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Overview: Uganda’s Oil and Gas Industry Regulatory Institutions

The upstream sub-sector is regulated by the Petroleum (Exploration, Development and Production) Act, 2013 (“Upstream Law”) and underlying regulations providing the legal framework for the exploration, development and production of petroleum in Uganda.
posted onAugust 31, 2021
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By Denis Yekoyasi Kakembo, Bill PageJohn TeiraDickens Asiimwe KattaFrancis Tumwesige Ateenyi

Introduction

Given its strategic importance to the national economy, Uganda regulates its oil and gas sector.

The regulations imposed via legislation apply across the entire sector value chain but with specific requirements for the upstream, midstream and downstream segments.

In broad terms, regulation is a balancing act between the competing needs of the two principal stakeholders namely the oil companies and the citizens represented by the government.

Uganda’s oil regulatory framework specifically seeks to establish a conducive and competitive environment for the exploration and production of crude oil as well as encouraging and protecting competition in the petroleum supplies market.

Investors in Uganda’s oil and gas industry are likely to interface with all or some of the core sector regulatory institutions that this article highlights.

Uganda’s oil and gas value chain

Until the turn of the 20th century, the only active segment of Uganda’s oil and gas value chain was the
downstream subsector involving the marketing of refined and processed petroleum products such as petrol,
lubricants, diesel, gas and the like at the fuel stations.

Renewed exploration at the dawn of the century led to crude oil discoveries in 2006 that will soon be produced.

These activities fall under the upstream oil and gas value chain segment. Uganda’s crude oil will be transported to the Port of Tanga in Tanzania through the East African Crude Oil Pipeline.

Undertakings relating to the transportation and storage of crude oil are covered by the midstream oil and gas value chain. Each of these segments is regulated in accordance with the applicable specific legislation.

List

3. The Ministry of Energy and Mineral Development

The Ministry of Energy and Mineral Development (“MEMD”) is the overall supervisor of Uganda’s oil and gas
sector.

The upstream sub-sector is regulated by the Petroleum (Exploration, Development and Production) Act, 2013
(“Upstream Law”) and underlying regulations providing the legal framework for the exploration, development
and production of petroleum in Uganda.

The responsibility of initiating, developing and implementing Uganda’s oil and gas policy is vested with the Minister responsible for Energy who discharges this mandate through the Directorate for Petroleum Exploration, Development and Production.

The other responsibilities of the Minister include granting and revoking licenses, submitting draft legislation to Parliament, issuing petroleum regulations, negotiating and endorsing petroleum agreements among others.

The Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act, 2013 (“The Midstream Law”)
and the underlying regulations is the principal law governing the midstream segment.

This Midstream Law outlines the legal framework for the development of petroleum refining, gas conversion, pipelines, transmission pipelines and midstream storage facilities in Uganda.

The responsibility of initiating, developing and implementing policy initiatives related with midstream operations is with the Minister responsible for Energy.

Other responsibilities of the Minister include granting and revoking licenses and submitting draft legislation to
Parliament among others.

The downstream oil and gas sector is regulated by the Petroleum Supply Act of 2003.

This Act outlines the legal framework for the supervision and monitoring, importation, exportation, transportation, processing, supply, storage, distribution and marketing of petroleum products.

This Act vests the Minister for Energy with the responsibility of initiating legislation and making the necessary regulations in order to support and promote a continuous, secure and adequate supply of petroleum products in Uganda.

4. Petroleum Authority of Uganda

The Upstream Law establishes the Petroleum Authority of Uganda (“PAU”) with the core function of monitoring
and regulating the exploration, development and production of petroleum in Uganda.

The specific functions of PAU include but are not limited to monitoring and regulating petroleum activities, reserves estimation and measurement of the produced oil and gas, reviewing and approving any proposed exploration activity contained in the annual work programme as well as undertaking cost recovery audits among others.

The PAU also monitors and regulates midstream operations.

5. Commissioner of Petroleum Supply

The Commissioner heading the Department of Petroleum Supply in the MEMD has the responsibility of
supervising and implementing the enforcement of standards, specifications and codes of conduct developed in
accordance with the law.

The licensing and granting of construction and operating permits for oil marketing stations is principally overseen by the Commissioner.

6. Other institutions
The Uganda National Oil Company is not necessarily a regulating authority but exercises the commercial
interests of the government by investing and participating in country’s oil and gas value chain.

In addition to its mandate of assessing taxes, the Uganda Revenue Authority also has the responsibility of collecting petroleum revenues that it remits to the Petroleum Fund.

The Minister responsible for Finance has the overall responsibility of managing the Petroleum Fund.

The Bank of Uganda is accountable for the operational management of the Petroleum Revenue Investment Reserve (PRIR), Uganda’s sovereign wealth fund.

Funds allocated to the PRIR are earmarked for investment with a view to generate more economic value from the petroleum revenues.

The writers are with Cristal Advocates

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