Securing Regulatory Excellence in Uganda’s Oil and Gas sectorBy Jane N. Mulemwa (Ph.D.)
The Petroleum Authority of Uganda (PAU) is the national body mandated by law, to monitor and regulate all activities in the upstream and midstream petroleum sub-sectors, in Uganda. The first Board of Directors of the PAU was appointed by the President of the Republic of Uganda, His Excellency, Yoweri Kaguta Museveni on 4th October, 2015, and inaugurated by him on the 23rd October, 2015. The mandate of the PAU gives this newly established institution the rare opportunity to participate in kick-starting a new economy for our country and hence, a significant responsibility. As the pioneer Governing Team, the Board is committed to not only laying a firm foundation for the Authority, but also to leading the Authority with diligence, professionalism and integrity.
Government holds the petroleum resources in trust and on behalf of the people of Uganda, both the current and future generations. The public has high expectations of the impact of the oil and gas sector in Uganda and therefore, the responsibility of Government to fulfil these aspirations makes achieving Excellence in all aspects of Management and Governance of the sector critical.
We are aware of the fact that the God-given resource of Oil and Gas can easily turn into a “curse” for any nation if it is not properly managed. Fortunately, Uganda is blessed to have discovered commercial oil resources at a time when the country could benchmark on best practices from other oil producing countries, and more so, those within the similar economic environment in Africa.
As narrated by Reuben Kashambuzi in his book “The Story of Petroleum Exploration in Uganda, 1984-2008: A Matter of Faith”, the challenging task of leading the exploration efforts until the discovery of the commercial oil resources was spearheaded by Ugandans under the parent Ministry of Energy and Mineral Development (MEMD). Many of these Ugandans achieved specialisation in various disciplines through more focussed education and training in this sub-sector, with the support and guidance of H.E. the President of Uganda. These trained Ugandans also took on the responsibility of benchmarking internationally, for best practices in the sector, as they set up the institutional framework and the developed key policies and laws to govern the sector.
Institutional Arrangements and Oversight
Several institutional models for the oil and gas sector exist around the world today. Through benchmarking widely in countries as varied as Angola, Australia, Canada, China, Nigeria, Norway, and, Tanzania, it was realised that International Best Practice has the policy, commercial and regulatory aspects separately managed by independent institutions. Therefore, this is the model that Uganda adopted, thus unbundling Government’s principal roles for the oil and gas sector, through the creation of two new bodies namely, the Petroleum Authority of Uganda (PAU) and the Uganda National Oil Company (UNOC), independent from the Directorate of Petroleum (DoP) in MEMD.
Consequently, the Ugandan law now provides that in this sector, the MEMD through DoP, remains with the responsibility for Policy formulation and oversight; the PAU has the mandate for Monitoring and Regulating the sector; while UNOC is responsible for the Commercial and Business aspects in this sector. This model is based on the need to ensure efficient oversight and management of the sector, as it progresses and expands from exploration to the development and production phases. In addition, this model also allows for a focus on further exploration to ascertain the potential for existence of additional oil resources in the country.
Uganda’s governance model further provides for other Ministries, Departments and Agencies (MDAs) to take charge of important components of the oil and gas sector, within their expertise. For instance, with respect to revenue management, the Ministry of Finance, Planning and Economic Development (MoFPED), will oversee the fiscal policy development and its implementation whereas the Uganda Revenue Authority (URA) takes forward the collection of all petroleum related revenue. A Petroleum Fund has been established under the Bank of Uganda, where the revenue will be deposited and disbursed with approval of Parliament, whereas the Office of the Auditor General undertakes independent audits of the expenditures incurred by the licensed oil companies, to determine recoverable costs.
The Strategic Direction of the PAU
PAU’s strategic direction is grounded on four pillars, namely, Institutional Building, Facilitating the Commercialization of the discovered Oil and Gas resources, Enabling Exploration to increase the resource base and, Enhancing the Impact and Sustainability of the Petroleum Sector. As the regulatory body for the country’s oil and gas sector, the PAU is established as an independent body and is insulated from interference, unless gazetted. The law also calls for ring-fencing of specific sources of funding for the operations of the PAU, in order to guarantee financial independence, in line with the transparency and accountability principles.
Since our inauguration, the Board has made important strides in setting up the Authority. We have competitively recruited high calibre staff to head the different Directorates and constitute the Executive team of the Authority. We have crystallised the purpose of our existence, by developing a Vision, Mission, and working out key principles and values to guide the work of the Authority, as we continue the process of recruiting other staff. We have further developed a Strategic Plan for the Authority, one that recognises the importance of developing a strong institutional culture and partnerships. Like all other regulators, the mandate of the PAU is derived from the law and our responsibility to society. Our aim is to be a transparent and publicly accountable institution; fulfil the professional responsibility and discretion bestowed on us; work diligently to build consensus with those we regulate plus our stakeholders; and, to anticipate, mitigate and address any challenges in our work.
Our commitment is to ensure that Uganda provides a regulatory environment that not only encourages investment in the oil and gas sector, but also supports inclusive development, in order to achieve lasting value to our country and its citizens. This, I believe, will drive the PAU towards attaining a strong and lasting legacy in line with our vision of “Becoming a Leading Petroleum Regulatory Agency”.Dr. Jane N. Mulemwa is the Chairperson of the Board of Directors of the Petroleum Authority of Uganda.