Strengthening the Management of the Oil and
Gas Sector in Uganda
(An expansion of “Strengthening the State Administration of the
Upstream Petroleum Sector in Uganda” Programme)
A Development programme in co-operation
with Norway
Ministry of Energy and Mineral Development
March 2009
Table of Contents
Table of Contents ..................................................................................................................ii
Abbreviations ....................................................................................................................... iii
1.0 Background...................................................................................................................... 1
2.0 Purpose ............................................................................................................................. 4
2.1 Common Outputs ......................................................................................................... 4
2.2 Resource Pillar .............................................................................................................. 5
2.3 Revenue Management Pillar ...................................................................................... 6
2.4 Environment Pillar ........................................................................................................ 8
2.5 Programme Management ......................................................................................... 10
2.5.1 The Secretariat .................................................................................................... 10
3.0 Planning, design and sustainability elements ..................................................... 11
3.1 Planning process ........................................................................................................ 12
3.2 Programme design (See Annex1 &2) ..................................................................... 14
3.3 Sustainability and risks (See Annex I, Risk matrix) ............................................... 16
4.0 Coordination (See Annex2, Programme Organogram and mandates for key
positions and functions) ................................................................................................... 19
4.1 Roles and responsibilities: Partner and donor ....................................................... 19
4.2 Alignment with Partner’s systems and procedures ............................................... 20
4.3 Coordination on the Norwegian side ....................................................................... 20
4.4 Donor coordination ..................................................................................................... 21
5.0 Implementation of the program ................................................................................ 23
5.1 Scheduling ................................................................................................................... 23
5.2 Priorities ....................................................................................................................... 23
5.3 Common tasks ............................................................................................................ 23
5.4 Budget (see Annex8, Overall Budget)..................................................................... 23
6.0 Reporting ........................................................................................................................ 23
6.1 M&E system ................................................................................................................ 23
6.2 The Secretariat (see Annex 7 secretariat Organogram) ...................................... 24
6.2 Annual meeting ........................................................................................................... 24
ANNEX1: LFA/ Matrix for the program document ........................................................... 25
ANNEX2: Program Management and Governance Structure ....................................... 43
ANNEX3: 2009 Work Plan and Budget for the Resource Management Pillar ............ 44
ANNEX4: 2009 Work Plan and Overall Budget for the Revenue Management Pillar
.................................................................................................................................................. 48
ANNEX6: Budget for the Programme Coordination Committee ................................... 54
ANNEX 7: Programme Coordination Committee Structure .......................................... 56
ANNEX8: Overall budget for the Programme (Detailed budget is attached
separately) .............................................................................................................................. 57
ii
Abbreviations
EA:
Exploration Area
FDP:
Field Development Plan
GIS:
Geographical Information Systems
GoU
Government of Uganda
HSE:
Health, Safety and Environment
MAAIF:
Ministry of Agriculture Animal Industry and Fisheries
MEMD:
Ministry of Energy and Mineral Development
MEP:
Macro Economic Policy
MFPED:
Ministry of Finance Planning and Economic Development
MWE:
Ministry of Water and Environment
NATOIL:
National Oil Company
NEMA:
National Environment Management Authority
NIMES
National Integrated Monitoring and Evaluation Strategy
PAU:
Petroleum Authority of Uganda
PEPD:
Petroleum Exploration and Production Department
PSA:
Production Sharing Agreement
PUP:
Petroleum Utilization Plan
UWA:
Uganda Wildlife Authority
iii
1.0 Background
Uganda is a land locked country located in the East African region with a
population of 28 million which grows at an annual rate of 3.4%. It is bordered by
five countries, with Kenya to the east, Tanzania to the south, Rwanda to the
south west, Democratic Republic of Congo to the west and Sudan to the north.
Over the last two decades, Uganda’s economic performance has been strong
with economic growth averaging 8.1% per annum and inflation controlled to
single digit levels. During the same period, the number of people living below the
poverty line substantially reduced from 56% in 1997 to 31% in 2005. This
progress has been backed by a good track record on economic reforms and
macroeconomic management which has also generated substantial external
support in the form of aid, debt relief and technical assistance. While the country
maintains adequate foreign reserves it continues to run a trade deficit with its
major trading partners and petroleum products constitute over 15% of the total
import bill. About 90% of Uganda’s petroleum imports are routed through Kenya
using the port of Mombasa with the balance of 10% coming through Tanzania
using the port of Dar es Salaam. Consumption of petroleum in Uganda currently
stands at 935,659 m3 per annum. The average annual growth of petroleum
consumption is estimated at 5%. Between 2005 and 2008, there was a steep
growth in consumption of about 20% as a result of thermal electricity generation
using diesel. The petroleum import bill is estimated at the value of US$ 320
million per annum, which constitutes about 8% of total national imports and
represents slightly above 20% of total export earnings. Petroleum product prices
in Uganda were deregulated in 1994 and since then pump prices have risen in
nominal terms by nearly 67%. Like other countries in the region, Uganda incurs a
high expenditure on petroleum products contributed by the long supply chain a
distance of about 1200km off the coast into the hinterland, a long supply route
characterized by inadequate and inefficient infrastructure, facing the land locked
countries.
Secondly, while increasing tax revenue collection is a critical
1
component of the Poverty Reduction Action Plan. The tax /GDP ratio in Uganda
remains lower than in Sub Saharan Africa (SSA) average making the country
considerably dependant on foreign aid.
The effort to promote Uganda’s oil and gas potential has led to intensified
exploration work being undertaken in the Albertine Graben. This culminated in
the confirmation of the existence of commercial reserves of oil in the country
during 2006. Nineteen wells drilled in Exploration Areas 1, 2, and 3A since the
end of 2005 have all found oil and gas. This represents 100% technical success
and appraisal drilling and well testing done so far shows about 700 million barrels
of recoverable reserves and about 2 billion barrels of oil in place in the three
exploration areas. It is now apparent that petroleum will be produced in the
country, with a possible start up in 2010. This has occasioned the formulation of
a National Oil and Gas Policy to supplement the country’s Energy Policy in
aspects of petroleum exploration, development and production. The policy states
that “Oil and gas are non-renewable extractive resources which are therefore
finite. Their exploitation and utilisation shall therefore be undertaken in a manner
that creates durable and sustainable social and economic capacity for the
country. These resources have the potential to provide immense benefits to the
country through creation of employment, generation of revenues, development of
infrastructure, and subsequently fast-tracking social transformation of the
country. Oil and gas resources and the revenues accruing from them can also
pose challenges of windfall revenue phenomenon and the resource curse if not
well managed.
The oil and gas policy is designed to maximize the benefits and meet the
challenges by providing for appropriate resource management systems and
procedures in line with the National Development Plan (NDP).
It seeks to
achieve this by providing for; the setting up of relevant institutions and capacity
building in the country; attraction of companies to invest in the development of
the country’s petroleum sector; adequate and commensurate return on the
2
companies’ investments; ensuring the country’s receipt of appropriate share and
benefits from any oil and gas resources and activities; and ensuring efficient and
effective utilization of these resources together with the revenues accruing there
from”.
The development of the oil and gas sector presents potential environmental
challenges. The main area with potential for commercial production of oil and gas
coincides with wildlife protected areas, which mean that the planning and
implementation of the programme is even more complex than usual. Unregulated
actions by the oil and gas industry can also destroy habitats, damage biodiversity
and important ecosystem services such as fresh water and bio energy.
Emissions from the industry must be reduced in order to reduce the rate of global
warming and climate change. Best practices are however emerging for
identifying potential issues early and avoiding or mitigating impacts with advance
planning.
The
current
Norwegian-funded
project
for
“Strengthening
the
State
Administration of the Upstream Petroleum Sector” in Uganda comes to a close in
June 2009 after three years of successful implementation. On 27 March 2008,
The Norwegian Embassy received a request from the Ministry of Finance,
Planning and Economic Development for continuation of support to the upstream
petroleum sub-sector. This followed discussions between the Embassy, Oil for
Development (OfD) and the Government of Uganda (GoU) concerning
Norwegian support beyond 2008, when the current upstream petroleum project is
scheduled to be completed.
In order to address the environmental and revenue aspects in addition to
resource, the new programme will have three pillars: Resource management,
Revenue management and Environmental management. The program will have
as its main reference document the National Oil and Gas Policy for Uganda, of
January 2008. The policy goal of the Oil and Gas Policy is “to use the country’s
3
oil and gas resources to contribute to early achievement of poverty eradication
and create lasting value to society”. This program reflects this goal.
2.0 Purpose
Development of the oil and gas sector is a key priority of the GoU, as reflected in
the National Oil and Gas Policy which was approved by Cabinet in January 2008.
This policy states that: “There is a need to put in place the institutional framework
