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Stakeholders decry govt secrecy in oil dealings
The containers of crude oil at the test drilling site of CNOOC in Bunyoro Sub-region on January 24, 2020. CSOs claim the secrecy in the oil and gas sector is fueling corruption. PHOTO | FILE
What you need to know:
- According to the CSOs, failure to avail the details of production sharing and double taxation agreements also bar the public from scrutinising the management of the sector.
Civil society organisations (CSOs) and other stakeholders have expressed concern over what they describe as government’s continued secrecy in the oil and gas sector, saying it fuels grand systemic corruption and tax evasion.
According to the CSOs, failure to avail the details of production sharing and double taxation agreements also bar the public from scrutinising the management of the sector.
“Who exactly are we dealing with (in the oil and gas sector)? Who are the investors and where are their headquarters? That determines the taxes they pay depending on the agreements,” Mr Henry Bazira, a member of the Energy and Extractives Working Group, told journalists in Kampala on Tuesday.
He added that insider dealing in the oil and gas sector has led to the influx of many international briefcase companies into the country, leaving out genuine local ones.
“There are people who fly out of Uganda, return in two weeks. They register a company, open up a shop, leave one receptionist in the office, get an address, and deposit $50,000 in a Bahamas account and come with bank statements saying they have had five years operations in the Bahamas yet they have only been there for two weeks,” Mr Bazira said.
“Then you come here and bid for a contract in our respective ministries. And because they are international companies, they are given tax holidays, tax exemptions and before you know it, the competent companies are out,” he added.
Ms Regina Kavuga, the programme coordinator at SEATINI-Uganda, explained that the government has kept out details of oil production agreements from the public.
“We know our counterparts, especially those multinationals from developed countries, spend a lot of time analysing how to doge taxes. We might spend a lot of time on the rules and the law but to them, even a comma means something and yet for us we might miss some of the issues (in agreements),” Ms Navuga said.
She added: “If we miss out on all these tax revenues (from oil), our citizens will not be able to get quality services that would have been made available with that money.”
The Civil Society Coalition on Oil and Gas (CSCO), a loose coalition of 60 organisations working towards sustainable governance of Uganda’s oil and gas resources, said without transparency, corruption and lack of knowledge on tax regimes in the country will lead to oil revenue leakage when production begins.
“The major international companies currently involved in Uganda’s oil sector are registered in tax havens and some have concealed ownership structures, which pose a high illicit financial flows risk,” Mr James Ruhindo from CSCOs and other stakeholder group said.
He added: “Although Uganda currently has rather comprehensive transfer pricing rules aimed at reducing incidences of tax avoidance as a result of price manipulation in transactions between related companies, these are difficult to enforce due to secrecy, information unavailability and limited institutional capacity.” Mr Robert Kasande, the Energy ministry permanent secretary, yesterday was not available for a comment.
But in August last year, after Uganda was admitted to the Extractive Industries Transparency Initiative (EITI), the government committed to make public its dealings with oil and mining companies in a report to be published within the next 18 months. EITI is a global standard to promote the open and accountable management of the extractive industry.
The head of the EITI Uganda multi-sectoral group, Mr Moses Kaggwa, who is also the director of economic affairs at the Ministry of Finance, told Daily Monitor then that a work plan had been put in place to guide the next processes.
BACKGROUND
Uganda discovered commercially viable oil deposits in the Albertine graben in 2006 but production is yet to begin. In August 2020, Uganda joined the Extractives Industries Transparency Initiative (EITI). The initiative is a global standard to promote accountable management of the extractive industry.
