“A number of stakeholders’ views and input have been gathered and will inform the amendments envisaged in the new Act,” he said.

“At this point in time, views and comments gathered from stakeholders are raw proposals for amendments. The next step will be validation of these views through public consultative meetings with various stakeholders.

“It is only then that we will have specific and concrete proposed amendments that we can share with you and other interested parties,” he said when pressed for specifics.

The review is in response to a spate of court cases and controversies that continue to plague tendering for major public projects, including those in critical areas such as the forthcoming General Election, national security and infrastructure development, he said.

The push to amend the procurement law recently attracted the attention of Prime Minister Raila Odinga who said new legislation must be put in place urgently to cater for Kenya’s development needs.

The current one, he noted, was forced on Kenya by the International Monetary Fund and the World Bank.

The Sunday Nation learned that among the changes being sought by the private sector include the separation of the tender process for huge projects from the routine undertakings by ministries and public agencies.

Local suppliers also want to use the window to seek legal protection against stiff competition from established foreign firms while a stringent appeals formula is being proposed as the best way to escape prolonged litigation among querulous bidding parties.

Kenya’s Vision 2030 chief executive officer Mugo Kibati said the amendments were inescapable if the country is to move forward. “We cannot move this way, and I have made my point to the Treasury and the Public Procurement Oversight Authority,” he said.

Mr Kibati said tendering for infrastructural projects with a huge economic impact on the country should not be subject to the same kind of bureaucracy common in ministries and the same adjudicating committees involved in buying furniture and cars.

“The current law also encourages unnecessary and costly court suits and is short on the sophistication that is needed for some of the projects lined up to attain growth levels of a newly industrialised economy,” Mr Kibati said.

A new law that offers remedy to aggrieved parties but does not hold the nation at ransom or punish hard-working public servants at the behest of a few profiteers is what is desired, he said.

Kenya Publishers Association chairman Lawrence Njagi said the new law should clearly define the role of the public private partnership in procurement.

“For instance, to get value for money, we as publishers would like to be involved in the auditing of post- bidding services to ensure what was sold is actually delivered to the final consumers,” he said.

Mr Njagi said the 10 per cent country preference rule should also be operationalised to safeguard local manufacturers against undue foreign completion.

Public sensitisation

“The private sector would also like to be involved in public sensitisation because as it is now the task cannot be carried out sufficiently by the oversight authority,” he said.

But the law society says corruption and lack of capacity in public entities, rather than the flaws in the law itself, were to blame for the procurement gridlock. (READ: Public procurement a haven of graft, TI)

“There could be some justification for those advocating the amendments, but I must say that corruption remains the biggest threat, and therefore as a country we should be careful not to mutilate the stringent regulations to check the vice,” cautioned Mr Eric Mutua, the law society chairman.

“We should look at the bigger picture and demand that only minimal amendments be allowed,” he said. The chairman said many times government officials have overlooked legal counsel to engage in wheeler-dealing.

Earlier, Mr Juma reinforced the corruption claim and said it is a monster that all must be ready to face. He also said the penchant for shortcuts did not help matters.

“We have had instances where procuring entities are brought before the Public Procurement Administrative Review Board and advised to address various anomalies before they re-tender. When they re-tender, these entities ignore the advice of the Board and commit the same mistakes… In such cases, the law cannot be blamed for deliberate human failures,” he said.

On the positive, he said the high number of procurement cases and complaints filed with Public Procurement Oversight Authority and the procurement review board is proof that more people were now conversant with the procurement law and are aware of their rights.

 

Oil confidentiality arguments flawed


Blog entry
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The Observer

By Deus Mukalazi

October 23, 2011 23:01

The last few weeks have been characterised by running battles between the Executive and the Legislature over confidentiality of the oil contracts signed between the Government of Uganda and the oil companies.

This climaxed in the two-day heated oil debate where Parliament resolved that government desists from signing agreements with confidentiality clauses. Attempts were made by the executive to argue the case for confidentiality, citing commercial sensitivity of certain information in the contracts and confidentiality being the norm all over the world, as well as security reasons.

The MP for Ruhaama Janet Museveni even reasoned that Uganda could have her oil fields bombed if there was no confidentiality! The one million dollar question is: are oil contracts really that sacred that they can’t be shared?

While treaties, laws, regulations, and other legal documents defining the relationship between governments and private companies are public documents, oil, gas and mining contracts between governments and the extractive industries are usually shrouded in secrecy. In Uganda, these have been unavailable to citizens and it took frantic efforts for the signed production sharing agreements to be availed to Parliament and even then the content of these contracts was not to be shared outside Parliament.

There is a growing international call to make the terms of extractive industry contracts available to the public, and to establish new norms for what information is and is not disclosed in deals between government and industry. Proponents of transparency argue that the secrecy surrounding oil transactions in Uganda and government’s reluctance to share the oil contracts might be a precursor to the ‘oil curse.’

