East African countries with rich oil deposits have been urged to strictly implement legal frameworks that will ensure transparency so as to benefit from expected production.
Thorbjorn Gaustadsaether, the Norwegian ambassador accredited to Rwanda but based in Uganda, made the remarks while closing the East African Oil and Gas Forum in Kampala.
Noting that transparency would ensure equitable distribution of resources, Gaustadsaether observed that the development of the petroleum sector in the region will require much foreign investment.
“Steps must be taken to secure budget discipline, develop a more sophisticated financial and banking system and competitive auctioning processes. They must establish predictable legal and regulatory frameworks,” he explained.
Transparency coupled with checks and balances were the only avenue through which gross misuse of revenue from the oil sector can be detected and minimized, the envoy underlined.
The Global Race for African Oil report says East Africa will be the world’s most important energy producer in 2040, during which trillions of dollars worth of oil will be purchased — with most of it going to China.
There have been oil discoveries in Uganda as well as natural gas deposits in Tanzania, creating a lot of excitement among oil companies. Kenya is also close to striking substantial oil deposits.
The ambassador said no East African state is fully compliant with the Extractive Industries Transparency Initiative, which aims at building critical trust in the ability of governments in the region to handle oil and gas resources on behalf of their people.
“Promises of milk and honey from the oil and gas sector are often made. Expectations are sky high, yet these enormous development needs are well-known and glaring,” the envoy asserted.
“The risk of disappointment and frustration over missing the revenue party is high, as is the risk of rising tension and conflict,” he added.