required to manage and regulate this new sector of development.
This
framework will necessitate the introduction of new legislation and institutions,
together with the enhancement of existing ones. Significant training and other
capacity building efforts will have to be undertaken in order to enable the
established institutions to effectively carry out their different mandates.”
The overall objective (Goal) of the programme is: “Oil and gas resources used in
an economical, social and environmentally sustainable manner to meet the
needs of present and future generations.”
The Purpose of the programme is: “Institutional arrangements and capacities in
place ensuring well-coordinated and results oriented Resource management,
Revenue management, Environmental management and HSE management in
the oil and gas sector.”
2.1 Common Outputs
The programme will, beyond the specific pillar activities, bring the three pillars
together in certain common activities important for the successful implementation
and planned achievement of the proposed objectives. These Outputs have been
commonly decided upon and encompasses activities where two or all actors
need to be involved. The Outputs include the training and implementation of a
Strategic Environmental Assessment (SEA) exercise, the development of a
common communication strategy towards other societal actors interested in the
4
progress of the programme and the efficient and effective governance and
management of the programme, including the development of an internal
monitoring and evaluation (management) system.
2.2 Resource Pillar
Petroleum exploration and production activities in the country are guided by the
Petroleum (Exploration and Production) Act, Chapter 150 of the Laws of Uganda
2000. Downstream petroleum activities (i.e. distribution, marketing and sale of
petroleum products), are guided by the Petroleum Supply Act of 2003.
The
former gives the responsibility of directing the upstream petroleum sub-sector to
the Minister responsible for the sector. The Minister receives applications for any
petroleum rights, and is responsible for issuing, renewing and revoking petroleum
exploration and production licences. The Act also provides for a Commissioner of
Petroleum Exploration and Production Department (PEPD), who, together with
the technical staff under him, carries out petroleum exploration promotion, initiate
petroleum legislation and monitor oil companies’ compliance with existing laws,
regulations and agreements.
The Petroleum Act has served adequately the promotion, licensing and
exploration for petroleum in the country, but will need to be reviewed after the Oil
and Gas Policy is put in place, so as to operationalise the policy, make the Act
more suitable to handle the development and production of oil and gas and
appropriately capture the recent trends in the industry. The new Act will, among
other things, include provisions for the development and production of natural
gas; bring on board international best practices in areas like Improved Oil
Recovery (IOR) together with Health, Safety and Environment (HSE) standards;
provide a harmonious relationship with the proposed law on management of
petroleum revenues; provide for National participation as an effort to enhance
value creation by oil and gas activities; and provide for a more competitive
licensing process.
The new Act will also take cognisance of the Petroleum
5
Supply Act (2003), and adequately relate to the emerging issues of the
midstream petroleum sub-sector (i.e. oil and gas transportation, processing and
refining).
The Petroleum (Exploration and Production) (Conduct of Exploration Operations)
Regulations, which were made in 1993, are the set of regulations currently
guiding the conduct of operations in the upstream petroleum sub-sector.
There is need to revise these regulations in order to take into consideration the
global improvements in technology over the recent past together with the
increasing concern for environmental conservation and sustainable development.
This will include implementation of international best practices like use of green
dragon burners for flaring during flow testing of oil and gas wells instead of other
types of burners which produce a lot of smoke and fumes and are therefore less
friendly to the environment. The improved regulations will also better address the
operations and activities undertaken during the development and production of
oil and gas.
The activities to be regulated under the upstream petroleum sub-sector shall
include exploration, development and the production of oil and gas. The new
regulations will be in harmony with those for midstream (refining and
transportation) and downstream (petroleum products distribution, marketing and
sales) petroleum activities.
2.3 Revenue Management Pillar
The economy has more than tripled in size in real terms for the last 5 years, with
real growth averaging 8.1% per annum. Strong private investment has been the
backbone of overall economic growth, while exports of goods and services,
excluding re-exports, have increased from US$243m in 1992/93 to over US$1bn
in 2005/06. Equally as important, dependence on coffee export earnings has
fallen from over 70% of total exports in 1994/95 to just 17.3% in 2005/06. Export
6
diversification has been achieved by re-invigorating other traditional export
sectors (cotton, tea and tobacco) and promoting non-traditional goods export
sectors (such as fish, flowers and vanilla) and tourism. Industrial growth has
averaged 10.0% per annum in real terms, outpacing growth in both services
(7.2%) and agriculture (3.6%). As a result, the share of industry in total output
has increased from 11.0% of GDP in 1986/87 to 20.6% in 2005/06, while
agriculture’s share has fallen from 53.1% to 34.2%. These shifts constitute the
process of structural transformation from subsistence-based agriculture towards
a mix of commercial agriculture, industry and services.
Despite this progress Uganda remains among the least developed countries in
the world and clearly has several challenges to overcome. These challenges
include decreasing dependence on foreign aid by enhancing domestic revenues,
the elimination of absolute poverty and income inequality, addressing
infrastructural bottlenecks in the road and energy sectors, improving the quality
of education and health care as well as value addition to its primary products.
Additionally, the emergence of an oil and gas sector presents a unique
opportunity for Uganda’s next phase in the development process, given that oil
and gas wealth is expected to generate significant revenues to supplement
existing resources. At the same time, if poorly managed or utilized, the oil and
gas wealth could easily reverse the gains made in the last two decades
especially in the areas of governance, export diversification, macroeconomic
stability and structural transformation.
The overall goal of the revenue management pillar is to manage oil and gas
wealth sustainably by consolidating on gains achieved in governance, overall
government revenue administration, government accounting and banking
arrangements, and macroeconomic management while effectively contributing to
the development agenda.
The earning of significant revenues from oil and gas
resources will create a new environment for the country. Managing these
revenues in a manner that facilitates sustainable development and avoids
7
distortion and destruction of the economy will require well defined and deliberate
efforts. These efforts will need to ensure that the state receives the right
revenues and that these revenues are used to achieve equitable and value
oriented national development for the current generation while also providing for
future generations.
2.4 Environment Pillar
Environmental management in Uganda is aimed at achieving National Objectives
and Directive Principles of State Policy, that promote sustainable development
and public awareness of the need to manage land, air, and water resources in a
balanced and sustainable manner for the present and future generations as
enshrined in The 1995 Constitution of the Republic of Uganda.
The high overlap between ecologically sensitive and biodiversity rich areas and
the occurrence of exploitable hydrocarbons in the Albertine Graben poses a
particular challenge for oil exploration and development in Uganda. The Albertine
Graben is the most species rich eco-region for vertebrates in Africa and contains
39% of Africa’s mammal species, 51% of its bird species, 19% of its amphibian
species and 14% of its plant and reptile species. On the other hand, the rate of
biodiversity loss in Uganda is high and was calculated in 2004 to be 10-11% per
decade or about 0.8% annually. The principle threats to biodiversity in Uganda
persist including habitat loss, modification and alteration along with unsustainable
harvesting, pollution as well as introduction of alien species.
The surroundings are key ecotourism sites and have even higher tourism
potential. Oil and Gas exploitation and production activities have the potential for
a variety of negative impacts on the environment. They induce, economic, social;
and cultural changes through alteration in land use patterns, local population
levels, social economic, and cultural systems. They also result into increases
aqueous and gaseous waste streams which may affect plant and animal
8
communities due to changes in their environment through variations in water, air
and soil/ sediment quality and through disturbance by noise, extraneous light and
changes in vegetation cover. These negative impacts need to be mitigated and
addressed to ensure ecosystem integrity.
Oil exploration and development environment issues are largely regulated
through the National Environment Act and the other related regulations that
prohibit degradation of the natural environment (Water, Air and Land), and
promotes the protection of biological diversity. Specific petroleum laws,
guidelines and policies that enforce/ provide for detailed requirements for
environment pollution control are however inadequate and the existing legal
framework (policies, laws and regulations) in other sectors need to be updated as
well.
.
In many cases, human capacity and technical infrastructure in government
agencies is inadequate to handle upstream and downstream oil and gas impacts
on the environment.
In addition there is insufficient knowledge about the
environment and possible environmental impacts of oil and gas exploration in the
potential oil and gas areas. This calls for integrating environmental safeguards in
all stages of exploration, development and production, including Strategic
Environmental Assessment (SEA), oil spill contingency planning and stakeholder
sensitization.
In the context of the programme, the objective of the environment pillar is to
prevent and mitigate the deterioration of the environment due to hydrocarbon
exploration and exploitation by strengthening the capacity of the environmental
authorities to regulate the oil and gas industry in accordance with Uganda’s
environmental policies. This includes the development of an appropriate legal
framework,
guidelines
and
procedures,
risk
assessments,
compliance
monitoring, oil spill contingency planning, and to carry out a Strategic
Environmental Impact Assessment. Preparation of SEA is critical in providing
9
guidance to the oil and gas sector and the basis for all other interventions. Skills
development in SEA, EIA, waste management and ecosystem management will
go a long way in strengthening the capacity for addressing environmental
aspects of upstream and down stream oil activities.
2.5 Programme Management
2.5.1 The Secretariat
The Programme Coordination Committee (PCC) shall ensure that the
Programme is carried out in an efficient manner according to the approved work
plans and budgets and that the results achieved are properly reported to the
institutions and the sponsors involved.
Under Programme management, the program secretariat will support the Pillar
managers in technical and administrative matters. The secretariat will provide