The oil curse is a popular reference to a situation of poverty, low economic growth, corruption and civil strife that has come to characterize natural resource rich countries in Africa like Liberia, Nigeria, DRC, Angola, etc.  Contract transparency is essential for the responsible management of natural resources and the potential for growth and economic development that those resources can provide.

The government, citizens and investors, all have to gain from contract transparency. Citizens’ suspicions of the hidden clauses will decrease, creating a more stable contract that is less likely to be subject to calls for renegotiation and better relationships with communities. It also allows citizens to monitor contracts in areas where they may be better placed than the government to do so, such as environmental compliance and the fulfillment of social commitments.

Contract transparency provides incentives to improve on the quality of contracting because government officials will be deterred from seeking their own interests above the population’s, and with time, government’s bargaining power would increase. There are already claims that the contract terms between the government and the oil companies were not consistent with international norms.

Secrecy only helps to fuel such speculation and hides incompetence, mismanagement and corruption. Ugandans have a right to know how their government is selling their resources. In Uganda, sub-soil resources such as minerals, oil, and gas are the property of the nation, not the individual owner of the surface rights.

Accordingly, contracts involving oil, gas and other mineral resources may cover a range of information to which citizens should rightly have access to, as owners of such resources. Contracts typically contain information about fiscal terms and the allocation of risk that are essential to understanding the benefits and risks – the real value of the deal.

Public contracts are essentially the law of a public resource, and the basic tenet of the rule of law requires that laws are publicly available. The size and scope of many extractive projects is so large that they directly affect the livelihoods of large populations for decades.

Where contracts create their own laws – because they modify existing laws, freeze their application or elaborate on outdated or incomplete laws – it’s all the more important to disclose their contents for democratic accountability.

Following several high-profile reports on contracts, national debates in a number of countries and campaigns by international organizations, Ugandans are increasingly aware of the critical role of contracts and some of their worst excesses.

Ugandans are also aware of the infrastructural development and benefits that transparency in managing diamonds has brought in Botswana.
So, in the face of mounting calls for transparency, those who fail to disclose, or to provide a plausible explanation for non-disclosure, are seen to have something to hide.

The author is coordinator, Publish What You Pay Uganda.
deusmukalazi@gmail.com

Nigeria: Jonathan orders screening of contractors


Vanguard

By Rotimi Ajayi

October 20, 2011

In a bid to reduce corruption and non-performing contracts in the Federal Civil Service, President Goodluck Jonathan  has ordered comprehensive screening of contractors and service providers for the Federal Government.

The directive was said to have been issued following a review meeting with some members of the National Economic Management Team after the recent retreat with members of the Organized Private Sectors where it was agreed that there was need to put sanity to awards of Federal Government contracts and jobs.

An indication towards the implementation of the Presidential directive was contained in a statement issued yesterday in Abuja by the Bureau of Public Procurement (BPP).

The statement issued by the Director General of the Bureau, Emeka Ezeh, pointed out that arrangements had been concluded to commence registration, categorisation and classification of all Federal Government contractors, consultants and service providers.

The Director-General stated that the project would revolutionise government procurement process and encourage more transparency and efficiency in the procurement process.

According to him, the objective of the database is to register, classify and categorize contractors, consultants and service providers as a platform of verification by Ministries, Departments and Agencies (MDAs), other entities, and interested organisations. It will also ensure that contractors, consultants and service providers of equal competencies and capabilities bid for specific jobs.

He added that the project would create an electronic interface with stakeholders and deepen the capacities of Ministries, Departments and Agencies (MDAs) and their leaderships to attain full compliance with the provisions of the Act in order to positively transform the economy of Nigeria.

He said, “the usefulness of the Act in Government’s obvious responsibilities, particularly in implementing strategic and sustainable plans to develop infrastructural facilities cannot be overemphasized. This is not just to fulfil a basis responsibility of government but also in order to attain the proposed Vision 20:2020.

“The benefits of the procurement reform process importantly correlate with the present administration’s transformation agenda.  This agenda, as articulated by government seeks to vigorously implement the initiatives or programmes that will enhance the Administration’s strategic plans for Economic Growth.

“The ultimate objective of the Bureau is to ensure that all Federal procurements are strictly done in compliance with the provisions of the Public Procurement Act, 2007, and that all ongoing projects are in line with sectoral targets and priorities. It is when viable ongoing projects are adequately funded, completed and commissioned that the populace will be the better for it.”

The Congo Brazzaville is moving towards decentralization


Congo-Brazzaville
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Afrique Avenir April 22nd, 2011

On April 19, the Congolese government has launched in Brazzaville a workshop to validate a national strategy for implementation of the decentralization policy. This policy is currently among the most important political reforms in the country.

Important as it is to President Denis Sassou Nguesso, the policy of decentralization will bring together administrations by constituents in the country where many areas remain isolated, including the creation of local government service. Its aim is also to promote the development of departments through meetings and elected local executive bodies. Read more

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