Annual Petroleum Development Scorecard 2016

MEASURE IT TO MANAGE IT
ANNUAL
PETROLEUM
DEVELOPMENT
SCORECARD
December 2016
Prepared by the
National Planning Authority (NPA) in collaboration with
Africa Centre for Energy & Mineral Policy (ACEMP)
Map Showing Petroleum Discoveries in the Albertine Graben
Annual Petroleum Development Scorecard
Source: Petroleum Exploration and Production Department, 2014
iii
Table of Contents
Map Showing Petroleum Discoveries in the Albertine Graben��iii
List of Figures ��iv
List of Abbreviations and Acronyms��iv
Executive Summary ��1
1. The Petroleum Sector in Uganda: Contextual Background��2
1.1 Developments in Uganda’s Oil and Gas Sector�� 2
1.2 Challenges and opportunities in the subsector�� 2
2. Introduction to the Petroleum Sector Scorecard ��3
3. Methodology��3
3.1 Petroleum Subsector Scoring Design �� 3
3.2 Weighting ��4
3.3 Data Collection��4
3.4 Validation Workshop��4
4. Performance Scores�� 4
4.1 General Performance of the Petroleum Subsector��4
4.2 Component Score��4
4.2.1 Institutional, Policy and Legal Framework�� 4
4.2.2 Reporting Practices �� 8
4.2.3 Safeguards and Quality Control �� 9
4.2.4 Enabling Environment �� 10
4.3 General Indicator Scores��10
4.3.1 Access to Oil & Gas Resources�� 11
4.3.2 Revenue Generation and Collection�� 12
4.3.3 Establishment of Uganda National Oil Company – (UNOC)�� 13
4.3.4 Petroleum Fund Management�� 14
4.3.5 Local Revenue Transfer�� 14
4.3.6 Local Content�� 14
4.3.7 Occupational Health, Safety and Environmental Management�� 14
4.3.8 Infrastructural Development�� 14
4.3.9 Citizens Engagement and Participation�� 15
4.3.10 Value Addition & Sectoral Linkages �� 15
5. Suggested Recommendations/Interventions��16
6. Conclusion��16
Annex 1: References��17
Annex 2: List of Institutions and Offices Consulted��17
Annex 3: Key Questions��17
List of Figures
Figure 1: Design Framework..........................................................................................................................................................................3
Figure 2: Component Scores.........................................................................................................................................................................4
Figure 3: Indicators contribution to the Institutional, Policy & Legal Framework Component......................................................5
Figure 4: Indicators contribution to the Reporting Practices Component.........................................................................................8
Figure 5: Indicators contribution to the Safeguards & Quality Control Component........................................................................9
Figure 6: Indicators contribution to the Enabling Environment Component.....................................................................................10
Figure 7: Indicator Scores...............................................................................................................................................................................11
List of Abbreviations and Acronyms

BOU Bank of Uganda NOGP National Oil and Gas Policy
EITI Extractive Industries Transparency Initiative NPA National Planning Authority
ESIA Environment and Social Impact Assessment OAG Office of the Auditor General
HSE Health, Safety and Environment PAU Petroleum Authority of Uganda
LG Local Government SIA Strategic Impact Assessment
MEMD Ministry of Energy and Mineral Development TI Transparency Initiative
MFPED Ministry of Finance, Planning and Economic Development UNOC Uganda National Oil Company
MTEF Medium Term Expenditure Framework URA Uganda Revenue Authority
NDP National Development Plan WGI Worldwide Governance Index
iv
Executive Summary

The National Planning Authority (NPA) scorecard tool was developed and used to
is launching the Annual Petroleum assess the performance of the subsector
Subsector Scorecard for Uganda. The along key selected indicators. Overall, the
purpose of the scorecard is to assess findings of the Scorecard suggest that
66.9%
Institutional,
the performance of the subsector and
identify key interventional areas aimed
at enhancing the contribution of the
sector towards Uganda’s socioeconomic
the Petroleum Subsector scored above
average at 65.5 percent. This aggregate
score is reflective of better performances
in institutions, policy, and legal framework
policy, and legal transformation which is enshrined in (66.9%); reporting Mechanisms (71.5%);
the National Development Plan (NDP) and Safe Guards and Control (64.5%).
framework and Vision 2040. The Petroleum However, the sector is not performing
Subsector Scorecard takes cognisance well regarding the creation of an Enabling
71.5%
of the fact that petroleum (oil and gas) Environment (32%).
is one of the priority sectors identified
by the government to drive Uganda’s More government effort is required
socioeconomic transformation. to strengthen the performance of the
Reporting Petroleum subsector especially in
Mechanisms The petroleum scorecard for Uganda is the providing an enabling environment and
first of its kind but it has been developed in framework for value addition. This can
32%
other resource rich economies as a tool for be achieved through improving Access
assessing and ranking performance across to Resources; Revenue Generation and
a bench mark of indicators that are aligned Collection; Revenue Management; Local
with national development priorities. Content; Health, Safety and Environment
Creation of These indicators include: Legal, policy Management; Infrastructural
an Enabling and institutional framework, sectoral Development; Citizens Engagement
linkages, value addition, Health, Safety and Participation; and, Value Addition
Environment and Environmental Management, local and Sectoral Linkages. The government
content, and infrastructure development should focus on strengthening key areas
64.5%
Safe Guards
among others.
Using information from key stakeholders

in Uganda’s Petroleum subsector, a
along the Petroleum Value chain so as to
maximise the contribution of the subsector
to socioeconomic transformation as
enshrined in the Vision 2040 and NDPII.
and Control
___________________________________ ___________________________________
Executive Director Executive Director
National Planning Authority Africa Centre for Energy and Mineral Policy
1
1. The Petroleum Sector round. Other subcontractors and service As the country progresses to the
in Uganda: Contextual providers are also expected to come into development phase, various projects
Background the country to support the development are proposed to be undertaken that
Uganda’s oil and gas sector phase for the oil fields, development of include: construction of a 60,000
has transitioned from the the refinery and construction of pipelines barrels/day refinery in two phases
exploration and appraisal and other facilities. Total private starting with 30,000 barrels/day ;
phase to the development investment in the petroleum sector drilling of over 700 wells (production
phase in preparation for stands at approximately $3 billion1. and injector wells), construction of CPFs
sustainable production of (Central Processing Facilities), pipelines
the petroleum resources 1.1 Developments in Uganda’s Oil and Gas (crude export, products, and infield),
that have been discovered Sector temporary and permanent camps;
in the country. The country Over thirty (30) seismic surveys have a new airport; upgrading of various
confirmed existence of been carried out in the country to roads and infrastructure to support
commercial oil and gas date resulting in the acquisition of petroleum activities, among others. The
deposits in 2006. The 7,254.6 line Km of Two Dimensional construction of the refinery will also lead
oil companies currently (2-D) seismic data and 1,948.6 square to the development of petrochemical and
licensed in the country kilometres of Three Dimensional (3-D) energy industries within the country.
to undertake petroleum seismic data. One hundred and twenty
exploration, development (120) exploration and appraisal wells 1.2 Challenges and opportunities in the
and production are: - have been drilled in the country with one subsector
China National Offshore hundred and six (106) of these wells The challenges facing the petroleum
Oil Corporation Uganda encountering oil and/or gas which is an subsector in Uganda include: Inadequate
Limited (CNOOC (U) Ltd), unprecedented drilling success rate of specialized skills relevant to the
Total E&P Uganda B.V and over 85%2. subsector; inadequate competitiveness
Tullow Uganda Operations at international level for most of the
The acquisition of data and the
Pty Limited. enterprises to support the extractive
subsequent exploration and drilling
industries; limited financial capacity of
Other significant investors activities have led to the discovery of
Ugandan or indigenous enterprises to
are expected to join the twenty-one (21) oil and/ or gas fields in
support the petroleum sub-sector; high
sector during 2016/17 the country’s Albertine Graben. Appraisal
cost of available local finance (lending
when the procurement of these discoveries has established that
interest rates of 28%); low levels of
of a lead investor for petroleum resources in these fields are
technology in the country; inadequate
the development of a now estimated at over 6.5 billion barrels
infrastructure; and exploiting resources
refinery and its attendant of oil equivalent in place of which 1.4-
while harnessing the environment,
infrastructure is concluded 1.7 billion barrels of those resources is
among others.
and new licensees come estimated to be recoverable3.
into the country at the Despite the above challenges, the
In addition, the country has an estimated
conclusion of the on-going subsector presents a wide range of
500 billion cubic feet of gas in the
competitive licensing investment opportunities and these
Albertine Graben. About 40% of the
include: joint ventures and farm-in
Cumulative foreign direct Albertine Graben has been explored. The
arrangements in existing and new
investment since 1998 total reserves are expected to increase
licenses; geophysical surveys, particularly
with further licensing and exploration
multi-client seismic surveys in the
activity in the remaining 60% of the
$2.8b
unlicensed areas; oil and gas field services
Graben.
including operation and maintenance of
Cumulative foreign direct investment rigs and other drilling related services;
in petroleum exploration in the country capital for the emerging infrastructure
at the end of 2014 since 1998 was estimated to be $ 2.8 such as refining and transportation of
billion at the end of 2014. Whereas petroleum commodities and products;
$3b
the total private investments in the service provision and contracts in the
exploration phase was approximately $ fields of engineering and infrastructure
3 billion by the end of 2015. Generally, development to support petroleum
planned investments in the development, resource development; procurement
by the end of 2015 production, transportation and refining & development of a petrochemical
phases will be in excess of about $ 20 industry; logistical services; construction
Uganda will earn billion in the next 5 years and through and fabrication; waste management and
2020 when first oil is expected. The treatment; and power generation using
Uganda government will earn $3.6 billion gas and crude oil by independent power
$3.6b
(about 9.4
(about 9.4 trillion shillings) annually from
the oil and gas industry when the country
starts production.
producers.
trillion shillings) 1 Ministry of Energy and Mineral Development, 2016