administrative functions such as accounting and day-to-day oversight of the
activities proposed under the program.
The secretariat shall also coordinate
procurement of goods and services for the programme, prepare reports to the
Steering Committee, handle preparations for the annual meetings and provide
support to the Pillar Managers.
2.5.2 Budget (see Annex6)
The structure of the PCC secretariat will be manned by senior staff and two
support staff as shown in annex7. The secretariat will be managed by an
administrator who will participate in recruiting secretariat staff, evaluate their
performance and handle the relationship between the Pillars and the PCC. The
Administrator will be responsible for the preparation of reports of the PCC
including those to the steering committee and those for the Annual meeting. The
Secretariat will have an accountant who will be responsible for managing the
accounts of the programme; this will include planning for the audits of the
programme. The accountant will receive requisition for funds from Pillars,
10
process the requisition through the accounting office of the coordinating Ministry
and make the payments available to the Pillars as required. The accountant will
manage the programme account including preparation of requisitions for
replenishment of funds from the donor when due. The accountant will be
supported by 3 account assistants to handle the more specific aspects of each
Pillar. The secretariat will also have a procurement assistant and secretary to
manage the procurement aspects of the programme and the secretarial /clerical
work for the secretariat respectively.
2.5.3 Communication Strategy
The recent developments in oil and gas sector in Uganda have led to heightened
anxiety and expectations in the country’s population. Most of the anxiety arises
out of lack of absence of regular and up to date information regarding
developments in this sector.
The recently approved National Oil and Gas Policy for the country recommends
putting in place a plan and implementation of a communication strategy for the
sector. Implementation of this strategy is expected to address among others, the
anxiety and expectations referred to above.
The programme will support the putting in place and implementation of a
communication strategy for the oil and gas sector.
The strategy is considered a cross cutting issue i.e. relevant for the three pillars
of the programme. Its implementation will therefore, be undertaken by the Project
Coordination Committee (PCC). The programme secretariat will therefore include
a communications officer who will facilitate the putting in place of the strategy
and its implementation.
3.0 Planning, design and sustainability elements
11
3.1 Planning process
On 27 March 2008, The Norwegian Embassy received a request from the
Ministry of Finance, Planning and Economic Development for continuation of
support to the upstream petroleum sub-sector. The Norwegian Government
through the Embassy committed herself to continue, and expand, its support to
the Government of Uganda in this vital area.
Following the request for support and acceptance by the Norwegian
Government, four consultative workshops were held at the Norwegian Embassy,
in May, June, August and November 2008, respectively. Key Ugandan
government institutions attended as well as representatives from Oil for
Development and consultants from Scanteam. Ugandan institutions which
participated in the consultation process since May 2008 include: Ministry of
Finance, Planning and Economic Development, Petroleum Exploration and
Development (Ministry of Energy and Mineral Development), Uganda Wildlife
Authority, National Forestry Authority, and Department of Fisheries Resources
(MAAIF), Directorate of Water Resources management (MWE), Directorate of
Environment Affairs (MWE) and National Environment Management Authority.
As indicated earlier, consultations started in May 2008 with individual
organization meetings and later joint meetings in May, June, August and
November.
The Norwegian embassy was responsible for all the coordination until the lead
Ministry (Ministry of Energy and Mineral Development) was agreed upon by the
three Ministries.
After the June workshop, NEMA called a meeting of the Environment pillar
members to come up with the sector needs based on an indicative budget of 2
million dollars. The meeting was attended by UWA, Department Fisheries
12
Resources and NEMA. Although Directorate of Water Resources Management
did not attend this meeting, they submitted to NEMA a comprehensive proposal
for consideration. The identified sector needs were submitted to the Norwegian
team.
Based on the input from the Ugandan teams, the Norwegian team prepared the
first logical framework matrix which was discussed at the August workshop.
The August workshop mainly focused on agreeing on outputs under each pillar
including drafting. During this workshop, joint outputs for the all the pillars and the
draft governance and management structure was presented.
Following input from the August workshop, the Ugandan teams provided more
input into the matrix especially on indicators and assumptions. The result of this
effort was used to prepare for the November workshop.
The major focus of the November workshop was to agree on the governance and
management structure, identify activities under each output and start on the
budget build up process.
At the beginning of February 2009, meetings were held between Pillar managers
and the Norwegian team to discuss programme operations.
The programme responds to particular capacity and technology gaps identified
by the different institutions and organisations of the GoU participating in the
programme. The programme intends to influence positively the ability of the GoU
to assess, regulate, plan, monitor, support and enforce the oil and gas sector and
its actors, to collect and manage revenues from the sector and to monitor, advise
and enforce when it comes to the environmental impacts from the oil and gas
sector.
13
Although a number of activities may be continued in the new programme, the
previous programme has done a lot regarding building the necessary capacity,
undertaking technical studies and kick-starting development of policy, legal and
regulatory framework. The proposed programme is therefore building on the
Norwegian supported “Strengthening of the State Administration of the upstream
Petroleum sector” project.
The programme may be influenced by the progress and success of the
exploration and development efforts. The current programme has been largely
driven by development within the upstream petroleum sector.
3.2 Programme design (See Annex1 &2)
The objectives of the programme are developed by the actors directly involved in
the programme and reflect the intentions in the National Oil and Gas policy of
January 2008.
The Goal of the programme is: “Oil and gas resources managed in a
(economical, social and environmentally) sustainable manner [for prosperity] to
meet the needs of present and future generations.”
The Purpose of the programme is: “Institutional arrangements and capacities in
place ensuring well-coordinated and results oriented Resource management,
Revenue management, Environmental management and HSE management in
the oil and gas sector.”
The Outputs and Activities of the programme are divided into four categories: i)
Common Outputs, deliverables the programme and its actors will produce
together, ii) Resource Pillar Outputs, deliverables the Resource Pillar (headed
by PEPD of MEMD) will produce, iii) Revenue Management Pillar Outputs,
deliverables the Revenue Management Pillar (headed by MEP of Ministry of
Finance,
Planning
and
Economic
development)
will
produce
and
iv)
14
Environmental Pillar Outputs, deliverables the Environmental Pillar (headed by
NEMA of MWE) will produce. All the Outputs have corresponding activities, as
shown in the detailed planning of activities for 2009 (Annex1).
The Inputs to the programme will be funds from the Norwegian programme, as
well as staff, technology and capacities from the participating Ugandan
institutions and organisations.
The Goal, Purpose and all Outputs have corresponding sets of Indicators
developed by the actors involved. The Indicators will form an integral part of the
internal monitoring and evaluation (M&E) system that will provide the
management and governance of the programme with timely input for efficient and
effective implementation as well as a solid basis for results based reporting.
Recipient’s monitoring system for the programme
There is no complete baseline data available for the programme at the outset,
but a number of data sets exists that will form the foundation for such a baseline;
since the programme mainly focuses on the institutional and organisation
development of the participating actors the functional assessments conducted by
PETRAD throughout 2008 and completed in 2009 will be used as baseline data
for measuring increased institutional and organisational improvement.
Means of Verification
Pillar meetings will be held every month to review progress of implementation.
The Pillar Managers will prepare, coordinate and follow up activities under their
respective pillars and coordinate with their Norwegian counter parts (Resource
Managers) on the progress of the project and present them at the meetings
The PCC meetings will be held on a quarterly basis to review the implementation
of the programme. The PCC will support the Resource Managers and Pillar
Managers in technical and administrative matters. The committee should
15
comprise of Pillar Managers, who are appointed by the respective ministries and
a chairperson appointed by the coordinating ministry. The committee shall
spearhead preparations for the annual meeting. The committee will be supported
by a secretariat which will handle both national procurement and that of external
assistance together with coordination of reporting.
An annual meeting will be held to review the progress of the programme and
make budget plans for the following year. Annual meetings shall be conducted
between Norway as co-operating partner and representatives from the
Government of Uganda. The annual meeting shall be held during the first quarter
of the year and will agree on the annual work programme and budget.
Preparation for the annual meeting shall be the responsibility of MEMD as
executing agency and the PCC, shall prepare the report to be discussed at the
Annual meeting.
There will be a midterm review of the programme. This will be undertaken by
someone outside the programme and will review progress of the programme.
Financial audits will be undertaken annually on the Programme.
3.3 Sustainability and risks (See Annex I, Risk matrix)
Policy and framework conditions
The policy and framework conditions for the oil and gas sector in Uganda are
favourable; there is a lot of attention surrounding the explorative efforts and
expectations are high. At the same time Uganda is dealing with corruption and
the natural resources revenues traditionally are avenues for rent-seeking. The
programme in and of itself are responding to some of these challenges by
updating laws and regulations and closing gaps in the policy and regulatory
framework.
16
Dutch Disease: The economy is likely to promote the activities in the petroleum
sector and boost the respective economic linkages.
This may disorient the
economy into a single commodity economy. Efforts to promote and maintain
interventions in other sectors of the economy and other domestic revenue
sources must be addressed.
Socio-cultural and gender aspects
The cross-cutting issues in general, and specifically socio-cultural, HIV-aids
concerns and gender, are very relevant risks interfacing the programme. The
constitution of Uganda guarantees equality between women and men before and
under the law in the spheres of political social and cultural life. The Uganda
Gender Policy requires that there should be achievement of gender equality and
women’s empowerment as an integral part of Uganda’s socio-economic
