By Pascal Kwesiga
World over, Governments and extraction companies are facing mounting
pressure to disclose contracts.
The pressure is coming from the Civil Society, industry regulators and
international financial institutions. Clearly, calls for greater contract
transparency in the extractive industry are louder than ever.
However, these calls are meeting stiff resistance from countries and
some extraction companies that still want to keep extraction contracts secret.
While some countries have allowed some degree of contract openness and
enacted pieces of legislations that make it mandatory for their Governments and
extraction companies to disclose contracts, many are still against disclosures.
The Governments which are still paranoid about contract disclosures
put forward the need to protect ‘public interest’ and their countries’ ‘commercial
interests’ as the main arguments against transparence in oil and mining
contracts.
But these arguments are slowly being punctured by emerging schools of
thought. For example, some of those in favour contract disclosure argue that
public interest is broad and it could also be in public interest for the
population to know the contents of the contracts their Governments have signed
with extraction companies.
Others argue that it is meaningless for Government officials to think
that disclosing extraction contracts will reduce the bargaining power of their
countries in future contracts because the companies share this information
among themselves. Some have disclosed these contracts in their countries’ stock
markets.
In Uganda, some of the Government officials who have continued to put
up a spirited defense against contract disclosures also appreciate the need for
Ugandans to know the contents of the contracts Government and Oil Companies
signed.
But, these Government officials also argue that maintaining contract
secrecy to protect the country’s ‘commercial’ and ‘public interest’ outweighs
the need for the public to know the contents in the extraction contracts.
In trying to dispel suspicion and fears from the public which is eager
to know the contents of the agreements, the Government officials at the
ministry of Energy and Mineral Development and the Petroleum Directorate keep
telling Ugandans that the contracts the country has signed with oil companies
are favourable for Uganda, and that there should be no need for alarm.
They also say that they ensured that comfort clauses are minimized
during negotiation of the contracts. Comfort clauses favour the companies. So,
is it possible that the oil companies signed deals where they will reap few
benefits given their experience in the extraction industry? Who determines a
good contract? Do governments act on behalf of the people in signing contracts?
If Governments sign contracts on behalf of the population they should
not be coy about disclosing them. Contract secrecy creates suspicion and
excludes the public from monitoring the activities of the oil companies. It
also makes it difficult for the people to understand the extractive industry.
It is also hard to convince the public that the Government signed favourable
contracts with oil companies. The use of the word favourable creates
ambiguities and it can be interpreted in various ways. There are many
stakeholders in the extractive industry and one wonders which category of
people the contracts favour. No matter the arguments for contract secrecy,
contract disclosure is in the best interest for the Government, extraction companies
and the people.
