Why MPs must oppose secrecy in oil deals

In this era of rising petroleum prices, African oil is drawing new interest from major oil companies around the world, writes John Ghazvinian, author of Untapped: The Scramble for Africa’s Oil. In his book, this American writer, explores why Africa’s oil money has not trickled down to the people. As we are going to see in this column, when you read Ghazvinian’s book, you will certainly understand why Parliament has got to discuss the confusion in our nascent oil sector without delay. For if, MPs choose to politicise the oil debate, then, Ugandans should brace themselves for difficult times ahead because the evidence has shown that even with the oil exportation, corrupt African countries are getting poorer.

In fact, Ghazvinian argues that because of corruption in the sector, most Africans are seeing little benefit from the influx of these [foreign] oil drillers and investments. But Why? Well, the answer is obvious; it’s because of secrecy, a major driver of corruption in the oil sector. As a result of an economic paradox known as the “Resource Curse,” Ghazvinian says that in most of the African countries he visited, the people are often hurt by exports of their country’s oil. In some of these ‘cursed’ oil-producing countries, secret government deals with profit-oriented foreign companies, go bad and are often discovered when it’s too late. The ‘fat cats’ belch as the poor taxpayer grows thinner.

The good news is that in some oil-rich countries, there are firm steps being taken to address transparency challenges in the sector. For instance, this week, South Africa’s ruling African National Congress shelved the Secrecy Bill after a widespread outcry that it would muzzle accountability and worsen corruption in public offices. Even with its majority in parliament, the ruling party luckily listened to the wise counsel and backtracked on the obnoxious Protection of State Information Bill before it’s too late. This bill has crawled through parliament since 2008. But even after revising the bill 123 times, it remained ostracised by the people.

In Uganda, 166 MPs, more than one-third of the entire House, signed a landmark petition this week to re-call Parliament for an emergency session to discuss secret deals that have confused our budding oil sector. Apparently, the lead petitioners, Mr Theodore Ssekikubo (NRM, Lwemiyaga) and Mr Abdul Katuntu (FDC, Bugweri) have accused the Executive of hiding behind the confidentiality clauses in the contracts signed with various foreign oil companies to deny Ugandans information.

Confidentiality clauses notwithstanding, the disturbing question is; why our government does not want us to know what is going on with our oil? And if Parliament is part of the government, then why is it a complex matter for the Attorney General to share this information with MPs? In any case, why should the government cordon accountability if, there is nothing to hide? World Bank estimates Uganda’s losses to corruption at Shs500 billion per year. While that figure could be higher, with the oil revenue, there is fear that if the status quo remains, corruption will end up infesting all the major sectors of the economy.

In April, in this column under the heading: Why Secrecy is bad for oil sector I wrote that the hide-and-seek we see today in the oil sector has over the years allowed grand corruption to thrive in countries such as Nigeria, Guinea, Angola as well as Cambodia.

For instance, in Nigeria more than $400 billion of oil revenue has been stolen or wasted over the years. I wrote that this grand theft explains the volatility in the Niger Delta, a fragile region where effects of oil on communities and environment have been enormous. However, for Uganda, it is not yet too late. In fact, if MPs address the loopholes in the oil sector, we can still pick lessons from the cold realities in other African countries.

The natural resources sector has the potential to generate billions of dollars in revenues that can be used for poverty reduction and investment. But for Uganda’s case, this can only be achieved if the government stops hiding oil deals. Secrecy has created mistrust and suspicion in the way our government is handling oil matters.

For some time now, management secrecy has allowed corruption to thrive in our systems. This is why our MPs must unite in passing a resolution, compelling the government to release all the Production Sharing Agreements signed with foreign companies such that we don’t get problems in future.

Ending this secrecy problem in the oil sector and trusting the public will, of course, not be easy. But the government should know that the oil curse undermines the investment climate, raises costs for companies, threatens development and mineral security, and consigns millions of citizens in resource-rich countries to endemic poverty. But evidence suggests that transparency in extractive industries can play an important role.

According to the Revenue Watch Institute (RWI), a non-profit policy institute that promotes transparent, accountable and effective management of oil, gas, and mineral resources for the public good, oil, gas and mining resources have the potential to fuel the growth and development of resource-rich countries. Often this wealth may be captured by corrupt elites, damage the economy, reduce governments’ need to respond to their citizens and fuel conflict.

Looking ahead, as Parliament prepares to discuss the entire oil sector next week, our leaders should know that oil revenues turn out to be a curse; the day corrupt individuals in government choose to squander public funds meant for national development. However, where there is honesty, checks and balances, peace, stability and development will certainly flourish.

Having said that, if corruption is the most damaging disease that we must confront before the oil billions begin to surge, then accountability and transparency are the major cures. Otherwise, if our leaders choose to continue hiding the oil deals, then, the institution of Parliament will be useless.

I am not a prophet of doom but if the lack of accountability continues in the oil sector, Uganda will ultimately join Nigeria and Angola, Africa’s top two oil producers, yet most of their people swim in wretched poverty.