by Patrick Barugahare
Licensees in Uganda’s oil and gas sector are required to comply with new statutory requirements prescribed under The Petroleum (Waste Management) Regulations, 2019 (“the Regulations”). The Regulations cover all aspects of waste management in the oil and gas sector including the production, import, export, transportation, storage, treatment or disposal of petroleum waste, construction and operation of petroleum waste management facilities.
Nyamasoga treatment facility is located 45 km from Hoima town. NEMA is required to inspect and approve such oil waste facilities before giving contractors licenses.
The Regulations were gazetted on 1st February 2019 and were promulgated on the 7th November 2018. As Uganda prepares for the commencement of oil production, licensees must ensure that they comply with the various new statutory requirements set out in the Regulations. Licensees must, therefore, familiarise themselves with the key principles and requirements under the Regulations. The Regulations cover all aspects of oil and gas waste management including:-
- general principles of waste management;
- licensing requirements;
- classification and characterisation of waste;
- transportation, treatment and disposal of waste;
- decommissioning of waste and handling of waste during decommissioning;
- records, reports and notices; and
- offences, penalties and administrative measures.
Key Waste Management Principles
One of the key management principles enshrined in the Regulations is the requirement for licensees to outsource waste management to a separate independent unrelated entity (see Regulation 5(1)). Regulation 5(1) is expressed in mandatory terms and provides that each licensee “shall contract a separate entity as a petroleum waste handler to manage the transportation, storage, treatment or disposal of petroleum waste”. Regulation 5(2) is also expressed in mandatory terms and provides that the petroleum handler “shall not include any affiliate or subsidiary of the licensee”. The term “affiliate” is defined widely under the Regulations and means any entity that is directly or indirectly effectively controlled by or under the indirect effective control of the licensee. The term “control” is also defined widely under the Regulations to effectively cover all affiliated and/or associated entities of the licensee including subsidiary and/or holding companies/entities.
Accordingly, as licensees plan to procure waste management services for the planned oil production, they must be mindful of these new mandatory and key waste management principles. In practical terms, this means that the use of related companies either directly or indirectly through the use of joint ventures or consortia with other unrelated companies by licensees is illegal and unenforceable under the law. This is intended to ensure transparency and strict adherence to environmental laws, regulations and standards. Use of related entitles to manage petroleum waste has potential to compromise compliance and enforcement of environmental laws and standards due to possible collusion inherent in conflicts of interest between the licensee and a related petroleum waste handler.
Another key waste management principle under the Regulations relates to the requirement for the waste management entity to conduct an environmental and social impact assessment (“ESIA”) and obtain a certificate of approval of the ESIA from NEMA. This is now a statutory requirement under Regulation 5(4) of the Regulations. This effectively means that the waste management entity to be contracted by each licensee must not only be separate and unrelated to the licensee but must also have NEMA approved/certified waste management facilities to treat and/or dispose of petroleum waste before being formally contracted by the licensee.
Brief case waste management operators with no or basic waste management facilities on the ground that meet NEMA standards will no longer be able to secure contracts in Uganda’s oil and gas sector. It is important to note in this regard that it is a mandatory requirement under Regulation 5(4) for each waste management entity to have undertaken an ESIA and obtained a certificate of approval of the ESIA from NEMA before it can be formally contracted by the licensee.
The Regulations also mirror the requirements under the National Environment (Waste Management) Regulations for each waste management entity contracted by a licensee to have a licence from NEMA. This is now a specific requirement under Regulation 5(5) of the Regulations.
It provides that an entity contracted by the licensee must not import, export, transport, store, treat or dispose petroleum waste without a NEMA licence. As NEMA has to inspect and approve all waste management facilities before granting licences, this requirement further strengthens the regulation and enforcement of sector specific waste management laws and standards in Uganda’s oil and gas sector.
Conclusion
As licensees prepare for the planned oil production phase, they must ensure compliance with new statutory requirements relating to petroleum waste management. Procurement of waste management operators who are related or associated with the licensee is not only illegal but will also result in non-compliance with environmental related conditions usually prescribed in the licence. Breaches of the Regulations thus pose significant risks to licensees such as possible sanctions and penalties including possible loss of their licences. Licensees must thus take special care when procuring waste management contractors and sub-contractors.