development. The programme therefore takes into consideration the fact that
gender equality and gender equity are an integral part of national development
and reinforce the overall development objectives in the country. With relative
reference to the rights as per acceptable national regulations, and other factors,
gender aspects play a vital role in the creation of a harmonious society.
The world of work has specifically born the brunt of HIV/AIDS since the most
affected groups coincide with the economically productive and mobile ages of 15
to 49 years. HIV/AIDS has affected and still continues to affect both the formal
and informal sectors in various aspects including productivity thus still pausing a
big challenge. The programme takes into account the intervention measures and
practices as spelt out in the National Policy on HIV/AIDS in the World of Work.
This is in principle to provide a guiding tool for the benefit of employers and
workers and the general public.
Economic and financial aspects
Export diversity: Oil and gas resources have the potential to generate
significant windfalls in terms of export earnings, which if not well managed, would
17
lead to significant appreciation of the exchange rate and undermine the
competitiveness of other exports and lead to over reliance on the oil and gas
sector.
Inflation: The oil and gas sector has the potential to generate significant revenue
for the national budget. To the extent that government outlays are made on the
non tradable sector, these expenditures need to be made in line with the
absorptive capacity of the economy to avoid inflationary pressures.
Tax evasion: This is a major challenge to revenue collection. Uganda’s fiscal
system is a hybrid type consisting of four main features, namely Royalty,
Production (Profit Oil) Sharing, State Participation and Corporate Income Tax.
For the state to adequately benefit from produced oil and gas, each aspect of the
fiscal system requires stringent administration.
Fluctuations in the price of oil: Need for conservative estimates on price of oil in
national budget assumptions. It is important to have a feature in the PSA to deal
with extremely high oil prices, to avoid the reduction of governments take as oil
prices increase (i.e., a regressive fiscal system). The PSA’s should allow
revisions to be made to have a price-based royalty, or a royalty based on a
combination of production volumes and price.
Institutional and organisational aspects
The programme in and of itself are responding to some of these challenges by
updating laws and regulations and closing gaps in the policy and regulatory
framework.
Climate Change
Exploitation of oil- and gas resources increases emissions of green house gases.
The Intergovernmental Panel on Climate Change (IPCC) has documented that
the global emissions must be reduced by 50-80 % by 2050. The largest cut in
emissions must take place in industrialized countries, but Uganda also needs to
18
consider a development path that limits the emissions from fossil energy sources.
In order to meet the energy need of Uganda, there is thus a need to encourage
development of renewable energy sources in parallel with oil and gas
development. Uganda will also need to consider adaptation measures to climate
change
Environmental aspects
The programme in and of itself are responding to some of these challenges by
updating laws and regulations and closing gaps in the policy and regulatory
framework, and institutional capacity building.
Technical/technological aspects
There are no significant technical risks to the program; deciding on the
appropriate “technology” in terms of training and capacity building in general is a
design issue and not a risk as such. It will be important to monitor the actual
effect of technology chosen, both in terms of training and capacity building and in
terms of more “direct” technologies chosen (like IT equipment/ GIS etc).
Cooperation between participating ministries
The good cooperation between participating ministries, agencies and the society
at large will be important if the programme is to succeed.
4.0 Coordination (See Annex2, Programme Organogram and mandates for
key positions and functions)
4.1 Roles and responsibilities: Partner and donor
The programme will consist of three pillars: Resource Management, Revenue
Management and Environmental Management. Each pillar will be headed by a
Ugandan Pillar Manager (PM), who will be assisted by a Norwegian Resource
Manager (RM) from one of the cooperating institutions. The Norwegian lead
institutions will be the Norwegian Petroleum Directorate, the Ministry of Finance
19
and the Ministry for the Environment. In addition, several directorates will be
involved. Norad, as OfD Secretariat, will have a coordination and technical
assistance role.
The Pillar Managers will report to a Programme Coordination Committee (PCC),
which again provides input to the Annual Meeting (AM) between Norway and
Uganda. The PCC will have a Secretariat to support it. The Secretariat will be
headed by a Programme Coordinator (PC) on the Ugandan side to ensure
sufficient coordination of the three projects, and a Programme Assistant (PA) to
ensure that input from the various projects is sewn together before it is presented
to the PSC (as will be the case with e.g. the programme document, programme
reports etc.). The chosen model should ensure maximum ownership by the GoU,
and should as much as possible be managed by existing (strengthened) GoU
institutions.
There will be one Ugandan lead institution for each pillar. The lead institution,
through the PM, will be responsible for coordinating activities with other relevant
institutions in each pillar. The PCC, the Secretariat and the PMs must ensure
coordination on cross-cutting issues.
4.2 Alignment with Partner’s systems and procedures
All the programme activities are based within the institutions participating in the
programme.
4.3 Coordination on the Norwegian side
OfD will set up a Working Group in Norway to ensure proper coordination
between the various Norwegian institutions which will provide support under the
OfD programme. In addition, OfD will recruit a Coordinator from Norway who will
be responsible for overseeing and coordinating the total Norwegian technical
contribution. The role and responsibilities of the Working Group should be
20
clarified, in light of the Embassy’s overall responsibility for managing the
Programme.
4.4 Donor coordination
OfD has an agreement to contribute to the Petroleum Governance Initiative (PGI)
with the World Bank. The Bank may become involved in the petroleum sector in
Uganda outside of the programme (see below). If and when the bank gets
involved, its involvement will be in corporation with the programme.
Resource management: Norway has developed frameworks of cooperation in
petroleum matters with other North Sea countries. Uganda signed an agreement
of cooperation with DRC for cooperation in petroleum exploration and
exploitation of common fields in 1990. Consideration has been made on the
need to update this Agreement as per the review by a consultant supported by
the Norwegian Government during 2006/07.
Support will be required to develop a framework under which the various oil and
gas activities can be implemented in the spirit of the above Agreement.
Revenue management: The MFPED has informed Norway that it intends to use
Norway and the IMF for support related to petroleum revenue management. This
will require some coordination efforts so as to avoid duplication of activities. The
African Development Bank has asked Norway for support for previous and
planned seminars and conferences on the topic. As mentioned, OfD gives
financial support to several non-governmental organisations active in Uganda,
including Revenue Watch, Publish What You Pay and the Norwegian
Confederation of Trade Unions (LO).
The IMF is assisting the Uganda Revenue Authority through short term technical
assistance to analyze training needs and deliver a series of training courses
21
during 2009 with output of guidance manuals for future use.
The Technical
assistance elements are three training courses over a period of 60 days,
covering oil and gas accounting, auditing of upstream activities and trading
operations of the oil and gas industry.
Environmental management: Different government partners have expressed
interest and commitment to provide both technical and financial resources related
to environmental aspects of oil and gas activities.
The Norwegian government provided financial support during preparation of the
first phase of the environmental sensitivity atlas (ESA) for the Albertine Graben.
Prior to this, The Belgian Technical Cooperation (BTC) financed a feasibility
study for the development of the Environmental Sensitivity Atlas of Albertine
Graben, but has no plans to give additional support to the sector.
The Norwegian government also supports a World Wildlife Fund (WWF)
programme related to minimising the negative impact of petroleum-related
activities on the environment in Uganda. The World Bank has pledged to support
petroleum / environment related activities through its environmental capacity
building programme in the amount of USD 1.5 million.
Since 2004 Norway has also provided technical and financial support for the
establishment of the National Forestry Authority (NFA). In 2009 Norway will
continue its support for another 4 year period, and the focus will be on restoration
of forest in Northern Uganda. This programme will complement the OfDprogramme in terms of management of forest reserves in oil and gas exploration
areas. The Ministry of Water and Environment has and will continue to ensure
that contribution of development partners in addressing environmental aspects of
oil and gas development activities are coordinated and harmonised.
22
5.0 Implementation of the program
5.1 Scheduling
The Outputs of the program have been broken down into detailed activities which
the different participating actors will start implementing upon commencement of
the programme. The activities are also scheduled as far as the programme has
felt comfortable in terms of knowledge about the future and the prioritised
sequence of the activities and their effect on each other (see Annex3, 4 &5
Activities, Scheduling/ Gantt chart)
5.2 Priorities
As far as possible the participants have prioritised the activities according to
importance and coordinated effect.
5.3 Common tasks
The Common Tasks have been scheduled separately, but in coordination with
the other activities.
5.4 Budget (see Annex8, Overall Budget)
A programme budget has been made for all the planned Outputs, including the
management of the programme. This budget is indicative and will be detailed in
due time for renew and acceptance by the Annual Meeting. In addition a more
detailed budget is prepared for the first year (2009) activities and Outputs (see
Annex3, 4 &5).
6.0 Reporting
6.1 M&E system
23
The internal M&E system is set up to provide timely data to the Pillar managers
and the different project managers within each pillar on the progress of the
programme. It is based on the Outputs indicators and the corresponding Means
of Verification, as well as the detailed activity plans, schedule and budget for
each year.
6.2 The Secretariat (see Annex 7 secretariat Organogram)
The proposed secretariat will be responsible for regular reporting to the PCC and
to the heads of the three Pillars on the day-to-day implementation (activity
reporting).
The PCC will then, with the help of the secretariat, prepare quarterly and annual
reports outputs, expenditures, planned activities and budgets.
6.2 Annual meeting
Annual meetings will be held at the beginning of every calendar year of the
programme.
24
ANNEX1: LFA/ Matrix for the program document
Name for the programme: Strengthening the Management of the Oil and Gas Sector in Uganda
`
OBJECTIVES
PROGRAMME GOAL
Oil and gas resources used in a
(economical, social and environmentally)
sustainable manner [for prosperity] to
meet the needs of present and future
generations.
INDICATORS
Means of
Verification (M O V)