2 Ministry of Energy and Mineral Development, 2016
3 Directorate of Petroleum, Ministry of Energy and
Mineral Development (2016)
2
2. Introduction to the be prepared and presented annually to assess progress
Petroleum Sector and identify new challenges and opportunities for
Scorecard effective action as government moves closer towards
commercialisation of oil and gas resources.
Uganda has
Uganda has commercially
viable oil and gas deposits The National Planning Authority (NPA), whose key
commercially
in the Albertine Graben with functions among others includes Monitoring and viable oil and gas

discovered reserves estimated evaluating of public projects and programmes and liaising
at 6.5 billion barrels of oil with the private sector and civil society in the evaluation deposits in the
equivalent and 500 billion cubic
feet (bcf) of natural gas. There
of government performance; has worked collaboratively
with the Africa Centre for Energy and Policy (ACEMP),
Albertine Graben
are more prospective resources a leading centre of excellence in research and policy with discovered
of oil and gas deposits that are development in the Energy and Minerals sector, as well
expected to be discovered as as ActionAid Uganda, an anti-poverty and human rights reserves
continuous explorations are
carried out in all the potential
advocacy organisation, with funding support from the
Democratic Governance Facility (DGF), to produce and
estimated at
areas. These resources present
an opportunity for the country
disseminate the Annual Petroleum Scorecard to inform
decision making on key issues affecting the subsector
6.5 billion
to sustainably develop its and to guide sector planning and budgeting processes. barrels of oil
people’s welfare and wellbeing.
Thus Vision 2040 and NDP II
This scorecard, the first of its kind in the country, equivalent and
examines the existence of the requisite institutional and
identified oil and gas subsector
as the key fundamentals in the
legal frameworks, the reporting frameworks, the enabling
environment and safeguards and quality control systems
500 billion
achievement of “A Transformed in place. The subsequent scorecards will delve into the cubic feet (bcf)
Ugandan Society from a operationalization of these systems and frameworks
Peasant to a Modern and for the subsequent achievement of the sustainable of natural gas.
Prosperous Country within 30 exploitation of the country’s petroleum resources.
years”. It is projected that the oil
and gas subsector will generate
revenues that will be used to
spur growth in other sectors, 3. Methodology
create employment, enhance
3.1 Petroleum Subsector Scoring Design
infrastructure and human
The scoring design was conducted at three different levels, each feeding into the other and
resource development, among
subsequently into the final petroleum subsector score. This is illustrated in the framework below:
others, thereby contributing to
socioeconomic transformation
of the country. Figure 1: Design Framework
To effectively harness resource
Component Analysis
wealth in the country, the
government will strengthen the Institutional, Policy and Legal Framework
• Access to Petroleum Resources
legal and regulatory framework, • Revenue Generation & Collection

• Establish National Oil Company
• Petroleum Fund Management
institutional framework, • Local Revenue Transfers
• Local Content Indicator Analysis
the enabling environment, • HSE Management
• Infrastructural Development • Access to Petroleum
ensure transparency and good • Citizens Engagement & Participation
• Value Addition & Sectoral Linkages
•
Resources
Revenue Generation &
governance; but ensure that •
Collection
Establish National Oil
Reporting Practices
Ugandans have the opportunity Petroleum Subsector Analysis • Access to Petroleum Resources
• Revenue Generation & Collection •
Company
Petroleum Fund Management
to directly and indirectly Petroleum • Establish National Oil Company
• Petroleum Fund Management
• Local Revenue Transfers
Subsector Overall • Local Content
participate and benefit from Composite Score
• Local Revenue Transfers
• Local Content •
•
HSE Management
Infrastructural Development
• HSE Management
the oil resources. This however • Infrastructural Development
• Citizens Engagement & Participation
• Citizens Engagement &
Participation
presents a host of challenges, • Value Addition & Sectoral Linkages
• Value Addition & Sectoral
Safeguards & Quality Control Linkages
since oil and gas activities are • Access to Petroleum Resources
• Revenue Generation & Collection
new in the country. • Local Revenue Transfers
• Local Content
• Infrastructural Development
This annual petroleum • Citizens Engagement & Participation
Enabling Environment
subsector scorecard therefore • Citizens Engagement & Participation
• Value Addition & Sectoral Linkages
presents an opportunity for
the country to assess the
performance of government
in managing the challenges The scoring process began with the analysis of the performance of the petroleum subsector along
presented by the emerging oil ten specific indicators and these are:
and gas subsector; but also to
draw urgent attention to issues i) Access to Petroleum Resources; vii) Health, Safety and Environment
that need immediate action ii) Revenue Generation and Collection; Management;
by the government, relevant iii) Institutional establishment i.e. National viii) Infrastructural Development;
stakeholders and development Oil Company; Petroleum Authority ix) Citizens Engagement and
partners. The scorecard will iv) Petroleum Fund Management; Participation; and,
v) Local Revenue Transfer; x) Value Addition and Sectoral Linkages.
vi) Local Content; 3
3.2 Weighting
Each of the above indicators has specific the sector. The questions in the data collection instruments were clustered by
questions which were given a specific indicator as well as by the component.
score ranging from 0 - 100 depending on
the answers chosen by the respondents. The Indicator and Component scores are colour coded in four categories
The indicators were then weighed against according to their performance as below:
all other scores to get the final score for
the specific indicator. The scoring and 1. Satisfactory 75-100 Green
weighting of questions and indicators 2. Partial 51-74 Yellow
was benchmarked with international best
3. Weak 26-50 Red
practices of scoring the performance of
the petroleum subsector. The scorecard 4. Failing 0-25 Black
has been used to assess the performance
of the extractives sector in countries 3.4 Validation Workshop
such as Norway, Chile, South Africa, and A validation workshop was conducted to discuss the preliminary findings of
Australia. The scoring procedure used the petroleum subsector scorecard. The validation meeting was conducted
by the Natural Resource Governance in June 2016. It attracted various stakeholders from the National Planning
Institute (NRGI) was closely followed. Authority (NPA), Ministry of Energy & Mineral Development (MEMD) and the
The indicators, depending on the structure Civil Society. The comments and suggestions were incorporated in the final
of the questionnaire and responses, report.
contribute proportionately to the four
components that were considered in this
assessment. These components are:
Institutional, Policy & Legal framework;
Reporting Practices; Safeguards & Quality 4. Performance Scores
Control; and Enabling Environment. The
performance of the component indicators 4.1 General Performance of the Petroleum Subsector
was then aggregated and weighted to
come up with the final composite score of Overall Score: 65.5/100 – Partial
the subsector. The overall score of the petroleum subsector is Partial at 65.5 %. There has been
progress made in the establishment of institutional and legal frameworks and reporting
The Components were also weighted practices. However, there’s much more that still needs to be done especially in the area of
according to the number of questions enabling environment and safeguards and quality control systems within the petroleum
that make up for each component. This subsector.
ensures that each question carries a
proportionately equal contribution to 4.2 Component Score
the overall component score. Thus, the The scorecard considered four components and these are: Institutional, policy
weights are: and legal framework; Reporting Practices; Safeguards & Control and Enabling
Environment. Performance for these indicators is reported below.
Component Weights
1. Institutional, Policy and 27.4 Figure 2: Component Scores
Legal Framework
80.0
2. Reporting Practices 44.4 71.5
70.0 66.9
64.5
3. Safeguards and Quality 19.7
Control 60.0
4. Enabling Environment 8.5 50.0
Total 100 40.0

