An Analysis of the Legal and Non-Legal Framework Relating to the Development of Natural Gas in Buliisa District in Uganda

Abstract

Following the commercial oil and gas discoveries in the Albertine Graben, and Buliisa district in particular, in 2006 the decision was made by the Government of Uganda to start development and production of the natural resource. The legal/non-legal framework was developed by Cabinet and approved by parliament to guide and govern the natural resource development. This study dealt with an analysis of the legal and non-legal framework relating to the development of natural gas in Buliisa district in Uganda basing on the theories of natural gas production including the Hotelling theory and the Hubbert Production theory which are dependent on economic growth and economic production functions. The legal/non-legal framework relating to the development of natural gas in Uganda is premised on the Petroleum Acts 2013 (Upstream and Midstream) and the 2008 National Oil and Gas Policy (NOGP) but still have lots of shortcomings of the existing legal/non-legal framework guiding the development of natural gas. There is still no transparency, accountability and easy access to information in the sector including the Model Production Sharing Agreements. There is insufficient indigenous material regarding workforce skills exchange, transfer of technology, company growth and competition, and so on, rendering the mother country and populace in a better position than they were prior to resource exploitation. There are shortcomings in environmental matters, land compensation and security at the production sitesIt is proposed that the state develop a legislative and set of policies mechanism to guarantee that natural resource exploitation respects human rights and liberties, and that the legal framework include safeguards for public exposure of contractual agreements and environmental impact audits for monitoring progress. A comparative analysis of the measures drawn from other jurisdictions in natural gas production and development shows that Uganda still has a lot of work to do to improve her oil and gas sector. If Uganda is to pick anything from the good performers in the oil and gas industry, she needs to improve on licensing, taxation local impact and state-owned enterprise as well as budgeting and sovereign wealth funds. Other areas that need critical improvement are accountability, government effectiveness, regulatory quality, rule of law, control of corruption, political stability and absence of violence. Finally, Uganda needs to enact a separate law on natural gas which specifically includes prohibition of flaring or venting of the natural gas.