Official statistics
Activity indicators
from the industry

Environmental
monitoring
National budget
documents
Central bank
reports
Industrial
investments
Resource data
bank




PROGRAMME PURPOSE
Institutional arrangements and capacities
in place ensuring well-coordinated and

results oriented Resource management,
Revenue management, Environmental

management and HSE management in the
oil and gas sector.



Poverty reduction
Sustainable (efficient)
resource management
Sustainable economic
development
Legislation in place
Institutions in place
No incidents/accidents
Public at large informed at
regular intervals
Depletion figures
(recovery rate)
System producing good
quality indicators in a timely
manner
Revenue Management Law in
place
Fiscal policy strategy in place




RISKS/ASSUMPTIONS




Political leadership in
Uganda use the
revenue generated
from oil and gas in a
sustainable way
International growth
rates
Oil price
International
environmental
standards
25


No negative externalities

Global environmental
resistance (NGO`s)
Reduced investment in
the sector
PROGRAM OUTPUTS
1 Resource pillar (see below)
2 Revenue pillar (see below)
3 Environmental pillar (see below)
4 The [governance or structure and]
management of the Programme for
Resource and HSE, Revenue and
Environment Management for the Oil
and Gas Sector planned and
implemented




5 Interaction/dialogue/communication
program with other stakeholders
(public at large, private sector, civil
society actors, media) developed and
implemented



6 A Monitoring and Evaluation system for 
Activity plans followed each
year, with mitigation
measures implemented
where deviation
Quarterly meetings held in
Coordination Committee
5 annual meetings held
5 annual audits conducted
finding no major issues or
challenges
1-2 open conferences
annually
Meetings with local
authorities
Joint communications
platform
Data gathering tools



Programme
reporting
Pillar reporting
26
the program has been developed and
developed
implemented, securing compliance with  Database developed
the NIMES where possible.
 Compliance and feed to
NIMES secured
PILLAR 1 OUTPUTS: RESOURCE MANAGEMENT
1.1 Legal and Regulatory framework

Petroleum Law

Petroleum upstream and
Petroleum resource Management Law, Oil
midstream regulations
Refining, Gas Conversion, Commodities,

Guidelines for Resource
Transportation Law, Upstream and
and HSE management,
Midstream regulations and Model PSA

Revised model PSA in
revised.
place
(The necessary regulatory framework for
prohibiting venting and restricting flaring is
developed and operational.
Incl. legislation for national content,
Including regulation of access to pipelines)
1.2 Institutional Development and
Capacity Building
Coordination of supervision Institutions: A
document that describes coordination of
supervisory institutions has been
developed and Support to Coordination of
activities
 Regulation for coordination
e.g. supervision of petroleum
sector
Organizational issues and infrastructure: A  Adequate plans for personnel
strategy for the establishment of the
and infrastructure
relevant institutions and assistance
development for institutions

Legislations

Published in the
Uganda Gazette

Revised Model
PSA and
guidelines
available

Delay in approvals at
different stages of the
process
Inadequate public
participation
 Norm/standard/
requirementsdocuments
approved and
available
 Lack of coordination/
cooperation
 Responsibilities not
clarified
 Establishment of
Institutions
 Appropriate
 Inadequate
budget/Financial
resources
27
regarding development of facilities
 Good facilities for institutions
Capacity Building: Recruitment
Assistance, Plans for Human Capacity
Building, Implementation of Training
Plans, Implementation of IT systems(for
the Petroleum Directorate, Petroleum
Authority and other Government
Institutions),
 HR plan in all institutions
 Adequate institutions and
personnel in place
 Well performing institutions
 IT systems upgraded




infrastructure in
place
Organisational
development
strategy in place
Activity plan for
different
Institution under
implementation
Training reports
Annual/quarterly
reports
 Delays in the law
formulation process
 Lack of training
capacity within Uganda
 Lack of management
capacity
 Lack of local
competence
 Adequate
compensation systems
1.3 National Local Participation:
Skills Development for the Oil and Gas
sector: Education Curriculas, Trainers
Educated, Petroleum related Courses at
Professional, Technical and Crafts level,
Contribution to Implementation of
Petroleum Related Training
Develop competencies and opportunities
for the country's entrepreneur sector.
A plan to support development of the
skills and competitive competencies
necessary for the country’s entrepreneurs
to participate in the delivery of goods and
 Reviewed National Curricula
 Petroleum Geo-science and
Engineering training
introduced at different post
secondary education levels.
 Reviewed
curriculum in
place
 Petroleum related
training within
Uganda
 Procurement practices
facilitating national
participation
 Database for planned
contracts
 Bidding procedures
 Bidding
procedures for
supplies to the
industry in place
 Reports on local
content developed
 Lack of qualified
lecturers/teachers
 Lack of cooperation
with respective
institutions
 Lack of IT-infrastructure
and adequate facilities
and equipment
 Lack of capital
 Lack of competence
 Low standards
 Few registered local
registered companies
 Unwillingness of
28
services for the oil and gas sector has
been developed. Implementation of
recommendations of the Local Content
Study
 Certified training
 Information database for
certified contractors inc.
personnel
 QA-systems
 Compliance with international
standards
 Information
database
established
 GIS-system developed
 Relevant QA/QC-procedures
and standards established
and updated
 Efficient retrieval of data
High quality data
available
 Relevant software
in place
 QA/QC
procedures in
place
 Rapid technological
changes and
incompatibility
 IT systems failures
 Lack IT-experts and
competence
 Lack of reporting
procedures


 Update resource
database
 IT systems failures
 Lack IT-experts and
competence
 Lack of reporting
procedures
 Inadequate G&G
capacity
operator to cooperate
1.4 Data, Records and information
Management:
Management Systems for Petroleum
Geoscience and Technical data, resource
data, administrative data, incidents and
accidents data, production and cost data:
Improved data and records management
systems. Development of procedures for
operations and records management
systems
1.5 Resource Assessment
A system for continuously updating
resource inventory developed
Plan and contribute to the assessment of
the country's oil and gas resources and to
the national oil and gas inventory: System
for continuously updating resource
inventory, developed capacity and

Play-models established
Resource inventory system in
place
Updated resource
assessments
o Yet to find resources
o Discovered resources
29
procedures to assess petroleum
resources.
1.6 Licensing Strategy and Plan
A licensing strategy/policy is established,
implemented and continuously updated:
Assessment of regional and international
competitiveness of fiscal terms;
Development of a strategy for promotion
of the country's petroleum potential;
development of a grid system for licenses;
implement a licensing round; undertake
due diligence on acreage applicants






1.7 Monitoring and Regulation
1.7.1 Oil and Gas Exploration
An appropriate supervisory (regulatory)
framework for monitoring and regulating
petroleum exploration programmes in
place with regards to; Data collection,
studies, drilling, relinquishment, HSE,
Costs
 Inferior data quality
o Reserves

Assess regional
competitiveness of fiscal
terms
Update the PSA in light of
new legal framework
Use open bidding as a basis
for licensing and only
consider other licensing
options where necessary
Promotion of the country’s
petroleum potential
Appropriate due diligence
undertaken on applicants for
licenses. This may be
undertaken with a view of
pre-qualifying applicants.
Negotiate adequate work
programs and fiscal terms
Regulatory framework in
place; Well executed work
programs with regards to
Data collection, studies,
drilling, relinquishment, HSE
and costs.



Use of open
bidding in
licensing
New E&P licences
Well negotiated
work programmes
 Monitoring reports
 Inspection and
Audit reports
 Efficient approval
for planning
document




Poor bidding response
Incompetent
negotiators
Negative exploration
results
Lack of transparency in
the licensing process
 Lack of cooperation
with industries
 Lack of cooperation
between supervisory
institutions
 Inadequate supervisory
systems and
enforcement
mechanism
30
 Non qualified operators
and licensees
 Lack of public and
political consensus

1.7.2 Oil and Gas Development and
Production :
An appropriate supervisory framework for
monitoring and regulating petroleum
development and production programmes
in place: Well implemented field
development plans, systems to handle
FDP's and supervisory framework for
monitoring





Use FDP’s to ensure that the
oil and gas resources are
produced optimally through
cost effectiveness, good
reservoir management and
where necessary enhanced
recovery.
Follow up approved EIA
Follow up HSE-management
systems
Optimal and effective use of
production and transportation
infrastructure
Well monitored plans for
licensees with regard to;
regulation, development
progress and costs
Well implemented production
plans with regard to reporting,
reservoir performance,
metering, operators
adherence to HS-regulations
and capacity building








Reports
- HSE
performance
- incidents and
accidents
reporting systems
- High production
regularity
- recovery factor
- high utilisation of
the infrastructure
- high efficiency
Record of
inspection and
audits




Lack of experienced
personnel and
procedures
Lack of coordination
and cooperation
between relevant
institutions
Inadequate
predictability for the
industry
Absence of holistic
approach regarding the
individual projects
31
1.7.3 Health and Safety Compliance:

An appropriate supervisory (regulatory)
framework for monitoring and regulating
HSE-compliance put in place. Develop
tools for undertaking HS audits