32.0
30.0
3.3 Data Collection
20.0
Collecting information to score the
performance involved a two-stage 10.0
data collection process; (i) primary

0.0
data collection process, which involved Institutional, Policy and Reporting Practices Safegurads and Quality Enabling Environment
engaging key sector players and Legal Framework Control
stakeholders; and, (ii) secondary data

collection process which involved 4.2.1 Institutional, Policy and Legal Framework
reviewing various documents to augment
the data collected in the primary process. Score: 66.9/100 – Partial
The documents included policies and
Under this component, the score is Partial at 66.9 percent. A number
regulations, reports, posts on Ministry
of Indicators were considered; and their disaggregated contribution to
websites, and various publications on the
the final score of the component is indicated in the figure 3 below.
sector. The collected information was
later subjected to scrutiny and analysis
using Excel to produce the final score of
4
Figure 3: Indicators contribution to the Institutional, Policy & Legal Framework Component
14.0 13.2
13.2 13.2 13.2
12.0
10.0 9.5
8.8 8.8

8.0
6.6 6.6 6.6
6.0
4.0
2.0
0.0
Access to Oil Revenue Establish Petroleum Local Revenue Local Content HSE Infrastractural Citizens Value
& Gas Generation & National Oil Fund Transfers Management Development Engagement & Addition &
Resources Collection Company Management Participation Sectoral
Linkages
Under this component, all pieces of legislation together with other

the considered indicators relevant laws and statutes like those on
a) Lack of a regulatory framework that
contributed to the performance Environment, Wildlife, Water, Land and
provides for parliamentary oversight
of the institutional, policy and Income Tax are being used in regulating
into the licensing process;
legal framework component. the country’s petroleum sector.
The major contributors are At the institutional level, the subsector b) Lack of a due process to appeal
local revenue transfers (15.1); has established a new institutional licensing decisions in the oil and gas
petroleum fund management framework for the sector which subsector;
(13.0); local content (11.3); separates the three aspects of policy c) Lack of a legal obligation by
value addition and sectoral setting, regulation of the industry and the UNOC and Petroleum Fund
linkages (11.3); access to oil execution of the commercial interests executives to disclose their financial
and gas resources (10.2); and of the state respectively is being interests in oil and gas activities;
infrastructural development put in place. At the Ministerial level, d) Lack of a HSE policy and legal
(10.0). Directorate of Petroleum was to support framework for the oil and gas
policy setting and implementation as subsector;
At the policy and legal
well as carrying out the licensing roles
framework level, the e) Lack of Clarification of EIA’s
of the Ministry. The establishment
availability of the National Oil and SIAs’ obligations of the oil
of the Petroleum Authority (PAU), to
and Gas Policy (NOGP) for companies.
regulate the sectoral activities and
Uganda, 2008, the Oil and f) The failure of the subsector to join
the National Oil Company (UNOC)
Gas Revenue Management Extractive Industries Transparency
to manage the country’s commercial
Policy, 2012 and the various Initiative (EITI): It should however
interests (including managing the
laws and regulations to be noted that the NOGP adopted in
State Participation provided for in
guide the development of 2008 signalled the country’s intent
the respective Production Sharing
the sector contributed to the to join EITI. In 2012 and 2013,
Agreements) has helped to streamline
high score of this component. the government had indicated
roles of institutions in the management
The NOGP guides the various willingness to join EITI, but has
of the country’s petroleum subsector.
developments in the oil and not yet taken any concrete steps
The Board of Directors of PAU and
gas sector including the towards doing so even as the country
UNOC have been nominated. In addition,
development of the Petroleum progresses towards oil production.
the positions of the CEO and Director
(Exploration, Development
of UNOC and PAU have been filled and
and Production) Act 2013
the companies are fully incorporated.
and the Petroleum (Refining,
Senior and junior staff recruitment
Conversion, Transmission
for the PAU and UNOC is currently
and Midstream Storage)
Act 2013. The Regulations ongoing.
to operationalize these laws Recommendations to Strengthen the
However, there are
have been drafted and these gaps in the policy, Institutional, Policy & Legal Framework
include: technical aspects like institutional and ࿤࿤ Review the legal framework to clarify on EIA’s and SIA’s;
metering, national content regulatory framework ࿤࿤ Develop the legal framework for the National Content;
together with Health, Safety for the subsector and ࿤࿤ Initiate Actions to join the EITI;
and Environment aspects these could hinder ࿤࿤ Develop the Policy and legal framework on HSE;
for both the Upstream and the performance of ࿤࿤ Strengthen the capacity of MGLSD to regularly monitor
Midstream segments of the the subsector. Various compliance to HSE Management in the oil and gas activities;
petroleum value chain. In ࿤࿤ Review legislation to provide for parliamentary oversight into
laws and regulations the licensing process;
addition, the Public Finance Act are not yet in place
was enacted in 2015. The Act ࿤࿤ Review the legislations to clarify on the procedural transfer
and these include: of resources to LGs;
provides for the management ࿤࿤ Review the petroleum legislations to provide for a due
of revenues accruing from process to appeal licensing decisions in the subsector.
petroleum activities. These
5
The major
contributors
to the partial
performance of
the Institutional
policy and legal
framework
Component are
local revenue
transfers
(15.1)
petroleum fund
management
(13.0)
local content
(11.3)
value addition and
sectoral linkages
(11.3)
access to oil and
gas resources
(10.2)
and infrastructural
development
(10.0)
6
A section of the newly-constructed Hoima-Kaiso Tonya Road is part of several other

infrastructural developments that the government is undertaking in the Albertine
Region in preparation for oil production. The 92 km road connects Hoima town to
Kaiso and Tonya towns on the shores of Lake Albert. (Photo: D. Binyina)
7
Figure 4: Indicators contribution to the Reporting Practices Component
14.0
13.2 13.2 13.2 13.2
4.2.2 Reporting Practices 12.0
10.0 9.5
Score: 71.5/100 – Partial 8.8 8.8
The component scored 71.5 8.0
percent, which is satisfactory. 6.6 6.6 6.6
This is because of the efforts 6.0
that are in place regarding
reporting of the activities in the
4.0
petroleum subsector. The figure
below indicates the percentage
contribution of various indicators 2.0
to this score;
0.0 t
l
Oi s n na
l e
en
t
en al en
t &
tio nu nt ur
to rce ra tio nd ve ge
m ct ent em ion es
ss sou ne on Na any Fu t Re fers l Co a ra
st opm ag tion dit kag
e
c Re e
G cti h
s mp m en l
ca ns ca an ra l g
n pa Ad Lin
c
A as e e l
b oi l e u
e m Lo Tra Lo M Inf eve s E ici e
lu ra l
nu oll ta C tro ag E
en ar t Va cto
G ve C Es Oil Pe an HS D
tiz P
& Re & M Ci & Se
Under this component, all the
ten indicators were considered
and contributed proportionately
to its performance. Figure 4
above shows the percentage including the petroleum licensing,
࿤࿤ Although the Public Finance Act 2015 contains
contribution of each indicator. the oil reserves and revenues, the a provision which requires government to
establishment and composition publish incoming revenue receipts, it however
Reporting is one way of of UNOC and the PAU, rules for does not specify how reported receipts will be
ensuring transparency in the oil Petroleum Fund management, disaggregated, nor does it require companies to
and gas sector. This can be in amount of revenues transferred publicly disclose the payments that they make to
form of availing information to to local governments in the the GOU.
the public freely. Albertine Region, opportunities ࿤࿤ The government also doesn’t publish the key
The NOGP 2008 provided for for skills development & training, clauses of the contracts signed with the oil
the development of the National local supplier development and companies such as the government share in the
the process of infrastructural PSC, acreage fees, bonuses, etc.;
Communication Strategy
for the oil and gas subsector, development in the Albertine ࿤࿤ Failure of Local Governments in the Albertine
which was developed in 2011 region. These have all had a region to publish information on revenue transfers
received from Central Government even before
to bridge the communication positive bearing on the score. production starts. Such revenues could be from
gap between the oil and gas signature bonuses, royalties, and acreage fees.
However, there are gaps that
industry and the general public.
need to be addressed regarding ࿤࿤ Limited public participation in Environmental and
A public information and reporting practices and these Social Impact Assessments and the failure of the
education campaign to include: subsector to make available all the EIA and SIA’s
enable Ugandans achieve from the oil companies.
a better understanding
of the developments and
opportunities in the sector
and how they (Ugandans)
can participate is also on-
going. This campaign has
included radio and television
programmes across the country, Recommendations to Improve on Reporting Practices
engagements with different
stakeholder groups such as the
media, civil society, business ࿤࿤ Ensure public access and sharing of information on EIA’s and ESIA’s that
are prepared by the Petroleum companies before the start of the projects;
entrepreneurs, religious and ࿤࿤ Educate the public on HSE standards and rights;
cultural institutions together ࿤࿤ Local governments in the Albertine region should be encouraged to publish
with leaders and communities information on royalties received from the central government as part of
in the Albertine Graben as their share on petroleum revenues;
focal stakeholders. In addition, ࿤࿤ The government should publish information on shareholding and assets
the website www.petroleum. owned by the oil companies within the country, the government share in the
go.ug is regularly updated PSC, royalties received, special taxes, information on oil prices, production
with recent developments and costs incurred by the companies, among others, as a way of ensuring
documentation relating to the transparency in the sector;
oil and gas sector. ࿤࿤ Develop regulations that will ensure that regulatory and oversight officials
in the oil and gas subsector declare their interest in the oil and gas industry.
The subsector has been This will also promote transparency in the subsector.
reporting on various issues
8
4.2.3 Safeguards and Figure 5: Indicators contribution to the Safeguards & Quality Control Component
Quality Control
30.0
Score: 64.5/100 – Partial
The performance of the
subsector under the component 25.0
is also partial at 64.5 percent.

