Proposed oil laws meant to allow Uganda conduct new licensing rounds will not be passed by parliament soon due to unexpected lengthy consultations and insufficient knowledge of the new petroleum industry, the lawmaker overseeing the bills told Reuters. Uganda found oil along its border with the Democratic Republic of Congo in 2006 and London-listed Tullow Oil and its partners are expected to start small scale production later this year.
In October Uganda's parliament passed a resolution imposing a moratorium on all new petroleum deals until new laws regulating the sector are put in place. In February, the government brought two bills covering both upstream and downstream sectors to parliament, where they have been stuck with a committee supposed to scrutinise and return them to the House for final debate and passage within 45 days.
"When we received these laws for review we were keen on meeting the deadline of 45 days," said Michael Werikhe, the parliament natural resources committee's chairman. "But we soon discovered that there were several contentious issues on which we had to make extensive consultations yet we also needed first to conduct workshops to educate MPs (members of parliament) on the oil industry because it's a new sector."
One of the laws, the 2012 Petroleum (Exploration, Development and Production) Bill, gives the oil minister wide-ranging powers, including to conduct negotiations with oil firms, endorse and administer petroleum agreements and arbitrate on public complaints. Another contentious issue is that there are insufficient safeguards in protecting the environment. Werikhe said they were now working on draft reports on the two bills and expected to return them to the House in late July. The government estimates Uganda's reserves at 2.5 billion barrels of oil. Tullow Oil and its partners French oil major Total and Chinese group CNOOC plan to invest $10 billion and to start production in 2016. Werikhe said broad consultations were needed to ensure the laws carried robust safeguards against environmental degradation and sufficient oversight on executive powers in managing the sector.
"We want to come out with laws that have as broad goodwill as possible, no one will be left out otherwise we can hurry and then unrest starts as soon as oil begins to flow," he said. East Africa has become a hot petroleum exploration frontier after Kenya too struck commercial oil deposits early this year. Extractive industries transparency watchdog, Global Witness, has criticised the proposed laws as concentrating too much power in the executive branch and not requiring government to disclose crucial information.
"The minister is granted extremely extensive discretionary powers over every major decision," George Boden, campaigner at Global Witness, told Reuters. "What is equally concerning is the lack of guarantee that crucial information will be made publicly available and the lack of provision for public oversight."