1.7.4 A system to handle FDP`s tested
and in place




Draft detailed regulations for
supervisory activities:
Procedures for
supervisory activities
Supervisory planning
Independent evaluations
where necessary with a view
of identifying any points of
divergence from the plans
presented by oil companies
Dialogue with companies
during preparations of plans
for development
Ensure that the PDO sees to
that the oil and gas resources
are produced optimally
through cost effectiveness
and where necessary,
enhanced recovery.
Undertake area studies to
ensure optimal and effective
use of production and
transportation infrastructure
Plan and implement tail end
production.
Adequate systems for fiscal
measurement








Adequate
requirements in
place
Reports
- HSE
performance
- incidents and
accidents
reporting systems
Procedures in
place
Reports

Reports
Proper systems
for measurement
in place






Lack of adequate
supervisory system
which includes use of
means of enforcements
Lack of management
systems, institutional
arrangements and
competent personnel
Delays in the law
process
Lack of cooperation
with the companies
Substandard
equipment
Incompetence
Luck of transparency
/trust
32
1.7.5 An appropriate supervisory
(regulatory) framework for monitoring and
regulating development and production
programme put in place and operational









1.8 Midstream Development
1.8.1 Institution responsible for midstream
activities strengthened
1.8.2 A plan for efficient utilisation of the
resources and development of attendant
facilities established
1.8.3 A licensing framework for
midstream activities/facilities
established





Follow up PDO:
Development progress
Costs
Follow up production plans
Reporting
Reservoir performance
Metering
Operators adherence to
HSE-regulation
Capacity building


Definitional/functional
analysis report
Adequate institutional
arrangements and personnel
in place
A Petroleum Utilization Plan
Plan for the development of
midstream facilities catering
for the upstream
requirements and with the
aim to maximise the value of
the resources
A licensing framework for
midstream activities/facilities
developed

Reports
Record of
Inspections and
Audits



Institution with
competent
personnel can be
identified to be in
place
 Resources
efficiently utilised
and facilities
developed on
plan

 Facilities licensed







Lack of adequate
supervisory system
Lack of management
systems, institutional
arrangements and
competent personnel
Delay in the law
process
Delays in procuring the
expertise to undertake
the analysis
Delays in recruitment of
human resource
Public and political
consensus
Approval process of
plan
Competence and
capacity to undertake
proper planning
Failure to mobilize
investments required
Lack of ready standards
Delays in approval
33
1.8.4 Establish an operational monitoring
system for midstream facilities and
activities
 An operational monitoring
system
1.8.5 Ensure least cost processing and
operations of midstream facilities and third
party access to capacity in midstream
facilities
 A pricing and tariff
methodology and third party
access procedures establish
 Facilities
developed and
operated on set
standards.

 Tariff
methodology
available and
third party access
guidelines
published






1.8.6 Study to evaluate the opportunities
for the development of a petrochemical
industry in the country has been
conducted
 A study report on
petrochemical development
1.8.7 Establish standards for midstream
activities /facilities
 Standards developed
 Report


 Standards
gazetted
process of framework
Software development
problems
Lack of data
Lack of expertise and
trained personnel
Lack of expertise and
trained personnel
Lack of predictability
and incentives for
cooperation between
licence holders
Delays in the approval
process
Government approval
of acceptable third
party tariffs
Lack of data and
information
Lack of expertise and
trained personnel
 Lack of governmental
initiative and guidance
to the industry
regarding development
of new standards.
 Lack of expertise and
34
trained personnel
1.9 Monitoring of Oil and Gas Policy
and Programs
The National Integrated Monitoring and
Evaluation Strategy (NIMES) assessed
and enhanced, to incorporate oil and gas
monitoring and evaluation systems.
2 Sector investment strategy/plan,
develop a scenario analysis for
the sector
3
Regional Cooperation, DRC,
Technical standardization and
bilateral treaties
 NIMES uses oil and gas data
 reports
 Inadequate knowledge
of the sector in NIMES
 Lack of support to
NIMES
 Sector Investment Plan
developed
 Sector Investment
Plan in place
 Institutional
capacity for
sector planning in
place
 Agreements and
memorandum of
understanding in
place
 Guidelines in
place
 Lack of Institution
cooperation
 Lack of expertise and
trained personnel
 National legislation
 Lack of capacity
 Delay at Cabinet
Parliament
 Delay in funding of T.A
 Bilateral treaties/Agreements
in place
 Technical standardization
guidelines in place
PILLAR 2 OUTPUTS: REVENUE MANAGEMENT
2.1 Legal framework & revenue policy
 Revenue Management Law
component
2.1.1 A law to establish revenues accruing
from oil and gas activities payment
 Lack of incentives for
bilateral cooperation
 Lack of expertise and
trained personnel
 Limited access to
external expertise
35
 Political approval
modalities and enforcement enacted
2.1.2 Existing tax legislation and
regulations reviewed and updated,
ensuring coherency with the new Revenue
Management Law
 Model PSAs
 Income Tax Laws
 How to capture windfall gains
 Government take
framework
 Delays in Parliament
 Local competence
 T.A competence
2.2 Revenue Pillar Secretariat
2.2.1 Assessment of the existing
institutions conducted
2.2.2 Human resource plan analysed and
updated
 Improved government take
from oil and gas activities
 Reforms made in the existing
institutions
 New human resource plan for
all relevant institutions
 Tax revenues
 Strong
administrative
structure
 Annual reports for
relevant
institutions
 Local competence
 Division of responsibility
2.3 Revenue administration
components
2.3.1 Adequate systems for fiscal
measurement and tax assessment
developed
2.3.2 A system for collection of revenues
from oil and gas activities established
 Right government take from
oil and gas activities
 Tax revenues
 Timely audits
 Local competence
 Loss of trained staff
2.4 Fiscal policy component
2.4.1 The current fiscal framework
assessed, taking into account the impact
of oil and gas activities
 Oil and gas activities are
incorporated into
macroeconomic models. A
special Petroleum Revenue
Model will also be developed
as a separate module that can
 National budget
documents
 State budget
documents
 Local competence
 Technical facilities
 Public and political
consensus
36

2.4.2 A fiscal policy strategy paper drafted





2.5 Monetary policy management
component
The current monetary framework
assessed and updated, taking into
account the impact of oil and gas activities
2.6 Banking arrangements and
accountability components
A petroleum fund assessed and




be interfaced with the other
macroeconomic frameworks.
All revenues and public
investments are
accommodated within the
government Medium and
Long Term Fiscal Framework
Assessment of the existing
fiscal policy guidelines
(deciding on a speed limit for
the use of oil and gas
revenues)
Development of adequate
saving instruments (Petroleum
Fund).
A Petroleum Fund
Investment Portfolio
proposed.
Broad public consultation
involving key stakeholders
made.
Developing an efficient
system for handling capital
outflow
Designing an appropriate
monetary policy framework
Governance model
Investment strategy
 Fiscal and
monetary
framework
 National budget
documents
 White paper
 Inadequate public
inquiry of strategy
 Local competence
 Public and political
consensus
 Reports on the
conduct of
monetary policy
 Local competence
 Public and political
consensus
 Annual reports on
the management
of the fund
 Local competence
 Public and political
consensus
37
 Reporting on management
performance
 Transparency.
PILLAR 3 OUTPUTS: ENVIRONMENTAL MANAGEMENT
OUTPUT
INDICATORS
 Transparency
established
3.1 Strategic Environmental Assessment
(SEA) for the Albertine Graben conducted
and results widely disseminated.



3.2 Capacity development programs, to
conduct SEAs and review Environmental
Impact Assessments (EIA) and SEAs,
planned and conducted within relevant
institutions.



3.3 Capacity development programs
developed and implemented in all relevant
institutions, for areas identified as
relevant/critical to the oil/gas sector
(based on capacity needs assessment).




Report prepared
Number of reports distributed
to stakeholders
Number of dissemination
workshops
Organisational needs
assessments conducted in all
relevant agencies based on
agreed ToR
Capacity plan, specific for
SEA and EIA work, for all
relevant institutions
Staff trained in SEA and EIA
in Oil
Study tours conducted
Capacity needs assessments
conducted in all relevant
organisations based on
agreed ToR
Capacity plan for all relevant
institutions
Performance level of
MOV








RISKS/ASSUMPTIONS
Assessment
report
Workshop reports
Acknowledgement
receipts
Activity plans for
relevant
institutions
Annual reports
from Program
secretariat
Training reports

Cooperation from
stakeholders

Staff available in
respective agencies
Enabling human
development policies in
place
National private
environmental
practitioners participate
on the training
Approved plan
documents
Performance
reports from
institutions




Cooperation from
relevant institutions
Government avails staff
38
institutions
3.4 Environmental and biodiversity related
policies reviewed with respect to oil and
gas (incl biodiversity off-sets), and
presented for approval.