Assessing the score was mainly
under six indicators, where 20.0
each indicator’s contribution is
indicated in figure 5 below:
15.0
27.9
23.3
10.0 20.9
14.0 14.0
5.0
0.0
as &
en
t al t
G n ur en
io nt ct nt
il & r at o ra me e m
O s e lC t
s p g
ga on
to rce en ca fra lo
ss ou e
G ion Lo In eve En pati
e
c es t s i
nu ec D en tic
Ac R ve oll tiz ar
Re C Ci & P
The safeguards and quality control the success or failure of reforms in fiscal policy and tax
examined the existence of systems administration beyond the oil sector; the more successful
and control of excesses and misuse Uganda is in capturing non-oil revenues, the lower will be
of the oil and gas resources and the risks of macro-economic distortion. Institutionally, the
revenues. Six indicators were establishment of the Directorate of Petroleum and the
considered under this component Petroleum Authority of Uganda is also an added value in
and they respectively contributed to regulating the activities and exploitation of oil resources
its performance as indicated in figure and revenues.
The 5 above.
The NOGP stipulates the role of the different oversight
development The sector has experienced institutions such as the Parliament and the Office of the
tremendous developments in Auditor General. The Office of the Auditor General acts
of the Oil and this area. The openness and as an independent external validator of internal controls
competitiveness in the bidding of the agencies managing the oil and gas resources and
Gas Revenue and licensing process ensures that assures the public of integrity of public funds and sound
Management the right companies are licensed
to undertake the exploration and
financial management. The office has the authority
and resources to review and conduct audits on use of
Policy in 2012 development activities.
development of the Oil and Gas
The oil revenues. It also reports to Parliament its findings, to
which the Parliamentary Committee on natural resources
and later, the Revenue Management Policy in
2012 and later, the Public Finance
scrutinizes within the year of audit. The National Planning
Authority (NPA) is also in place and leads the national
Public Finance Management Act, 2015 have planning for effective incorporation of the oil and gas
been instrumental in ensuring revenues into the economy.
Management the safeguards and control of the
However, the delay in the operationalization of these
Act, 2015 revenues from the oil and gas. The
Act, among others provides for the
institutions makes some of the activities of the oil
companies to go unchecked. Even though the Directorate
have been management of revenues accruing
from the petroleum resources.
of Petroleum undertakes some of the regulatory activities
in the subsector, there is need to speed up and put in
instrumental This enhances the fiscal discipline
over any revenues generated from
place the resultant regulations. Also the absence of the
in ensuring the the oil and gas activities. Also, the
oversight role by Parliament in the licensing process is
likely to create avenues for corruption.
existence of other relevant
safeguards legal framework such as the
Recommendations to strengthen
taxation and the Petroleum
and control of Fund, the fiscal rules for Safeguards and Quality Control
the revenues deposits and withdrawals
creates a platform for the
࿤࿤ Review the legislations to ensure that Parliament also has
an oversight role in the oil and gas licensing process;
from the oil management and control
of the oil revenues. It should
࿤࿤ Review of the legislations to compel licensing officials to
disclose their financial interest in the oil and gas sector;
and gas. be noted that Uganda’s
level of oil dependency
࿤࿤ Speed up the operationalization of the various institutions
such as the Petroleum Authority of Uganda and the
will depend largely on National Oil Company; and clarify on their roles and
responsibilities;
9
4.2.4 Enabling Environment
Recommendations to also influenced by Governance
Score: 32.0/100 – Weak
improve the Enabling and Corruption challenges in the
Environment The score of the subsector under the enabling environment country. According to the 2015
is also still very weak. This is particularly because of factors
࿤࿤ Expedite the development not only related to the subsectors performance, but also to Transparency International (TI)
of the national content law the country’s general engagements and activities. Under Corruption Index, Uganda scored
to guide and regulate the this component, there are mainly two indicators that were 25 points, and was ranked 139
participation of the local considered, (i) citizen’s engagement and participation; and out of 168 countries/territories
communities and nationals in (ii) value addition and sectoral linkages, which contributed around the world. According
42.8 and 57.2 percent (figure 6) to the final score of the
the oil and gas activities and component respectively. to the Worldwide Governance
programs; and use of the local Indicators (WGI), Uganda’s score
products and services in the Even though the NOGP provides for community on governance effectiveness
industry; participation, there’s however limited national and stood at 49.76 in 2014. The
࿤࿤ Development of a clear community participation in the oil and gas activities. governance effectiveness index
strategy and plan for the This is particularly because there is no effective means
value addition in the oil and to encourage community engagement and support. The
reflects perceptions of the quality
gas subsector; participation of the communities should be in form of of public services, the quality of
࿤࿤ The government should inclusion in the development and implementation of the civil service and the degree
enhance efforts to strengthen the strategic programs in the sector and local content. of its independence from political
good governance and fight This is however not embedded in any law, rather than pressures, and the quality of
prescribed in the oil companies’ contracts, which are also
corruption. inaccessible to the general public. There’s need to expedite policy among others.
the development of the national content law such that The Corruption and Governance
companies are compelled by law to develop and implement
community participation and national content programs. Effectiveness Indices suggest
Disclosure of pertinent provisions of the Production Sharing more effort is needed in
Agreements relating to promoting local participation should improving the quality of the
also be made available to the public. petroleum subsector governance
There’s need and curbing corruption as
these negatively impact its
to expedite the Figure 6: Indicators contribution to the performance. For example,
Enabling Environment Component nationals have overly complained
development of politically connected
of the national 70
individuals using their political
clout and influence to get jobs
content law such 60 in the oil and gas industry, even
though they are less qualified
that companies 50 57.2
than some of their most qualified
40
are compelled by 42.8 counterparts and OAG reports
30 have indicated mismatch
law to develop 20 in salary benefits between
Ugandans and IOC workers of
and implement 10
similar qualifications and working
community 0
Citizens Engagement & Value Addition & Sectoral
experience (OAG Report: New
Participation Linkages Vision, Wednesday April 2015).4
participation and This affects performance,
On value addition and sectoral linkages frontier, the credibility and transparency in
national content enactment of the Petroleum (Refining, Conversion, the sector.
programs. Transmission and Midstream Storage) Act, 2013 set
pace for the value addition in the petroleum subsector.
Disclosure However, there’s a need for a clear strategy and plan for 4.3 General Indicator Scores
The scoreboard below shows the
value addition in the sub-sector. Under Sectoral Linkages,
of pertinent the government through the National Planning Authority score of the petroleum subsector
along the 10 indicators. The green
provisions of encourages all the sectors to develop investment plans
bars show that the performance
that incorporate sectoral linkages. The MEMD developed
the Production a Sector Investment Plan (2014/15 – 2018/19). This is satisfactory and the yellow bars
stipulates the investment and development agenda in show that the performance of the
Sharing the EMD sector and for the petroleum subsector. This subsector is still partial in that
area. The red bar indicates that
Agreements plan is however generic and there’s need for a specific
the performance of the sector in
development plan and strategy for the subsector in line
relating to with national development objectives outlined in the NDP that particular indicator is still
II and Vision 2040. very weak.
promoting local
It should also be noted that the operation of the Petroleum
participation subsector is submersed into other aspects of political,
should also be social and economic nature. These have an imperious
effect on the performance of the sector. These aspects 4 AG exposes rot in oil firms: http://archives.
made available to directly or indirectly affect the performance of the sector visiongroup.co.ug/national-news?format=ra
w&resource=546c59774d5441304d5456
the public. and the economy. The performance of the subsector is 775a7a41334c6e426b5a673d3d&token=
810a1403ddfba2bd857b93a41777c303
10
Figure 7: Indicator Scores
Value Addition & Sectoral Linkages 47.9
Citizens Engagement & Participation 47.6
Infrastractural Development 70.8

