PRESENTATION BY BUSINGYE NELLY PROGRAMME OFFICER, AFRICA INSTITUTE FOR ENERGY GOVERNANCE 6TH NOVEMBER 2009 HOTEL AFRICANA A critical analysis of the relevance of contract transparency in the implementation of Extractive Industries Transparency Initiative (EITI) Case Studies of Nigeria and Azerbaijan Lessons for Uganda 1

Outline of the Presentation 2  Introduction  Objectives of the Study  Research Methodology  EITI and Contract Transparency  EITI and Contract Transparency experience in Azerbaijan and Nigeria  Lessons for Uganda  Conclusion  What should Uganda do?

Introduction  The public has a right to full access of extractive industry contracts  EITI and Contract transparency are important components of oil governance  Civil Society engagement critical for natural resource governance  There is need to avoid the “ resource curse” syndrome 3 Hands displaying Oil spills in the Niger delta

Objectives of the Study 4  To examine how the transparency of the contracts affects the EITI process and civil society’s participation in promoting revenue transparency and accountability  To provide lessons for Uganda for effective management of revenues in the extractive sector in Uganda

Research Methodology 5  Nigeria and Azerbaijan as case studies  Written interviews  Phone call interviews  Desk Research  PSA Contract- Azerbaijan  PSA Model contract Nigeria  EITI templates; Nigeria and Azerbaijan  Data was collected from CSOs, IFIs and International NGOs

EITI and Contract Transparency  EITI is a voluntary, government- led initiative in which a government agrees to disclose its resource revenue receipts and companies disclose their revenue payments.  Initiative is overseen by a multistakeholder group comprising of government, companies and civil society  28 countries have been publicly recognised as EITI candidates countries having publicly committed to implementing EITI.  Contract transparency encompasses public disclosure beginning with the contracting phase  Significant information related to, signature bonuses, royalities important for EITI reporting  Disclosure of contracts enhances EITI reporting i.e revenue terms in the contracts matching with revenue payments in the EITI reports which will encourage public oversight 6

EITI and Contract transparency experience in Azerbaijan  Joined EITI on 17 th June 2003  Azerbaijan receives information about revenues generated by the oil and gas industry twice a year  26 oil contracts are said to be in the public domain. Once signed, contracts are ratified by Parliament  Research showed many of the contract terms are reflected in the EITI reports.  Availability of contracts in Azerbaijan has had a positive impact on the participation of civil society in promoting good governance 7 Oil and gas fields in Azerbaijan bounded by caspian sea

EITI and Contract transparency experience in Nigeria  Oil in Nigeria was discovered in 1956 and is the 8 th largest producer of petroleum in the world  Nigeria signed up for EITI in February 2004  EITI reports; Nigeria produced an EITI report in 2005 covering 1999 to  In 2009,Nigeria released a new EITI report; Nigeria EITI report shows over 5 billion US$ financial discrepancies and outstanding payments  Information in the EITI reports missing  No public disclosure of contracts  CSOs have no access to contracts  CSOs engagement in EITI is minimal  Freedom of information Bill not passed 8 A Map of Niger Delta Showing Oil Fields and Pipelines

Lessons for Uganda 9 Uganda National oil and gas policy objective VI states Uganda’s willingness to join the initiative. But Government has not yet adopted the initiative  Promotes effective public participation  Improved investment climate  Creates a systematic framework for collaboration  Creates a culture of public scrutiny around company payments and government revenues  Builds trust between governments, companies and the public  Enhances international credibility  Increases prosperity and economic well-being  Advances democracy and accountability  Affirms commitment to fighting corruption  Benefits to CSOs resulting from increased amount of information in the public domain

Conclusion 10  Revenue transparency fundamental for oil governance “You cannot manage what you cannot measure”  Contract transparency enhances EITI having a direct impact on economic and social development  Information empowers people to demand and promote responsible management of resources

What should Uganda do? 11  Government of Uganda (GOU) should sign to EITI  GOU should disclose the oil contracts to enable effective participation from the public  The Parliament of Uganda should demand for the disclosure of contracts  Pro-active civil society: Lobby Parliament, oil companies, and selected ministries in government to promote contract transparency and revenue budget and transparency  Sound legal systems need to facilitate transparency and accountability.  Civil society in Uganda should establish a community prescence in the Albertain Region if they are to have a significant impact on the local communities. The region comprises of grassroots communities.  The media in Uganda needs to appreciate the extractive industry and report more on the industry in order to generate public debate on revenue management.  IFIs put pressure on government on issues of transparency and accountability.  Academia. Research tailored to extractive industries, transparency and accountability

Thank you 12