Integrating the Proposed National Oil Company of Uganda into the Corporate Governance Discourse: Lessons from Norway

Abstract

Corporate governance is central to the effective and profitable management of corporations. This applies to all corporations. State-owned enterprises (SOEs) are in a unique position as they have to address commercial and social functions. Thus, the need to develop and maintain a comprehensive corporate governance framework is even greater for SOEs than private corporations. The concept of corporate governance for SOEs in Uganda has received very little attention. This is evident in the Draft Petroleum (Exploration, Development, Production, and Value Addition) Bill 2010 (the ‘Petroleum Bill 2010’). The aforementioned bill makes no reference to corporate governance, yet it provides for the creation of a national oil company (NOC) under the Companies Act. Further, the current Companies Act Cap 110 has no corporate governance code; however, it is under review and will be amended soon. Although the Companies Bill 2009, the proposed amendment, provides for corporate governance, it makes it optional and does not address the corporate governance needs of SOEs. On the other hand, Norway has taken very big strides in building a formidable corporate governance framework. The Norwegian state oil company is one of the beneficiaries of good corporate governance for SOEs in Norway. The contribution of the oil sector to the economy of Uganda, one of the least developed countries in the world, merits discussion. It is worth noting that oil production may be the dawn of economic prosperity in Uganda. The International Monetary Fund has noted that, while it may be too early to forecast the benefits of oil production in Uganda, oil revenues are expected to exceed one-third of total government revenue and to contribute eight per cent of gross domestic product (GDP). Despite the importance of the oil sector to Uganda, literature on the subject, especially in the academic sector, is still thin on the ground. This article addresses the concept of corporate governance in the discussion of the proposed NOC and the oil sector generally in Uganda.

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Timothy Kyepa

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Timothy Kyepa LLM (International Trade, Investment and Business Law) University of the Western Cape, Cape Town, South Africa. The author is particularly indebted to Professor Riekie Wandrag and the anonymous reviewers for their insightful comments and guidance. The author can be contacted by e-mail at [email protected].