Policies reviewed and
updated for Wildlife, Forestry,
Wetland, Water resources
management, Fisheries,
Environment management,
Land use, and Occupational
health and safety

Review report
with proposed
amendments

The relevant political
bodies approve the
recommended changes
and amendments
3.5 Existing Acts reviewed,
recommendations drafted and presented
for approval

Acts reviewed and updated
for Wildlife, Forestry,
Wetland, Water resources
management, Fisheries,
Environment management,
Land use, and Occupational
health and safety

Review report
with proposed
amendments

The relevant political
bodies approve the
recommended changes
and amendments
12 wildlife protected area
management plans reviewed
and or prepared
7 Central Forest Reserves
management plans reviewed
Local forestry reserves plans
Land use and physical plans
developed for EPS, Hoima
and Buliisa Districts
Indicator list

Published
management plan
documents
Consultation
reports


Enabling policy and
legal framework exists
Cooperation from
stakeholders
Baseline data

Reliable baseline data
3.6 Management plans for protected
areas, and relevant sector plans for the
AG, reviewed and updated taking the oil
and gas issues into consideration





3.7 An environmental monitoring system
for the AG, with clear and agreed



39
indicators, is established.




3.8 Environmental regulations and
standards relevant to the oil/gas sector
developed and existing acts reviewed and
amendments drafted and presented for
approval.

3.9 Mechanisms for oil and gas industry
(hazardous) waste strengthened.





3.10 Framework for compliance
monitoring and enforcement of the oil and
gas industry strengthened (incl. the issue
of payment from industry).


Baseline data collected on
indicators
Database
IT equipment
Data collection tools
(specified)
Draft amendments proposed
for waste management,
effluent discharge, air quality
Final draft regulations and
standards presented for
approval
Waste types identified and
categorised
Handling procedures
developed
Collection and disposal sites
available
Staff trained (including private
sector) to manage hazardous
waste
Compliance management
information system
developed
Compliance assistance
provided to companies










report
Regular reports
generated from
the system

available
Acceptance of the
indicators by
stakeholders
Documents
available
Minutes of
presentation

The relevant political
bodies approve the
recommended changes
and amendments
Report on
categories and
composition of
wastes generated
List of licensed
facilities
Published
procedures for
handling different
wastes
Training reports
Published
checklists
Minutes of
monitoring teams
Published

Industry best practices
available
Cooperation between
government and private
sector




Willingness of
operators to comply
Company take up
voluntary initiatives
Commitment from
40











Monitoring checklists
developed
Monitoring teams established 
and meet regularly

Public disclosure procedure
developed

Licensed facilities inspected
and audited
Monitoring equipment
procured and installed
Key personnel of government
agencies trained in using
monitoring equipment
Compliance and enforcement
manual developed
Data management systems
reviewed and improved.
Develop GIS-system
Establish and update relevant
QA/QC-procedures and
standards
Establish play-models
disclosure
procedure
Inspection and
audit reports
Training reports
Published manual

government agencies
to allocate resources
Reliable baseline data
available
41
3.11 National Oil spill contingency
mechanism in place and operational.




Environmental sensitivity
atlas regularly updated
Equipment in place
Response units established
Staff trained (private and
government agencies)





Published
updated atlas
Dissemination
reports
Functionality of
equipment
Spill response
reports
Training reports


Reliable baseline data
available
Cooperation between
government and private
sector
42
ANNEX2: Program Management and Governance Structure
Uganda
MoFPED
MEMD
MWE
PM 1/2/3
Norway
Embassy
OfD
Coordinator
(observer)
Draft
Agreement
MoFPED-Embassy
Annual
Meeting
Meeting in Q1
Abbreviations (NB: to be verified)
Uganda
PDU
Petroleum Directorate of
Uganda
PAU
Petroleum Authority of
Uganda
NatOil
Ugandan National Oil Co
MFPED
Ministry of Finance,
Planning and Economic
Development
BoU
Bank of Uganda
URA
Uganda Revenue Authority
NEMA
National Environment
Management Authority
NFA
National Forestry Authority
UWA
Uganda Wildlife Authority
DFR
Directorate Fisheries
Resources
Oslo
Uganda
Head
PM1
PM2
PM3
Norway
Coordinator
(observer)
Pillar 2
Resource
management
Pillar Mgr
(PM 1)
Quarterly meetings(?)
Pillar 3
Revenue
management
Resource Mgr
(RM 1)
Coordinator
Norad
MPE [NPD]
FIN
MD [SFT, DN]
Norad/OfD
Working
Group
Programme
Support
Quarterly meetings(?)
Pillar 1
Contract
TBD
Programme
Coordination
Committee
(PCC)
Pillar Mgr
(PM 2)
Environmental
management
Resource Mgr
(RM 2)
Pillar Mgr
(PM 3)
Resource Mgr
(RM 3)
Cross-cutting
issues
& overlaps
Norway
MEMD
MFPED
PDU
MWE
BoU
NEMA
UWA
PAU
URA
NFA
MoJ
MoJ
DFR
...
...
Policy and Legislative
frameworks
MPE
Ministry of Petroleum and
Energy
Planning &
management tools
NPD
Norwegian Petroleum
Directorate
Data management
PSA
Petroleum Safety Authority
Communication
strategy
FIN
Ministry of Finance
Supervision &
Compliance monitoring
MD
Ministry for the Environment
SFT
Norwegian Pollution Control
Authority
DN
Directorate for Nature
Management
OfD
Oil for Development
...
...
Good governance
(Transparency)
...
Parliament
Media
Civil
Society
Coordination
...
...
43
ANNEX3: 2009 Work Plan and Budget for the Resource Management Pillar
OUTPUT/Activities
Inception workshop
Component 1: Legal and Regulatory Framework
Legal and Regulatory framework for the upstream
and midstream petroleum sectors
a) Completing formulation of resource management
law
b) Formulating the law for oil and gas utilization
c) Preparing subordinate regulations for upstream
petroleum sector (including HS) and local content
d) Preparing subordinate regulations for midstream
petroleum sector (including HS) and local content
e) Preparing revision of model PSA
Licensing strategy and plan
a) Assessment of regional and international
competitiveness of fiscal terms
b) Development of a strategy for promotion of the
country’s petroleum potential
c) Development of a grid system for licenses
d) Promote the country’s petroleum potential
e) Implement a licensing round
f) Appropriate due diligence undertaken on
applicants for licensing
Monitoring and Regulation
Time frame (Jul-Dec 2009)
Jul
Aug
Sep
Oct
Budget (NOK)
Nov
Dec
429,000.00
1,266,500.00
381,000.00
1,990,000.00
44
a) Oil and gas exploration: Development of an
appropriate supervisory (regulatory) framework for
monitoring and regulating petroleum exploration
programmes
b) Oil and gas development and production:
Development of an appropriate supervisory
(regulatory) framework for monitoring and regulating
petroleum development and production programmes
c) HS Compliance: Develop a supervisory strategy
and plan; Develop procedures for supervisory
activities; Develop tools for undertaking HS audits
Monitoring of Oil and Gas policy and programmes
Component 2: Capacity building
Institutional Development and Capacity Building
a) Coordination of supervision: Coordination of
supervision
Completing the functional analysis and harmonizing
the roles for the institutions, drafting the coordination
document
and implementing coordination activities.
b) Organizational issues and infrastructure:
Preparations of the organizational development
plans, definition and procurement of the necessary
facilities
c) Capacity Building: Recruitment Assistance, Plans
for Human Capacity Building, Implementation of
Training Plans, and Implementation of IT systems
National/Local participation
216,500.00
1,371,000.00
2,063,500.00
45
a) Skills development for the oil and gas sector:
Skills Development for the Oil and Gas sector:
Education Curricula, Trainers Educated, Petroleum
related Courses at Professional, Technical and Crafts
level, Contribution to Implementation of Petroleum
Related Training
a) Develop competence and opportunities for the
country’s entrepreneur sector: Contribute to
development of entrepreneurs in the oil and gas
sector and implementing of recommendations of the
local content study
Data and Records Management
a) Identification and definition of necessary computer
software
b)Development of procedures for operations and
maintenance of data and records management
systems
c) Upgrading the present data and records
management systems
d) Development of QA/QC- procedures
e) Evaluation and compilation of data
Resource Assessment
a) Define play-models in the Albertine Graben
b) Develop a resource inventory system
c) Study the potential of the country’s unconventional
resources
d) Asses the country’s oil and gas resources
Sector investment strategy/plan
Develop a scenario analysis for the petroleum sector
·
1,780,000.00
·
·
·
·
·
950,000.00
437,500.00
46
Regional and international Cooperation
Update and review bilateral treaties, Agreement with
DRC and Technical standardization
Component 3: Midstream (please note that these
may not be done in 6 months but within 1 year)
a) Complete the structuring of the midstream
institutional set up
b) Develop a plan for the utilisation of resources and
plan for development of midstream facilities
c) Develop an operational monitoring system
d) Develop a licensing framework for midstream
activities/facilities
e) Undertake a study of petrochemical development
f) Develop a strategy and plan for the refining of oil in
Uganda
g) Support to monitoring of midstream activities and
facilities
h) Develop a tariff methodology and third party
access procedures for capacity utilization of
midstream facilities
610,000.00
1,487,100.00
·
·
i) Develop standards for midstream activities /facilities
j) Undertake a study of the transportation options
·
Subtotal
Contingency 10%
Total
·
·
·
·
·
·
·
·
·
·
·
·
·
·
12,982,100.00
1,298,210.00
14,280,310.00
47
December
November
October
September
August
ANNEX4: 2009 Work Plan and Overall Budget for the Revenue Management Pillar
201
2
439,440
-
-
797,300
-
-
831,600
831,600
-
-
1,464,800
292,960
732,400
439,440
-
-
1,287,200
993,400
293,800
-
-
-
Assesment of existing institutions
615,000
615,000
-
-
-
Analysing and updating HR plan
293,800
-
-
-
-
Inception Workshop
378,400
378,400
-
-
-
1,758,600
293,800
1,464,800
-
-
-
1,758,600
293,800
1,464,800
-
-
4,818,800
1,713,3
00
3,105,500
2,284,400
1,142,2
00
1,142,200
July
2011
component 1: Legal framework & policy
Revenue management law
Review and updating of existing
legislation
Developing adequate system for fiscal
measurement
Component 2: Pillar Secretariate
Component 3: Revenue administration
Establishing a system for colletction
and accounting of revenues
Component 4: Fiscal Policy Framework
Assessing the fiscal framework
Total
costs
2009
4,722,600
1,921,8
60
2,361,300
1,594,600
797,300
1,663,200
2010
293,800
-
-
2013
-
-
-
-
Comments
MoFPED
(TPD)
leads,
MoJCA,U
RA
MoFPED
URA
MoFPED
(MEPD)
lead
48
Developing a fiscal policy strategy
paper and Petroleum model
Component 5: Monetary Policy Framework
Assessing the monetary framework
Developing a monetary policy strategy
paper
Component 6: Oil & Gas Accounting & Banking
Framework
Designing the establishing a
petroleum fund
Subtotal
Continge
ncy
Grand
Total
2,534,400
571,100
1,963,300
-
737,800
368,900
368,900
-
737,800
368,900
368,900
2,992,800
748,200
2,244,600
-
2,992,800
748,200
2,244,600
-
16,317,80
0
6,039,4
60
9,838,900
439,440
1,631,780
603,946
983,890
17,949,58
0
6,643,4
06
10,822,790
-
-
-
-
-
-
BoU
MoFPED
(Acct.Gen,
Auditor
Gen take
lead
-
-
-
-
-
43,944
483,384
49
ANNEX5: 2009 Work Plan and Budget for the Environment Management Pillar
OUTPUT/Activities
Time frame (Jul-Dec 2009)
Aug Sep Oct
Nov Dec
Jul
Budget
Inception workshop
439,000
Component 1: Ecosystem planning
Strategic Environmental Assessment (SEA) for the Albertine Graben
conducted and results widely disseminated.
Activities:
a) Scoping Process (Concept note, stakeholder workshop, guidelines for Terms
of Reference)