HSE Management 66.7
Local Content 57.1
Local Revenue Transfer 66.7
Petroleum Fund Management 76.1
National Oil Company (UNOC) 75.0
Revenue Generation & Collection 70.8
Access to Oil & Gas Resources 71.0
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 Article 9 of the UN
Convention against
4.3.1 Access to Oil & Gas Resources
corruption recommends
Score: 71.0/100 – Satisfactory that governments should
Ownership and Licensing of Oil and Gas Resources: The
1995 Constitution of the Republic of Uganda and Constitution
disclose information on
Amendment Act 2005 (Section 43) defines and grants ownership licensing processes including
of all petroleum resources to the State. The legislation does not
recognize or confer private property rights over petroleum resources. distribution of information
The government thus has the powers to explore, produce and sell the on licensing procedures
oil and gas resources.
and contracts, including
Licensing: Legal definition of ownership of oil and gas resources is
by what authority has the powers to grant the oil and gas licenses.
information on invitation to
In Uganda, these powers are vested in the Minister of Energy and tender and on the award of
Mineral Development. These powers will be passed over to the
Petroleum Authority of Uganda (PAU), once it becomes fully contracts, allowing potential
operational. Following the Public Procurement and Disposal Act bidders sufficient time to
(PPDA), the government ensures clarity and openness of licensing
procedures to achieve transparency during the subsequent stages prepare and submit their
of development. The government conducts open bidding rounds
with sealed bid process and a decision is made against established
proposals.
criteria. The fiscal system for the petroleum resources in Uganda
involves companies signing production sharing agreements (PSA)
that determine payments and sharing of costs and profits with the
governments. In the downstream, the government conducts the rule
of “first-come first-served” to grant import and sell of oil and gas In awarding licenses, the Ministry of Energy
and Mineral Development follows key principles
licenses.
established by the legislation, standard agreements
or auction rounds but it can negotiate departures
Disclosure of licensing processes: Article 9 of the UN Convention from these principles within reasonable margins.
against corruption recommends that governments should disclose Its independence in awarding of these licenses is
information on licensing processes including distribution of however under scrutiny as it’s deemed to adhere
information on licensing procedures and contracts, including to influence from the office of the Presidency.
information on invitation to tender and on the award of contracts, Good practices recommend for the establishment
allowing potential bidders sufficient time to prepare and submit their of regulatory agencies with the clear division of
proposals. The government of Uganda has followed this directive and roles and responsibilities to grant the licenses
through the PPDA regulations; this information is always shared and and contracts. This has been adopted in Brazil,
run through various local and regional newspapers and the Ministry Colombia and Indonesia; and thus establishment of
of Energy and Mineral Development website www.petroleum.go.ug. the Petroleum Authority of Uganda is a good move
Information advertised includes information on licensing process, towards institutionalizing and division of roles and
the contract terms for licenses, the geographic scope of the blocks responsibilities in the petroleum subsector.
and a complete description of the procedure for awarding a license
(including bidder qualification procedures or rules for contacting The government also publishes extensive
the licensing authority in case of negotiated process). Hence the information after negotiations, including results
licensing process is open to all qualified companies, and provides for from competitive bidding rounds such as bids
competition based on technical, financial and environmental criteria. received, winning bids and information on final
contract awards and blocks licensed. However, the
11
contracts aren’t published social impacts assessments, as the oil and by lack of clarity in drafting and envisaged
in full with actual terms gas activities have impacts on the lives and scope of application. The exceptions to the
after negotiations (duration, communities surrounding the exploration and right of access are also rather wide and open
royalties and tax obligations), production areas. Section 3 of the Petroleum to interpretation and could be used to reduce
or the main negotiated Refining, Conversion, Transmission and existing rights to information anticipated
terms, winning bidding Midstream Storage Act 2013, directs on the in the constitution. The government takes
variables and/or production Compliance with environmental principles. advantage of these irregularities in the law to
sharing rules left out of the It states that “a licensee or a person who deny public access to some of the information
information published. exercises or performs functions, duties in the oil and gas subsector.
or powers under this Act in relation to
Environmental and Social midstream operations shall take into account, Oversight role in the Licensing and
Impact Assessments (SIA): and comply with the environmental principles Contracting Process: The National Oil and
The IMF recommends that prescribed by the National Environment Act Gas Policy 2008 hands the Office of the
environmental concerns should and other applicable laws…” Auditor General the role of independent
be built into the general and oversight in petroleum operations through
oil and gas industry-specific It also states that, “a licensee shall ensure financial and other management audits in
legislation as well as contracts. that the management of transportation, accordance with constitutional provisions.
It also includes the issue of storage, treatment or disposal of waste It’s however non-committal on the issue
arising out of midstream operations is carried of oversight in the licensing process. The
out in accordance with the environmental Ministry of Justice participates in the licensing
Uganda’s petroleum principles and safeguards prescribed under process. The Parliament however, receives no
resource base the National Environment Act and other laws information on the award of contracts and
applicable.” licenses in the petroleum subsector, which
300 The environmental impact assessments for

oil and gas projects are made available to
excludes the legislative powers of having
an oversight role. Parliamentary ratification
or contract approval doesn’t necessarily
million the public and for stakeholder review on the

NEMA website, http://www.nemaug.org.
However, in preparing some EIAs, the public
mean that contracts are disseminated to the
public; however, it can limit the negotiators’
discretion.
barrels of oil equivalent or project affected communities or persons
in place are not consulted for their input. This creates The PPDA rules provide avenues for
the risk of downplaying the social concerns of appealing of licensing decisions, however
in 2008 the affected communities. these are generic and not specific to the
to oil and gas subsector. The UN Convention
2 billion
The ESIA regulations are in place and applied, against Corruption recommends the building
however they don’t cater for specific oil and of an effective system of domestic review,
gas issues. They are biased towards mining including an effective system of appeal, to
sector activities. The NEMA Act 1998 and ensure legal recourse and remedies. On the
the Petroleum (Exploration, Development issue of disclosure of the beneficial ownership
& and Production) Act 2013 are also silent in oil and gas companies, the oil companies
on social impact assessments. Part VII of are required to register with the Uganda
3.5 the Environmental Impact Assessment

Regulation, S.I. No. 13/1998, puts a caveat
in accessing the EIA report by the public
Registration Services Bureau (URSB), and
the information can be accessed from URSB
on request. It’s thus not publicly available.
billion from the Authority. Any person who desires

to consult the documents shall, subject to
section 85 of the Act, be granted access by 4.3.2 Revenue Generation and Collection
barrels in 2010 the Authority on such terms and conditions Score: 70.8/100 – Partial
as the Authority considers necessary. These
and 2012 prevail over the free access to information as Objective six of the NOGP is about
prescribed in the Access to Information Act, collection of the right revenues and
respectively; and 2005. using them to create lasting value for
now stands at the country. The Ministry of Finance,
The government publishes the petroleum Planning and Economic Development
6.5 resource legislation but this only provides

a general indication of key principles for
extractive industries. Petroleum (Exploration,
is taking a lead in this policy objective.
The Ministry formulated the Oil
and Gas Revenue Management
billion Development and Act 3 Production)

