Social licence to operate in the energy transition era: Case study of the East African oil and gas sector

Abstract

The concept of a social licence to operate (SLO) has become a key issue for companies, researchers, policymakers and other stakeholders in the oil and gas sector. With the global move to transition to a low-carbon economy, SLO remains relevant especially considering the continued role of fossil fuels in Africa. Securing 'social permission' for oil and gas activities is increasingly seen as critical for the future profitability and sustainability of the sector. In East Africa, like many developing regions, there has been a shift from purely economic-driven development in keeping with the trend, and SLO has become a significant factor for governments, communities, oil and gas companies and other industry participants. As will be demonstrated in this paper, there are numerous examples of oil and gas operations that have been setback in East Africa because of inadequate consideration of SLO issues. It will also be demonstrated that the main challenge with legislative provisions in SLO in East Africa is that generally, the legislation is relatively recent, and regulations are still being formulated. Further, there is insufficient enforcement caused by a lack of financial resources and governance issues. As such, companies in the private sector are increasingly implementing corporate social responsibility (CSR) programmes to achieve SLO. There is also increasing SLO pressure on companies and governments from non-governmental organizations (NGOs), international organizations and private sector member organizations. This paper will provide a study of SLO in the oil and gas sector in three East African countries-Kenya, Tanzania and Uganda. It will analyse the current State of SLO in the sector, developments in the sector legislation and policy, corporate initiatives by international resource companies, as well as the initiatives by communities and the public to ensure greater consideration of SLO. The paper offers a conclusion on whether SLO issues are adequately addressed in the oil and gas sector in East Africa, and whether there are any further steps that need to be taken.