b) Drafting and approval of the Terms of Reference (ToR)

c) Procure and approve (incl. assessment of proposal from consultancies)
consultancy (ies) (national/international)
d) SEA Inception workshop
Management plans for protected areas, and relevant sector plans for the
AG, reviewed and updated taking the oil and gas issues into consideration
a) Review and propose recommendations for existing management plans for
PA in exploration area 2, 1, 3A




















































































 













 
 
 
 
 
 
540,000
50
Component 2: Capacity building

Capacity development programs, to conduct SEAs and review
Environmental Impact Assessments (EIA) and SEAs, planned and
conducted within relevant institutions.

a) Carry out capacity needs assessment for SEA and EIA among government
relevant institutions and develop training programs

c) Review and update SEA/EIA guidelines

Capacity development programs developed and implemented in all
relevant institutions, for areas identified as relevant/critical to the oil/gas
sector (based on capacity needs assessment).










a) Conduct capacity needs assessments in all relevant organisations based on agreed
ToR
·
b) Develop capacity plans for all relevant institutions
·




















·
·
·
·
·
·







Activities
c) Develop integrated capacity development plan
Component 3: Policy and legal frameworks


























·
·
·
·




34,000


·





 

Environmental and biodiversity related policies reviewed with respect to
oil and gas (incl biodiversity off-sets), and recommendations presented to
Government for approval
Existing Acts reviewed, recommendations drafted and presented for
approval
 



 










 













 
51
Environmental regulations and standards in relation to the oil/gas sector
developed and framework for discharge permits reviewed and updated
a) Review and update waste management and effluent discharge regulations
and standards,



·

·


·



·

·



 
·
500,000
b) Develop air quality standards

Component 4: Monitoring and compliance














200,000





 

An environmental monitoring system for the AG, with clear and agreed
indicators, is established.
Mechanisms for oil and gas industry (hazardous) waste strengthened

a) Identify and categorise waste types

b) Compile existing “best practices” for handling oily and hazardous waste

c) Develop framework for handling oily and hazardous waste





















































 









 
 
 
 
Framework for compliance monitoring and enforcement of the oil and gas
industry strengthened (incl. the issue of payment from industry).
·
c) Review and update compliance management tools
·
·
·

·
·
·
100,000
52
National Oil spill contingency mechanism in place and operational.
a) Complete national oil spill contingency plan
c) Establish, develop, maintain and update the sensitivity atlas
































 



3,970,000
53
ANNEX6: Budget for the Programme Coordination Committee
ITEM/ACTIVITY
YEAR
2009
USD
2010
USD
2011
USD
2012
USD
2013
USD
TOTAL
A. SALARIES
1. ADMINISTRATOR
1
12,000
24,000
24,000
24,000
24,000
108,000
2. COMMUNICATIONS OFFICER
(ONE @ USD2000.00)
12,000
24,000
24,000
25,000
24,000
24,000
3. ACCOUNTANT
6,000
12,000
12,000
12,000
12,000
54,000
4. ACCOUNTS ASSISTANTS
3 (ONE FOR EACH
PILLAR @ USD500.00)
9,000
18,000
18,000
18,000
18,000
81,000
5. PROCUREMENT ASSISTANT
1
3,000
6,000
6,000
6,000
6,000
27,000
6. SECRETARY
1
3,000
6,000
6,000
6,000
6,000
27,000
7. OFFICE ATTENDANT
1
1,500
3,000
3,000
3,000
3,000
13,500
46,500
93,000
93,000
94,000
93,000
334,500
1. ANNUAL MEETINGS
342
342
342
342
342
1,710
2. PCC MEETINGS (HELD QUARTERLY)
527
1,053
1,053
1,053
1,053
4,737
3. COMMUNICATION COSTS
4,200
8,400
8,400
8,400
8,400
37,800
4. TRANSPORT
4,500
9,000
9,000
9,000
9,000
40,500
5. STATIONERY
6. OFFICE EQUIPMENT (LAPTOP AND
PRINTER)
3,000
6,000
6,000
6,000
6,000
27,000
5,000
5,000
2,500
5,000
2,500
20,000
SUBTOTAL FOR B
17,569
29,795
27,295
29,795
27,295
131,747
SUBTOTAL FOR A
B. OFFFICE EXPENSES
C. COMMUNICATION STRATEGY
1. STAKEHOLDER CONSULTATION
MEETINGS
54
1.1 NATIONAL STAKEHOLDER
MEETINGS (TWICE A YEAR)
1.2 REGIONAL STAKEHOLDER
MEETINGS
28,529
57,059
57,059
57,059
57,059
256,764
0
•HOIMA (ONCE A YEAR)
6,389
6,389
6,389
6,389
6,389
31,947
•ARUA (ONCE A YEAR)
6,362
6,362
6,362
6,362
6,362
31,808
17,904
17,904
17,904
17,904
17,904
89,518
3,000
2,000
•KASESE (ONCE A YEAR)
2. WEBSITE CREATION AND
MAINTENANCE
•CREATION
•MAINTENANCE
3. CONSULTANCY COST
5,000
1,000
1,000
1,000
1,000
4,000
77,158
77,158
77,158
77,158
308,632
SUBTOTAL FOR C
62,184
167,871
165,871
165,871
165,871
727,669
TOTAL (LESS CONTINGENCY)
126,253
290,666
286,166
289,666
286,166
1,193,916
CONTINGENCY 10% OF TOTAL
12,625
29,067
28,617
28,967
28,617
119,392
TOTAL (USD)
138,878
319,733
314,783
318,633
314,783
1,313,308
972,144.37
2,238,128.10
2,203,478.10
2,230,428.10
2,203,478.10
9,847,657
TOTAL (NOK)
(I USD=7.00 NOK)
55
ANNEX 7: Programme Coordination Committee Structure
ADMINISTRATOR
ACCOUNTS ASSISTANT (3)
COMMUNICATIONS
OFFICER
ONE FOR EACH PILLAR
SECRETARY


PROCUREMENT
ASSISTANT
OFFICE ATTENDANT
DRIVER
56
ANNEX8: Overall budget for the Programme (Detailed budget is attached separately)
Year
2009
2010
2011
2012
2013
Sum Pillar
Resource
7,858,142.00
7,057,542.00
4,211,992.00
Revenue
6,643,406.00
10,822,790.00
483,384.00
Environment
7,059,584.21
10,349,069.86
2,354,360.81
1,639,360.81
2,376,214.14
23,778,589.84
972,144.37
2,238,128.10
2,203,478.10
2,230,428.10
2,203,478.10
9,847,656.78
22,533,276.58
30,467,529.97
9,253,214.91
8,154,234.91
9,134,290.24
79,542,546.61
Programme Coordination
Sum Programme
4,284,446.00
4,554,598.00
27,966,720.00
17,949,580.00
57