Act, 2013 and the Petroleum (Refining,
Conversion, Transmission and Midstream
Policy 2012 and a Public Financial
Management Act 2015, which provide
for, among others, management of the
barrels of oil with Storage) Act 2013 are all available to the revenues accruing from the petroleum
public. The country also adopted the Access resources.
potential for more to Information Act 2005, which covers all
government ministries, departments and
discoveries agencies, but it’s not specific to the oil and
gas subsector. Its significance is diminished
12
Disclosure of oil-related information: Oversight and Independent Validation 4.3.3 Establishment of Uganda National
The subsector annually publishes of Internal Controls: The IMF guides Oil Company – (UNOC)
a report on the progress of the that the internal audit controls should be
implementation of the NOGP. This clearly defined and subject to external Score: 75.0/100 – Satisfactory
Report has information related to oil and review that is accessible to the public. The government has instituted the
gas reserves and the estimated amount This provides adequate assurance that UNOC as recommended by the NOGP,
to handle its commercial interests in the

that is recoverable. According to the controls on the use of the oil revenues subsector such as state participation in
latest edition, the country’s petroleum are in place. The office of the Auditor the licenses and marketing the country’s
resource base rose from 300 million General has the authority and resources share of oil and gas production received
barrels of oil equivalent in place in 2008 to review and conduct audits on use and in kind. Although this entity will become
to 2 billion and 3.5 billion barrels in disbursement of oil revenues to establish more relevant when production begins,
the government is now embarking on
2010 and 2012 respectively; and to the that internal controls are adequate and the process of building its capacity
current estimate of 6.5 billion barrels provide assurances of integrity of public so that it is able to play its role when
of oil in place with 500 billion standard funds and sound financial management. production starts. The specific roles of
cubic feet of gas. Out of these resources, Officials in the Office of the Auditor UNOC shall include: (a) Managing the
business aspects of state participation,
1.4 billion barrels of oil equivalent are General are supposed to annually (b) Developing in depth expertise in the
estimated to be recoverable. disclose their financial status, but oil and gas industry, (c) Optimising value
aren’t obligated to disclose the financial to its shareholders, (d) Administering
The subsector also publishes interest in the oil and gas subsector. contracts with co-ventures, (e)
information on the value of resource This creates a loophole and potential Participating in Contractor/Operator
meetings, and, (f) Investigating and
exports, the estimated investments conflict of interest for those involved in proposing new upstream, midstream
in exploration and development, the the oversight role of the sector. and downstream ventures locally and
names of companies operating in the later, internationally.
country, the blocks licensed to each Annually the Office of the Auditor
company and the bonuses accrued from General reports to Parliament, providing The company was set up by Article
the companies. However, the subsector objective analysis of the MFPED and 42 of the Petroleum (Exploration,
falls short of publishing information on BoU, which are currently in charge of Development and Production) Act 2013
shareholding and assets owned by the managing oil and gas resource revenues and incorporated under the Company’s
oil companies within the country, the and these reports are published in a Act 2012. It was registered as a limited
government share in the PSC, royalties timely manner (i.e. within one year after liability company at the end of June
received, special taxes, information on the reporting date). The Parliament 2015 and wholly owned by Government
oil prices, production costs incurred receives and scrutinizes these reports of Uganda. The Petroleum Exploration,
by the companies, among others. The and they are discussed within a year Development and Production Act
report, which is produced annually, is after the audit report date. 2013 provides for the establishment
mainly technical and lacks narrative of a National Oil Company incorporated
sections or notes on methodology. It’s Extractive Industries Transparency under the Companies Act. The Act
available in hard copy and online, and is Initiative (EITI) Membership: also provides that the National Oil
generally comprehensive. Transparency and accountability play an Company be entirely owned by the
important role in ensuring that resource State to manage Uganda’s commercial
Collection of Taxes and Payments wealth is managed for the benefit of the aspects of petroleum activities and the
from Petroleum Companies: Uganda whole nation. The EITI aims at creating participating interests of the State in
Revenue Authority (URA) is mandated more transparency in financial dealings the petroleum agreements.
to collect taxes and payments (such as between extractive companies and
royalties, taxes and special taxes) from governments. EITI is a global voluntary The company published information
the oil companies as per the Income initiative that operates on the principal on the composition of the Board of
Tax Act, Value Added Tax Act, East that countries declare income they earn Directors and the rules governing
African Customs Management Act and from their extractive industries and the decision making by the Board
Stamp Duty Act 2014. This clearly that the companies operating in those of Directors. However, there is no
defines the roles and responsibilities of countries also declare the payments provision requiring Board Members
the Authority and hence helps to avoid they make to host governments. It and the company officials’ to disclose
conflict of interest and complexities, is seen as an effective tool against information of their financial interests
which translates into transparency corruption in the extractive industry. So in any of oil and gas activities. This
issues in the industry. The Oil and far 18 out of 48 member countries are violates the principle of good corporate
Gas Revenue Management section of from Africa and include Tanzania, DRC, governance recommended by IMF. The
the Public Finance Management Act Nigeria and Ghana. legislation is also silent on the company’s
2015 provides for the creation of the obligation to publish financial reports.
Petroleum Fund with Bank of Uganda The NOGP 2008 signalled the country’s The company is also yet to set up all its
where all oil and gas revenues shall intent to join EITI. In 2012 and 2013, the structures, systems and staff.
be deposited. Before this provision, all government had indicated willingness to
oil resource revenues collected were join EITI. Despite repeatedly expressing
deposited into the national treasury its willingness to join EITI, government
as reflected in the reports made to has not taken any concrete steps
Parliament by the OAG. This allows the towards doing so even as the country
allocation of oil revenues to follow a progresses towards oil production.
normal budget process and observing
transparent accounting practices.
13
4.3.4 Petroleum Fund Management The rules and formulas for sharing oil Policy is yet to be approved by Cabinet;
and gas revenue allocations to local and this has affected the development of
Score: 76.1/100 – Satisfactory governments are published in the a Legal Framework. Also, the Work Force,
The performance of the subsector under PFMA, which is publicly available. The Skills Development Strategy and Plan
the Petroleum Fund Management MFPED also publishes information were conducted by the MEMD but it was
indicator is satisfactory. The Petroleum on the detailed breakdown of the not exhaustive because unlike MGLSD,
Revenue Fund refers to a separate
account set up by the government to transfers to the local governments the MEMD does not have knowledge
preserve funds generated from the in newspapers for the broader and information on disaggregated skills
oil and gas resources. It attempts public. However, these reports lack data and qualification in employment. It
to mitigate some of the negative the narrative sections, but they are is questionable why the MEMD would
consequences associated with oil
and gas resource dependence (the generally available in newspapers and exercise this mandate which is absolutely
oil curse). It aims at facilitating the are comprehensive enough. They are a mandate of the institution charged with
accumulation of large, volatile and understandable and published at least labour.
temporary revenues when times are once every year. The local governments
good, stabilize public spending, and are however not compelled by law to
finance public spending when the
revenues are no longer flowing in. publish this information and indeed 4.3.7 Occupational Health, Safety and
The Fund will be managed by Bank of they don’t. Environmental Management
Uganda.
Score: 66.7/100 – Partial
The Public Finance Management 4.3.6 Local Content Currently, the Petroleum subsector doesn’t
Act 2015 provides the rules for the have a HSE Policy, Plan or Manual but
Score: 57.1/100 – Partial the Ministry of Gender, Labour and Social
fund deposits and withdrawals. The Development (MGLSD) is in the process
Parliament is tasked to appropriate The performance of the Petroleum
sector in the area of Local Content is of developing a manual, code of conduct
these funds through the annual budget partial. The subsector has developed and other relevant instruments. Monitoring
process. The PFMA also recommends a comprehensive plan and strategy for Compliance to HSE is a mandate of the
that the funds be earmarked skills development for Ugandans to Occupational Safety and Health Department
fully participate in oil and gas sector in the MGLSD and not any other institution.
specifically for development The Capacity in the Department (MGLSD)
programmes. It should however be activities.
is however limited because of resource
noted that the officials responsible for constraints and lack of personnel to
The Workforce Skills Development effectively monitor occupational safety and
oversight of the Petroleum Revenue Strategy and Plan (WSDSP) for the
Investment Reserve Fund aren’t health issues in all the sectors.
petroleum subsector was prepared
required to disclose information and concluded in early 2015. The
about their financial interest in any efforts to enhance skills development In a way of publishing information and
of the oil and gas related projects. is a responsibility of the Ministry reports on occupational health and safety,
of Education, Science, Technology the MGLSD has prepared a checklist that
This creates a loophole for conflict of and Sports with the support from
interests in managing the matters of the Ministry of Energy and Mineral
is applied to all elements in the industry,
investing revenues from the petroleum Development and development but this checklist is inadequate. Efforts are
subsector. partners. Government has also required to publicize information regarding
continued to prioritise capacity building HSE issues in the country. The country has
of officers from different institutions a general legal framework for occupational
taking forward the development of the
4.3.5 Local Revenue Transfer oil and gas subsector in the country. safety and health but lacks the specific
one for the petroleum subsector. It’s also a
Score: 66.7 – Partial The oil companies licensed in the country contractual obligation for all oil companies
The IMF recommends that such as Tullow Oil, Total and CNOOC to ensure compliance to HSE standards
arrangements to share revenues from together with their service providers and guidelines.
the petroleum resources between have been offering scholarships to
central and local governments be train Ugandans in oil and gas courses
well defined and explicitly reflected in locally and in foreign Universities. They
also continue to provide employment 4.3.8 Infrastructural Development
the fiscal policy and macroeconomic
objectives. In addition, clear rules, opportunities at the blue collar and
principles and agreed formulas should professional levels. Development Score: 70.8/100 – Satisfactory
be well defined and applied in a partners have offered capacity building The government has made strategic
consistent manner. Section 75 of the opportunities to Ugandans in Oil and investments in infrastructural development
PFMA clearly defines and provides rules Gas related activities. Information both in the upstream and midstream
and principles for sharing of resources concerning capacity building and segments of the petroleum subsector
with the local governments from the oil training opportunities is always value chain. These investments are being
exploration and production areas. published and availed to Ugandans implemented by the MEMD, Ministry of
through newspapers, and other Works and Transport, and other MDAs such
These are defined as a percentage of the websites. as UNRA, though most of the projects are
production volumes and royalties as part still at infancy stages. A Memorandum of
of the compensation. The legislation Understanding to develop a crude export
also provides that local governments However, the country still lacks the pipeline from the Albertine Graben (Hoima)
should consider the royalties as part legal framework for National Content, to Tanga Port was concluded between the
of the revenue of the local government government of Uganda and Tanzania in April
and shall be integrated in the budget and even though the international 2016.
of the district to be spent on priorities oil companies are compelled within
determined by the Local Government their contractual agreements to train A study for the development of pipelines
Council, taking into consideration and employ Ugandans, this should be
national priority programme areas. and storage facilities of petroleum
operationalized by the enforcement commodities (crude oil and gas) from
of the law. The National Content the fields to the refinery was concluded
14
in March 2012. Planning for the Cabinet for approval. The Ministry of Energy (Ugandans) can participate is also on-
transportation of crude oil from the and Mineral Development and the Ministry going. This effort has included radio and
oil fields to the refinery is ongoing of Works and Transport publish reports on television programmes across the country,
and crude oil feeder pipelines will be infrastructural development in the oil and engagements with different stakeholder
developed before the country enters gas subsector annually. groups such as the media, civil society,
the development phase of the oil business entrepreneurs, religious and

