CSOs under CSCO Caution Government on IFFs Risk Factors in the Oil and Gas Sector
On 2nd February 2021, Civil Society Organizations (CSO) including ACODE, SEATINI Uganda and Water Governance Institute under the umbrella body, Civil Society Coalition on Oil and Gas (CSCO) held a press briefing during which they cautioned government of Uganda on the potential impact of illicit financial flows (IFFs) in Uganda’s Oil and Gas sector. IFFs refer to movements of money and value from one country to another that are illegitimately earned, illegitimately transferred, and/or illegitimately utilized.
According to a report by Trust Africa and the Mail & Guardian, Africa is estimated to be losing approximately USD 50b in illicit financial flows every year. Uganda alone is estimated to be losing UGX 2 trillion per year and it is feared that the situation could get worse with the commencement of commercial oil production.
James Muhindo, the CSCO Coordinator says that the absence of stringent rules and regulations to curb illicit financial flows may affect the country’s returns from the Oil and Gas sector.
‘‘The existence of Production Sharing Agreements/contracts which government signed with various oil companies that have clauses that limit the government’s ability to tax or to change laws is likely to limit Uganda’s ability to generate enough from the oil and gas sector,’’ said Muhindo. These stabilization clauses are very dangerous because they tie the arms of government,’’ he added.
‘‘There is still an opportunity for the government to implement measures to close the existing gaps and revenue leakages in the oil and gas sector,’’ said Regina Navuga, the SEATINI Uganda, Program Coordinator, Financing for Development.
‘‘There is also urgent need for the government to renegotiate the Netherlands – Uganda Double Taxation Agreement (DTA), she added.
Meanwhile, the Executive Director of Water Governance Institute, Henry Bazira noted that companies involved in Oil and Gas do not often declare the full proceeds of oil and gas.
Civil Society Organizations suggested various recommendations that the government and other relevant stakeholders should consider if the country is to optimally benefit from the oil and gas resources.
