Civil society organizations (CSOs) have submitted a petition to the Minister for Energy and Mineral Development, expressing concerns about the lack of transparency and effective utilization of royalties in the extractives sector. These concerns revolve around delays in disclosing information to local governments eligible to receive royalties from petroleum production.
The petition, filed by the Advocates Coalition for Development and Environment (ACODE) and civil society partners from the Mid-Western Albertine Graben, operating under the Bunyoro Albertine Petroleum Network on Environmental Conservation (BAPENECO), highlights the government’s commitment to the Extractive Industries Transparency Initiative (EITI) standards, which emphasize transparency in the sector.
The CSOs acknowledge the government’s substantial efforts in the extractives sector, particularly in the petroleum sub-sector, where a comprehensive policy and legal framework has been established for petroleum resource exploration and production. However, they identify several areas requiring urgent attention:
- Delay in Implementing PFMA Section 75 (2): The Public Finance Management Act (2015) mandates the petroleum minister to publish a list of eligible local governments within petroleum exploration and production areas in Uganda entitled to receive royalties from petroleum production.
- Lack of Regulations in the Mining Sub-Sector: There is a delay in formulating regulations for determining the royalty regime in the mining sub-sector. This includes the valuation of minerals to establish the royalty base, setting rates based on prevailing mineral market prices, determining royalties for mineral samples, outlining conditions and durations for royalty waivers, and providing provisional assessments.
- Absence of Regulations for Royalty Utilization: Currently, there are no regulations governing the optimal use of royalties transferred to local governments, raising concerns about potential arbitrary use of these funds by beneficiary local governments. Given the finite nature of mineral resources, the CSOs recommend developing guidelines for the proper utilization of mining royalties, with potential inspiration drawn from the wildlife sector.
In light of these concerns, the CSOs call upon the Minister responsible for petroleum to promptly publish the list of districts eligible to benefit from oil production and to establish regulations governing the effective utilization of mineral royalties transferred to local governments. These regulations should prioritize appropriation for development purposes.
Additionally, the CSOs urge the Minister to disclose and publish information related to royalty determination, including the volumes of minerals and/or petroleum being extracted, mineral valuation, licensee returns to the Ministry of Energy and Mineral Development (MEMD) and/or the Uganda Revenue Authority (URA), as well as any waivers granted to licensees in the mineral sub-sector. These transparency measures are aimed at enhancing accountability in the management of minerals revenue and the remittance of mineral/petroleum royalties to local governments.