February 22, 2013

Parliament Passes Second Oil Bill

Irene Muloni, Uganda's Energy Minister
Irene Muloni, Uganda’s Energy Minister

Parliament has today passed the second oil bill more than two months after the Petroleum (Exploration, Development and Production) Bill 2012 was passed on December 7 last year. The Petroleum (Refining, Gas Processing, Conversion, Transportation and Storage) Bill 2012 is to promote policy formulation, coordination and management of petroleum refining, gas processing and conversion, transportation and storage. This is to give effect to Article 244 of the Constitution. The new law will further provide for third party access to infrastructure; to provide for an open, transparent and competitive process of licensing by the Minister responsible for petroleum. It will also provide for health and safety environment, to provide for cessation of petroleum activities and decommissioning of petroleum facilities and infrastructure and to provide for related matters. There was no repeat of the controversy that surrounded the debate and passing of the first bill took more than three months, after Parliament and the Executive disagreed over some of the clauses therein. In particular, some MPs opposed clause 9 of the law that defined the powers of the energy minister, arguing that such powers should be vested with the institution, not an individual. Energy and Minerals Minister Irene Muloni moved before the house the motion to pass the second Oil Bill with amendments on clauses 3, 54 and 74. Clause three defines the authorities mentioned in the Bill such as the Minister, while Clause 54 provides that the licensee, its contractors and subcontractors give priority to competent citizens of Uganda and registered entities owned by Ugandans in the provision of goods and services. The licensee is also expected to give priority to the purchase of local products and services from Ugandans wherever they are competitive in terms of price, quality and timely availability. Clause 74 on information, data, reports and records states that a holder of a licence in crude oil refining, gas processing, transportation and storage shall keep at an address in Uganda notified to the Authority. It also demands that the licensee provide the number of employees by race, gender and disability, a report on training of Ugandan personnel and title of qualifications obtained. However, Dickens Kamugisha the Director Africa Institute for energy governance (Afiego), tells URN that even though the Bill means Uganda shall now have a law, clause three that gives powers to the Minister should have been changed. Kamugisha cites projects like the construction of Karuma power dam which has faced many challenges because of the powers that were given to the ministers and believes the three billion dollar refinery project should not have been left in the hands of the minister. He states that the Bill has been passed in a rush without engaging the public which was the same thing done with the Exploration Bill. The Afiego Director adds that the second Bill is going to depend on the provisions put in place and the willingness of government to implement them. The two bills were tabled in parliament in February last year in line with the Uganda National Oil and gas policy approved by government in 2008.

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