CRITICAL REFLECTIONS ON OIL GOVERNANCE DISCOURSE IN UGANDA Responsibility, Accountability and Security Godber Tumushabe Executive Director/Policy Analyst Advocates Coalition for Development and Environment (ACODE) High Level Policy Dialogue on Oil Governance and Biodiversity Conservation in Uganda Kampala: February 22, 2010

Structure of the presentation o Theoretical Underpinning of the presentation o Consensus issues in the current oil discourse o Outstanding concerns of public interest o Responsibility o Accountability and transparency o Revenue sharing and balance of power o Environmental security and sustainability o The BIG PICTURE SYSTEMIC FAILURES- failures militate against responsible exploitation of oil. o Building a new partnership between government and citizens on oil governance.

Key Elements of governance Critical for Oil Governance o State Capacity – related to a states’ power and ability to enforce rules that are consistent and predictable. o Rule of law – that establishes among other things property rights and limits the states’ discretion in manipulating those rules. o Democratic institutions – that further limit exercise of state discretion by holding governments accountable to their citizens. o An active citizenry - devoid of fear and manipulation that acts as front line defenders of democracy [modified from Francis Fukuyama]

Causes of Governance Failures Bad Laws Low Public Sector Capacity Political Market Imperfections Uninformed Citizenry Political Credibility Polarization

Consensus Issues on Oil Governance in Uganda o Oil discovery is a tremendous economic opportunity for Uganda. Estimated consumption -10,000 barrels of oil/day. Estimated petroleum import bill of UGX30 billion annually AND THEN the export of excess.

Consensus Issues on Oil Governance in Uganda o The potential revenue windfall could help the country address major production infrastructural constraints.

Consensus Issues on Oil Governance in Uganda Government and industry are less than transparent in their current dealings on oil. In this debate, it is only GoU officials who believe that they are more than transparent! “Be transparent on oil exploitation” – New Visio editorial, Feb. 19, “Spare Ugandans the ‘Oil Curse’” – Saturday Monitor editorial, Feb. 20, Pending court cases.

Consensus Issues on Oil Governance in Uganda And then the BIG IF - “Oil revenues will not be used for consumption and importing perfumes, wines, cars and paying salaries. We shall use it as a finite resource to create infinite capacity for Ugandans,” BUT public funds have been used to buy cars and pay salaries and build the current political patronage network! “If Museveni keeps his word, the nation that has long been content as an economic underdog could level the playing field.”

Outstanding Concerns of Public Interest Responsibility and Accountability The current institutional architecture blurs lines of responsibility and accountability. The parliament has taken a spectator role and has consistently been ignored on details concerning oil exploitation activities. The fusion between the political, legislative and administrative responsibilities are inconsistent with accountability. [Best illustrated by the CHOGM Case]

Transparency and Access to Information o Contestation over the disclosure of PSAs – disclosure the key pre-condition to mobilizing citizens and CSOs around a common national objective o Failure to conclude subscription to the Extractive Industries Transparency Initiative – in spite of the policy commitment (objective 6 of the policy). o Access to drilling sites by environmental inspectors and relevant legislators.

GoU-Corporate blackout conspiracy! o Government of Uganda:- confidentiality clauses militate against release of the PSAs. o Oil Companies:- we can release the agreements if only GoU consented? o The big brother syndrome- Government knows what is best for you!

Source: World News Report [Sunday Feb. 21, 2010 at 06:15 hrs] Media Frenzy in the Face of State-Corporate Conspiracy of Silence

Revenue Sharing and Balance of Power Central government control of oil revenue will increase the imbalance of power between the centre and local governments. Under the current budget architecture, app. 70% of the national budget is spent by central government and only app. 30% by district. This dependence is the foundation for building political patronage, undermines democracy and local accountability. A new revenue sharing structure must target at destroying and eliminating the big brother mentality.

Revenue Sharing and the Balance of Power: Sharing What?

o The environmental safeguards process has been relegated to the back seat – or at least there is no reliable information on the progress of the Strategic Environmental Impact Assessment (SEIA) process. o A selected review of the current EIA’s show that they do not adequately address social and environmental security concerns in the event of destruction of the environment and biodiversity. Environmental and Livelihood Security & Sustainability

Oil flaring by Shell near Warri in Nigeria Environmental and Livelihood Security & Sustainability o Environmental oversight agencies have either taken a back seat or just adopted a silent posture. o No specific corporate commitments on environmental performance deposit bonds or other environmental restoration commitments.

BIG PICTURE SYSTEMIC FAILURES 6 Reasons Why Uganda Could Catch the Dutch Disease

1.Breakdown of Trust in Government ----eroded by endemic corruption

1.Breakdown of Trust in Government ----eroded by vested interest in land

2.Growing Ethnic Nationalism – increasingly seen as a threat to central authority

3.The Character of the State of Uganda Uganda increasingly seen as a failing State

4.Eroding Systems of Accountability. o Inter-institutional accountability and responsibility o Fusion between executive, legislative and administrative authority –the Global Fund/CHOGM experience. o The supply-demand conundrum- civic incompetent citizenry incapable of providing frontline defense for democracy and good governance. o A disempowered local government leadership that laments more than taking responsibility.

5.State incapacity to arrest the trend of environmental degradation o Forest cover has been declining for most of the last two decades. o Failure to restore critical wetland ecosystems. o Widespread land degradation and soil erosion causing widespread economic and livelihood losses. o The increasing menace of polythene and polythene bag materials. o The State and state agencies acting more as agents of industry.

6.Regime Survival Politics o Public policy and decision-making in the petro-political era will increasing be defined by regime survival politics.

Building State-Citizen Partnership on Oil Governance o Responsible exploitation of oil resources is only possible when there is partnership between State agencies and citizens’ institutions. o Citizens’ voices are expressed through civic organizations such as NGOs, independent think tanks, religious groups, traditional institutions, etc.

Building State-Citizen Partnership on Oil Governance o GoU Uganda can change the current discourse on oil by becoming more transparent in its dealings with oil companies. o Government simply needs to provide more information including: o releasing the PSAs, ensuring proper and timely conduct of SEIA; o addressing issues of revenue sharing; o moving expeditiously and transparently on enacting appropriate legislation. o Perceptions of conspiracy between state agencies and the oil companies is a breeding ground for a potential oil curse.