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Last minute scramble to salvage Petroleum Bills

More than 140 Ugandan members of parliament gathered in the Munyonyo Speke Resort today to ‘harmonise’ their positions ahead of the expected parliamentary debate next week on the two Petroleum Bills that were tabled in February.

The event was convened by the Parliamentary Forum on Oil and Gas (PFOG) which has criticised the draft laws more strongly than the Natural Resources Committee recommendations published last month.

PFOG, in common with many civil society groups, is calling for more limits on executive power and for stronger environmental and transparency provisions.

It emerged that PFOG met on Wednesday evening with the Natural Resources Committee and Ministry of Energy and Mineral Development officials in an effort to hammer out compromises on key issues.

“They’re making concessions in some areas but digging in their heels over others,” PFOG Chair, Theodore Ssekikubo (NRM, Lwemiyaga County, Ssembabuule) told Oil in Uganda.

Today’s large gathering of MPs was intended to advance a ‘harmonisation’ agenda, but significant differences of opinion remain.

“The way we were proceeding in the house, it was going to take us two years to pass one clause,” Deputy Speaker, Jacob Oulanyah, told the parliamentarians in a short, opening address.  Whilst Oulanyah also stressed the democratic importance of open and wide ranging debate, the apparent purpose of the meeting was to encourage convergence towards a consensus as a prequel to the parliamentary debate.

National Oil Company

One area of broad agreement among participating MPs was that the proposed National Oil Company (NOC), intended to advance Uganda’s commercial interests in the extraction, processing and marketing of petroleum resources, should be entirely state owned, rather than allowing share purchases by private investors, as the Bill proposes.

“Once you open the window for the sale of shares, you know that you are doomed,” Hon. Ssekikubo told participants, citing the National Insurance Corporation and National Housing Corporation as past cases where problems arose after share issues.

The National Resources Committee has also recommended that the NOC be fully state-owned.

Differences arose, however, over the appropriate legislative instruments.  Hon. Abdu Katuntu  (FDC, Bugweri County, Iganga) and some others argued that the NOC should be established by a separate Act of parliament.  Katuntu emphasised the need for “a detailed legal regime that will govern the institutions we are creating.”

Whilst many of the MPs present agreed that it was important to take the time necessary to get the legislation right, others countered that it could take “years” for new legislation to be drafted.  They were more inclined to urge that guiding governance principles be embedded in the ‘upstream’ Petroleum Bill, which proposes to establish the NOC, and that details be defined in later Schedules and Regulations.

Authority or Commission?

There were also signs of divergence over the other statutory body proposed in the upstream Bill—the Petroleum Authority, which will be the industry regulator.

PFOG’s position is that this should not be an Authority but a Commission—a body with higher administrative status, whose members would be appointed directly by the president, with parliamentary approval.  The Authority proposed in the Bill would be appointed by, answerable to, and subject to ‘directions’ from the minister.

PFOG also proposes trimming the powers of the minister.  In the Bill, those powers include granting and revoking oil exploration and production licences, negotiating petroleum agreements and approving oil companies’ field development plans.  PGOF says those powers should be given to the Commission experts rather than vested in an individual and that the minister should be responsible for overall policy direction rather than negotiating specific deals.

Whilst participants showed considerable support for the principle of parliamentary oversight, some argued that the ‘Authority’ versus ‘Commission’ debate turns on a merely cosmetic difference, while others held that it would be difficult for the minister to govern effectively if she or he had no powers of appointment and direction over the regulator.

Important differences evidently remain.

NRM caucus

Some of these may be resolved in the ruling National Resistance Movement (NRM) caucus meeting that is expected to take place before parliament reconvenes next week.  Today’s meeting, insiders say, was geared largely towards influencing the NRM caucus discussion.

Although it commands an overwhelming majority in parliament, the NRM is widely reported to be a politically fragmented party, lacking, as President Museveni  lamented in his address to parliament last year, its former ‘discipline.’

Many commentators have noted that younger NRM legislators can see that their political futures will be much longer than the remaining span of their leader’s and, whether opportunistically or honourably, see oil as an issue on which to take a stand.

The behind-closed-doors caucus meeting is thus likely to determine whether ‘party discipline’ prevails in pushing through the Petroleum Bills or whether NRM MPs may buck the executive in demanding significant amendments.

‘Development partner’ dance

The parliamentarians’ workshop, which took place in Uganda’s most luxurious and expensive conference centre, was funded by the Democratic Governance Facility—a multi-donor fund that, after decades of donor praise for Uganda, is attempting to address ‘governance’ issues that have increasingly tarnished the country’s international standing.

In a separate development, according to an international donor source, ‘development partners’ are considering making a joint statement on governance aspects of the Petroleum Bills. Development aid donors, the source says, have long been reluctant to take a public position that could be seen as interfering with Uganda’s internal affairs, but have been nudged towards expressing their views by a Global Witness memorandum that criticises their silence.

Further pressure comes from a breaking scandal in the Office of the Prime Minister (OPM), a major coordinator of and conduit for international donor funding.

According to detailed and prima facie plausible allegations from OPM staff, widely circulated by email this week, senior OPM officials have been salting away funds from several European donors into a ‘forgotten’ bank account that some believe may be linked to the president’s family.

This adds pressure on donors to insist that the flow of money from taxpayers in their own economically beleaguered countries must be strictly conditional upon efforts to stem the tide of rent-seeking and corruption in Uganda.


Report by NY