Uganda struggling in oil, gas and mining governance – Report

Uganda struggling in oil, gas and mining governance - Report
Oil well. The report call for more transparency and implementation of laws on oil, gas and mining. Courtesy Photo.

Uganda has been named among countries that are struggling to adequately govern their oil, gas and mining sectors. The 2017 Resource Governance Index released today surveyed sixty six countries including Uganda. It found that the countries were weak, poor or failing in their governance of extractive industries.

The cross-country study of extractives governance released by the Natural Resource Governance Institute (NRGI) found that less than 20 percent of the 81 countries assessed achieved good or satisfactory overall ratings.
It is based on new research into how countries’ governance affects their potential to realize value and manage revenues from their resources.

The Index data show that Norway exhibits the best governance of natural resources, followed closely by Chile, the United Kingdom and Canada in the top-most “good” performance category.

Eritrea exhibits the worst resource governance and receives a failing grade in the index, with Turkmenistan, Libya, Sudan and Equatorial Guinea among others also rated failing.
Burkina Faso places highest among the low-income countries studied; its mining sector ranks 20th overall.

Uganda’s oil and gas sector scored 44 of 100 in the 2017 Resource Governance Index (RGI), placing it 51st among 89 assessments in the index.

The results according to the report was worsened by governance gaps in the extractive sector components and improved slightly by the enabling environment.

The report says early years of exploitation have been marked by uncertainties related to investment conditions and infrastructure development with neighboring countries, and resistance by local communities.

Daniel Kaufmann, Natural Resource Governance Institute president and CEO said is encouraging that dozens of countries are adopting extractives laws and regulations, but noted often these are not matched by meaningful action in practice

“Good governance of extractive industries is a fundamental step out of poverty for the 1.8 billion poor citizens living in the 81 countries we assessed in the Resource Governance Index,” he said.

The gap between law and practice is larger in countries where corruption is systemic, the index found.

The 2017 Resource Governance Index comes at the time when Global Witness has just released findings of an investigation unearthing what it called massive corruption in Uganda’s Directorate of Geological Surveys and Mining.

Global Witness in a rep[ort released at the end of may questioned dealings of Africa Gold Refinery based in Entebbe. It said businessmen, including a former government minister, Richard Kaijuka and the brother-in-law of Salim Saleh, have been processing and exporting hundreds of millions of dollars’ worth of gold, suspected to be from the Democratic Republic of Congo (DRC) and South Sudan, as well as Uganda, paying little tax in the process.

Global Witness can revealed that African Gold Refinery (AGR) processed and exported over US$200 million worth of gold from Uganda, paying only half a million dollars in tax and failing to publish information about where it came from.

Edwards Katto, the Directorate of Geological Surveys and Mines (DGSM) Commissioner, reportedly told Global Witness that the DGSM “has not issued any export permits” to Africa Gold Refinery (AGR)

Global Witness also named businessman, Moses Kamuntu over alleged involvement in an Iron Ore after getting permission from the Directorate of Geological Surveys and Mines (DGSM) to export tens of thousands of tonnes of iron ore despite a ban on exports after apparently paying for an audience with the President

Kamuntu allegedly paid US$10,000 to a third party to get a meeting with the President; got permission to circumvent a presidential ban on iron ore exports; avoided taxes/ royalties by exporting minerals as samples; and dodged regulations in order to re-export Congolese minerals labelled as Ugandan.

Press reports this week indicated that President Museveni cancelled Shs600b mining project of a Chinese company, Kilembe Mines after he learnt that a former minister was bribed $1m. Natural Resource Governance Institute calls upon governments to support key transparency measures (including compliance with open data standards) and for them to adopt and implement laws requiring the disclosure of the identities of the true beneficiaries of oil and mining companies.

URN