Uganda has been confirmed as a member of the Extractives Industry Transparency Initiative (EITI), a global standard body that promotes transparency, accountability and good governance in the management of extractive industries, such as oil, gas and minerals.
Much as it has a number of advantages, some sector players have cautioned the Government regarding the move.
Uganda becomes 54th member and the 26th in Africa to join EITI.
Going forward, the country will not have any confidential information regarding its extractive sector.
Disclosure
Uganda is now required to disclose information along the extractives industry value chain, including awarding of extraction to the way revenues make their way through the Government.
In addition, the Government will also be required to disclose how the natural resources benefit the public.
Joining the EITI implies that Uganda has agreed to publish the processes, royalties, contracts, licences and revenues obtained in the extractives sector to the public.
Through participation in the EITI, countries agree to a common set of rules governing what has to be disclosed and when.
As a new member, the Government has been given 18 months to come up with a harmonised report on the sector to the international body. Thereafter, the country will then publish timely annual reports on the sector.
In addition, all mining and petroleum companies (both government and private), will be compelled to give its operations, contracts awarded and the terms, volumes they produce and the profits to the Government and public.
The news of Uganda’s becoming a member of the EITI was confirmed in a statement on Wednesday following successful application by Uganda in July.
Saul Ongaria, a senior economist with the Ministry of Finance, who is also the chief co-ordinator of the EITI processes at the ministry, said: “It is now mandatory that all mining and petroleum companies in the country declare everything.”
In the 18-month period, he said, the Government has been tasked with reconciling all the data at its ministries, departments and agencies (MDAs) in the extractives sector.
In addition, he said, each of the MDAs are also required to publish using online platforms.
For private companies, Ongaria said, it will be mandatory for them to declare everything. “We are hopeful that joining EITI, will increase our revenues now that everyone has to declare,” he said.
EITI secretariat reacts
The development was also confirmed by Leila Pilliard, the EITI communications officer at the EITI International Secretariat in Oslo, Norway.
In a letter to our reporter, Pilliard said: “EITI intends to help Uganda promote understanding of natural resource management, strengthen public and corporate governance and provide the data to inform greater transparency and accountability in the extractives sector.
In each country that has joined the EITI, a multi-stakeholder group, composed of government, companies and civil society supports implementation of the EITI standards,” she said.
However, Uganda will only be compelled to declare proceeds or deals in the extractives sector got after joining the EITI.
Going by this standard, Uganda will be required to make public what the country will offer to international oil companies which are set to undertake Final Investment Decisions (FID), for the refinery and pipeline projects.
Both the Government and oil companies will have to publish the production-sharing agreements and transport tariffs for the deals.
Good news for Uganda
James Muhindo, the national coordinator of the Civil Society Coalition on Oil and Gas (CSCO), believes the move will attract real investors in the mining and minerals sector, as opposed to having briefcase companies.
“Now the public will be able to account for every coin received. It will also eliminate cases where individuals decline to remit taxes,” he said.
Winfred Ngabiirwe, the executive director at Global Rights Alert, said: “This is a breakthrough. The EITI has standards on gender and women affairs, as well as environmental issues, which must be followed. These will shape the sector.”
Both agreed that Uganda should ensure participation of women and marginalised groups, as it is required by the EITI, for them to benefit.
A word of caution
However, a senior government official, said the Government has rushed to join the EITI.
“The EITI can be used to arm-twist the Government and award a contract to a certain company. I think we rushed, we should have done it after the major deals in the country are signed,” the source said.
Going forward, the source said, the country will be dancing to decisions made by EITI and foreign powers to undertake all projects.
EITI standards
Under the new standards, the transparency body requires member states to address issues of gender, environmental issues, contract transparency and state-owned enterprises in the sector.
It also requires full, independent, active and effective participation of civil society.
The second requirement is mainly on the legal and institutional framework, including allocation of contracts and award of licences.
Under this, it requires disclosures of information related to the rules for how the extractive sector is managed, enabling stakeholders to understand the laws.
Thirdly, EITI calls for disclosures of information related to exploration and production, enabling stakeholders to understand the potential of the sector.
On revenue collection, the transparency body recommends a comprehensive reconciliation of company payments and government revenues from the extractive industries.