and gas resources. Surveying of the cultural institutions together with leaders
route to transport crude oil from the 4.3.9 Citizens Engagement and Participation and communities in the Albertine Graben as
Kingfisher field in Buhuka to the focal stakeholders. In addition, the website
Score: 47.6/100 – Weak
refinery area in Kabaale commenced www.petroleum.go.ug is regularly updated
in June 2015. The subsector scores under this indicator with recent developments in Uganda’s oil
are still weak. The government rarely and gas sector.
involves the general public in discussing
A study covering the distribution pertinent issues in contracts with oil
and storage facilities of petroleum companies nor are these issues made
products (gasoline, diesel, kerosene, public after the contractual negotiations. 4.3.10 Value Addition & Sectoral Linkages
jet fuel etc.) from the refinery to In addition, the country doesn’t have a
legal framework that enables the public to Score: 47.9 – Weak
different national and regional participate in the decision making process
markets was concluded during for the oil and gas sector. It’s upon the The linkage between the Petroleum
November 2012. A 205 km pipeline discretion of the government to engage or subsector and other sectors of the
not to engage with members of the public economy is still very weak. This could be
to transport refined petroleum from partly because activities are not yet fully
the refinery in Kabaale, Hoima to or civil society organizations.
operationalized and this could change
a distribution centre in Buloba, during the development and production
west of Kampala is planned to be However, the development of the oil and phases of the subsector with increase in
developed as part of the refinery gas sector in Uganda is being taken forward demand for inputs from other sectors.
project. A routing study and a in a manner that recognizes the roles of
Resettlement Action Plan for this different stakeholders and seeks to ensure NPA is mandated to issue a Certificate of
pipeline route have commenced. their participation in the development of the Compliance to sectors whose investment
sector. The citizens are engaged in different plans and strategies are aligned to the
forums that scrutinize the institutional, NDP and Vision 2040. About 60% of the
The construction of the roads government sectors have developed long
infrastructure required for the policy and legislative developments term plans. Accordingly, all Ministries,
development of the oil and gas pertaining to oil and gas development in the Government Departments and Agencies
country. are required to prepare their respective
resources is also ongoing. In this sector policies and master Plans,
regard, the Hoima-Buseruka-Kaiso- which are consistent with the long
Tonya Road whose construction Extensive consultations were undertaken term national development goals and
commenced in 2013 was during formulation of the National Oil and objectives. Linkages to other sectors can
completed and handed over to Gas Policy and in the preparation of the new be identified in these plans and policies.
Government in December 2014. petroleum legislation that became effective
Designing of the Kyenjojo-Kagadi- subsequently. The consultations on the The Public Finance Management Act
Hoima-Masindi road as well as new laws were enhanced by the additional empowers the NPA to compel sectors
consultations which Parliament undertook to prepare plans that are well aligned to
Hoima-Biso-Wanseko Road were the NDP so as to award the Certificate
completed by the Ministry of Works both in country and overseas in preparation
of Compliance. The NPA Act in section
and Transport and procurement of for the debate on the Bills. Consultations 7 (4), gives the Authority discretion to
contractors for these two roads is with stakeholders continue to be undertaken enforce this. The section is however silent
ongoing. during studies relating to the Refinery on the need for strengthening sectoral
Development Project, National Participation linkages in the alignment of strategic
plans to the NDP. The NPA has not fully
Regional governments under the and Environment Management, among consolidated its role as an ‘Authority’ to
Northern Corridor Infrastructure others. enforce sufficient oversight over MDAs in
Master Plan5 are fast tracking the the alignment of strategies, policies and
The consultations undertaken while putting plans.
development of key infrastructure
projects such as regional pipelines, in place these frameworks do not only
the refinery and standard gauge enhance the quality of the frameworks but
railway which will support the also boost ownership of the outcome of the
emerging extractives sector in East frameworks by the respective stakeholders.
Africa. In addition to the consultative process,
a National Communication Strategy for
The MEMD concluded the the Oil and Gas subsector was developed
preparation of a draft strategy and and put in place during 2011 to bridge the
plan for the Transportation and communication gap between the oil and
Storage Facilities of Petroleum gas industry and the general public. This
Products in Uganda. However, strategy, which is under implementation,
the plan is due for submission to can be accessed on www.petroleum.go.ug
A public information and education effort

5 The Northern Corridor Infrastructure to enable Ugandans achieve a better
Development Master Plan comprise of understanding of the developments and
Uganda, Kenya, Tanzania, Rwanda, Burundi opportunities in the sector and how they
and South Sudan.
15
5. Suggested Recommendations/Interventions
To consolidate the achievements of the petroleum subsector as reflected in this scorecard and to
improve on this performance, government should fast track the following:
01 02 03 04
05
Put in place a Develop Develop a Fast track the
The policy for HSE in guidelines and clear strategy efforts to join
establishment oil and gas to help regulations and plan for Extractives
of the National operationalize pertaining value addition Industry
the existing to citizens in the oil and Transparency
Content Law regulations and engagement gas subsector. Initiative (EITI)
and Policy and guidelines and and public This will enable to promote
operationalize equip regulatory participation to strengthen transparency and
this to enable and monitoring in oil and gas linkages accountability
Ugandans agencies with the activities between oil and in oil and gas
required training, to increase gas and other development.
and Ugandan equipment transparency and sectors of the
firms with the and manpower accountability; economy; and
required skills to effectively
and expertise to monitor
participate in oil operations
of oil and gas
and gas activities companies during
(local content field development
development); and production;
6. Conclusion
The performance of the petroleum subsector is important for NPA which is mandated to supervise
performance of key sectors that will spearhead Uganda’s socioeconomic transformation as envisaged
in NDP II and Vision 2040. Overall, the scorecard results suggest that the subsector has performed
above average as Uganda embarks on the process of developing and commercialization of her oil and
gas resources. Significant progress has been made in providing an enabling institutional, policy, and legal
framework for exploitation of oil and gas resources. However, key gaps especially putting in place a policy
and law for National Participation in oil and gas development and creating an enabling environment to
promote transparency and accountability in the subsector need to be prioritised.
16
Annex 1: References 4) Does legislation require oil and gas development
1) Access to Information Act, 2005. projects to prepare an environment impact
2) Environmental Impact Assessment assessment prior to project implementation?
Regulation, S.I. No. 13/1998. 5) Are ESIA’s for oil and gas projects published and is
3) Government of Uganda (1995); Constitution of the there a consultation process in their preparations?

