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Are we ready for the first oil next year? 

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Onesmus Mugyenyi, the deputy executive director of Advocates Coalition for Development and Environment. PHOTO/ FILE

Once the oil begins flowing, the government will be pocketing $ 2 billion in revenue from the resource every year. However, in an interview, Onesmus Mugyenyi, the deputy executive director of Advocates Coalition for Development and Environment (ACODE), also the head of the Environment and Natural Resource Governance Programme, told Prosper Magazine’s Ismail Musa Ladu that the success of the lucrative but highly secretive sector can only be unlocked with due transparency, making a case for the sector players, including the government to adhere to the basic principles of Extractive Industries Transparency Initiative. Excerpts below … 

There has been a lot of talk about the Extractive Industries Transparency Initiative (EITI). Why?
The whole idea of the Extractive Industries Transparency Initiative (EITI) came about after realizing that many countries have valuable natural resources such as minerals, and oil and gas, but citizens are oftentimes not benefiting from these resources.

You must have heard of the “paradox of plenty” referring to countries with abundant natural resources but are poorer than those that lack natural resources. So this is how EITI came up, initially with a handful of countries. Now, with its International Secretariat, based in Oslo, it supports countries in implementing a published set of requirements, which is currently being implemented in 57 countries around the world, including Uganda.

You spoke of standards, what are they and why are they important for Uganda?
It is essentially a basic principle. The standard requires disclosure of information across or along the extractive industry value chain. This means from the point of extraction to how revenues make their way through the government, and importantly how they benefit the citizens.
For example, transparency is crucial in extractive business. Governments must be open in the way the contracts are awarded. Companies or entities that will mine the minerals must be known. And so is the entity that will exploit the oil resources? 
Is the entire process open? 
And is it competitive? 
Are people involved in these sectors there on merit or through patronage? 
Do we know what has been mined in terms of quantities and value? Is there value in what we have mined? These are some of the things that EITI looks to cure or help navigate. 
This is important because then you get to understand how much is being exported or processed before export. It will also help in determining accurate accrued revenue from the resource and it can be applied to service delivery to improve people’s livelihoods.

So it’s all about financial accountability, right?
That is correct. But we are also evolving. This means they are now going strong into environmental and gender accountability as well. We believe extractive resources should be beneficial to everyone.

Is Uganda living by EITI expectations?
Uganda joined EITI in August 2020, fulfilling the requirement of publishing a work plan. To comply with Uganda’s national priorities. EITI intends to strengthen the governance of Uganda’s extractive industries to benefit current and future generations. 
The policy focuses on collecting and utilizing the appropriate revenues to create long-term benefits for the country, something the government says it is committed to doing. One area where we have progressed is in public participation. 

Recommendations have been made to avail contracts to the public to know the position and role of the government and the players involved in the grand scheme of things. 

The government has agreed to this, saying the contracts will be published as long as the company has no problem with it. The companies have also agreed to this for as long as some of the sections that are sensitive due to business interest may not be published. Despite this concession, no contract has been published yet and this is hurting Uganda’s score. 

Is Uganda moving in the right direction with its mining prospects ahead of commercial production of oil resources in 2025?
In terms of legal reforms in mining, some work has been done.  We have a new progressive mining law that has some good transparency clauses. Now the process of putting regulations for its implementations has been delayed and that is problematic because it will leave the door open for Illicit Financial Flows (IFFs). As a result, a lot of money is already being lost. 

Then we still have issues with value addition. Most countries that have benefited from their minerals add value to it. This requires some good investment. 

The national mining company is supposed to be the vehicle that drives this in terms of improving the sector and moving it into value addition. 
However, we don’t have it up and running yet. Some money allocation has been made in the budget for its establishment, but until it happens we don’t have it.   

As for oil and gas, there is a lot of progress in terms of the legal and institutional frameworks. The challenge is the infrastructure. We must have the pipeline and the oil processing facilities moving fast. 
However adequate resources to expedite these works remain a big challenge. Most financiers can’t give us money and we are resorting to other lenders, some of whom are very expensive.  

Do you think we can produce oil by 2025?
From where I stand, I don’t think we will have commercial production of our oil by 2025 which is just next year. I think we are behind schedule. 
We have not accessed all the necessary resources to progress at the speed that we would like. 
On the refinery, I know we have interested investors but there is no commitment to suggest that the refinery will be up and running anytime soon. I think it could take us about three more years to be ready to go.