Republic of Uganda, 1995 (Revised, 2005). 6) Does Parliament have any oversight role regarding
4) Ministry of Energy and Mineral Development contracts and licenses in the oil and gas subsector?
Annual Performance Reports (Various)
Section 2: Revenue Generation and Collection
5) National Oil and Gas Policy, 2008.
1) What authority actually collects payments
6) Ministry of Energy and Mineral Development: Progress in the
from oil and gas companies?
Implementation of the National Oil and Gas Policy, 2015.
2) Does the Ministry of Finance Planning & Economic
7) The Petroleum (Refining, Conversion, Transmission
Development, Ministry of Energy & Mineral Development,
and Midstream Storage) Act, 2013
Bank of Uganda, Uganda Chamber of Mines and
8) The Petroleum (Exploration, Development
Petroleum, Office of the Auditor General, publish some
and Production) Act, 2013.
or all of the information on revenue generation?
9) National Planning Authority (2016); Certificate of
3) Are all oil and gas-related revenues, including those
Compliance, for the Annual Budget, FY 2015/16.
collected by regulatory agencies, ministries, special
10) NEMA Act.
funds or by URA placed in the national treasury?
11) NEMA EIA Guidelines for the Energy Sector, 1998.
4) Does the Office of the Auditor General report regularly
12) Office of the Auditor General (2015); Report of
to the Parliament on its findings, including an objective
The Auditor General on the Financial Statements
analysis of agencies in charge of managing resource
of Ministry of Energy and Mineral Development
revenues, and are these reports published?
for The Year Ended 30th June, 2015.
13) Public Finance Management Act, 2015. 5) Is Uganda an EITI candidate or compliant country?
14) Transparency International (2015); Section 3: Establishment of the Uganda National Oil
Corruption Perceptions Index, 2015. Company
15) Uganda BTVET Strategic Plan 2011 – 2020.
1) Is there a state owned company operating in
16) Uganda Bureau of Statistics (2015);
the oil and gas sector? What are its roles?
Statistical Abstract 2015.
2) How is government ownership in the UNOC structured?
3) Are officials in UNOC required to disclose their
Annex 2: List of Institutions and Offices Consulted financial interests in any oil and gas projects?
1) Uganda Revenue Authority (URA), Manager 4) Does the UNOC publish information about the roles
Strategy Development and Management and composition of its Board of Directors?
2) MEMD, Directorate of Petroleum
Section 4: Petroleum Fund Management
3) Ministry of Gender, Labour and Social Development
(MGLSD), Chairperson, Oil and Gas Skills Council 1) Has the government created a petroleum
4) Ministry of Education and Sports fund that concentrates revenues directly
5) National Planning Authority (NPA) from the Oil and gas projects?
6) Ministry of Finance Planning and 2) Which government Institution is responsible
Economic Development (MFPED) for the Petroleum Fund?
7) Office of the Auditor General (OAG) 3) Does the fund management or authority in charge
8) Bank of Uganda (BoU) of the fund publish comprehensive information
9) National Environment Management Authority (NEMA) on its assets, transactions and investments?
10) Ministry of Finance, Planning and 4) Are the rules governing deposits into
Economic Development (MFPED) the fund defined by legislation?
Section 5: Local Revenue Transfers

Annex 3: Key Questions 1) Does the central government transfer resources to local
governments based on production of oil and gas resources?
Section 1: Access to Oil and Gas Resources 2) Does the central government publish
1) What licensing practices does the government comprehensive information on transfers of
commonly follow in the oil and gas subsector? resource related revenues to LGs?
2) What is the fiscal system for Petroleum resources? 3) Do LGs publish information on transfers
3) What information does the government publish received from central governments?
before and after the award of licenses?
17
Section 6: Local Content
1) Are there arrangements such as a policy, plan or strategy
to enhance the skills & capacity of the nationals to fully
participate in the activities of the oil and gas subsector?
2) Do women and the youth have equal opportunities to
participate in the activities of the oil and gas subsector?
Section 7: HSE Management

1) Does the country have a HSE policy, plan or Manual?
2) Does the institution responsible with monitoring
compliance to HSE Policy framework in the oil and gas
subsector have the required capacity (skills and resources)?
3) Is there a legal, regulatory and policy framework on
HSE Management in the oil and gas subsector; and
is it published and available to the general public?
Section 8: Infrastructural Development

1) Are there adequate investments in infrastructural
development in the oil and gas subsector?
2) Does the country has & implements a strategy or plan for
infrastructural development in the oil and gas subsector?
Section 9: Citizens Engagement & Participation

1) Are there informed citizen’s engagement and
participation forums in policy and legislative
development in the oil and gas subsector?
2) Does the government publish and informs the public
about the decisions concerning oil and gas activities?
3) Does the country have a legal framework that enables
the citizens to participate in the decision making process
about the operation of the oil and gas subsector?
Section 10: Value Addition & Sectoral Linkages

1) Has the government and all its sectors
developed long-term development plans?
2) Has the spending of revenues from the oil and gas
subsector been aligned to the long-term planning
and spending framework of the government such
as the MTEF, NDPs, and Vision 2040?
3) Is there a strategy or plan for value addition
in the oil and gas subsector?
18
CONTACT AND ADDRESS DETAILS
National Planning Authority Africa Centre for Energy and Mineral Policy (ACEMP)
Planning House Plot 245, 1st Floor, Suite 20,
Plot 17B, Clement Hill Road J&M Airport Road Hotel, Bwebajja, Entebbe Road
P.o. Box 21434, Kampala – Uganda P.O Box 1164, Kampala
Tel. +256-414- 250229/+256-312-310730 Tel:+256-394-003-934
Email :Npa@Npa.ug Email:info@acemp.org.com
Website: www.npa.ug Website: www.acemp.org

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MEASURE IT TO MANAGE IT

Annual Petroleum Development Scorecard

Source: Petroleum Exploration and Production Department, 2014

List of Abbreviations and Acronyms

Annual Petroleum Development Scorecard

Using information from key stakeholders

trillion shillings) 1 Ministry of Energy and Mineral Development, 2016

Annual Petroleum Development Scorecard

legal and regulatory framework, • Revenue Generation & Collection

This annual petroleum • Citizens Engagement & Participation

4. Enabling Environment 8.5 50.0

Total 100 40.0

data collection process; (i) primary

stakeholders; and, (ii) secondary data

Annual Petroleum Development Scorecard

Under this component, all pieces of legislation together with other

A section of the newly-constructed Hoima-Kaiso Tonya Road is part of several other

4.2.2 Reporting Practices 12.0

Annual Petroleum Development Scorecard

Value Addition & Sectoral Linkages 47.9

Citizens Engagement & Participation 47.6

Infrastractural Development 70.8

Annual Petroleum Development Scorecard

Local Content 57.1

Local Revenue Transfer 66.7

Petroleum Fund Management 76.1

National Oil Company (UNOC) 75.0

Revenue Generation & Collection 70.8

Access to Oil & Gas Resources 71.0

300 The environmental impact assessments for

million the public and for stakeholder review on the

3.5 the Environmental Impact Assessment

billion from the Authority. Any person who desires

6.5 resource legislation but this only provides

billion Development and Act 3 Production)

Annual Petroleum Development Scorecard

Annual Petroleum Development Scorecard

A public information and education effort

Annual Petroleum Development Scorecard

Section 5: Local Revenue Transfers

Section 7: HSE Management

Section 8: Infrastructural Development

Section 9: Citizens Engagement & Participation

Section 10: Value Addition & Sectoral Linkages

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