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UGANDA: Pressure Mounts to Make Public Oil Agreements

Joshua Kyalimpa

KAMPALA, Mar 4 2010 (IPS) - Uganda’s members of parliament (MPs) are pressurising government to make public details of oil production-sharing agreements it signed with various international oil companies.

Uganda does not have the funds to finance the production of oil. Credit: Dirk Ingo Franke/Wikicommons

Uganda does not have the funds to finance the production of oil. Credit: Dirk Ingo Franke/Wikicommons

MP’s are pushing for the documents to be made public to enable parliament to scrutinise agreements over the production of what could be one of sub-Saharan Africa’s largest oil finds. (In 2009 one international oil company announced the discovery of what it claimed to be the largest onshore discovery of oil in sub-Saharan Africa in 20 years.)

Concerns have been raised by various government officials and civil society organisations (CSOs) over the fairness of the deal after details emerged that President Yoweri Museveni held direct talks with oil investors without including government agencies.

John Arimpa Kigyagi, a member of the parliamentary committee on natural resources, says while on Feb. 21 the committee received copies of the oil production-sharing agreements (PSAs) signed between government and oil company Tullow Oil, they are not at liberty to disclose details to their electorate. (Tullow Oil is one of five oil companies involved in PSAs with Uganda.) The committee are also not at liberty to disclose details of the agreements to the rest of parliament.

However, 60 of over 300 MPs have signed a petition that will be presented to the house to force government to disclose to parliament contents of the agreements.

The petition began after consultative meetings were held with CSOs and MPs – including those from the natural resources and national economy committees. These two committees handle issues relating to the oil sector, which has taken centre stage since Uganda first struck oil in 2006.

Uganda’s oil discovery is already attracting major players like Italian oil giant Eni Spa, U.S. Exxon Mobil, France’s Total and of recent the China National Offshore Oil Company. The country does not have the funds to finance the production of oil and instead signed agreements with oil giants spelling out how the revenue will be shared with investors willing to fund the production phase.

The companies will build an oil refinery in Uganda and an oil pipeline to the Indian Ocean. This will enable the landlocked country to sell its estimated two billion barrels of crude oil internationally.

The petition by MPs is the latest in a series of protests against the PSAs. Late last year, with the help of the Human Rights Network (HURINET), journalists Charles Mwangushya and Angelo Ezama applied for a court order to compel government to disclose details of its agreement with Tullow Oil.

Judgment was in favour of government. On Feb. 4 chief magistrate Deo Sejjemba, of Nakawa district in the capital Kampala, declined to grant the order saying the petitioners failed to convince the court that obtaining access to the documents was in the public’s interest and would benefit all Ugandans. Sejjemba ruled that government is not obliged to disclose all the information in its possession and has the right not to disclose information to the public where it believed release of such information will be prejudicial to national security.

MP for central Kampala, Nabilah Sempala, says MP’s still want the PSAs made public. “We are only waiting for an appropriate parliament session to present the petition and we are convinced the petition will succeed,” says Sempala.

The issue of contracts spelling out how oil will be shared between government and its oil partners after production has been contentious because government refused to make them public since oil explorers struck oil in February 2008 in Albertine Graben, a region in the western rift valley neighbouring with the Democratic Republic of the Congo.

Government insists the contracts are favourable to Uganda but would rather they are kept secret for security reasons. Minister of state for energy, Peter Lokeris, says Uganda is unable to make the contracts public because of clauses to that effect within the agreements.

“The oil firms are in business and would not want details of their contracts made public for their competitors in business to know,” says Lokeris.

Mohamed Ndifuna, national coordinator of HURINET, told IPS the failed court application to disclose details of the agreement was a test of the country’s Access to Information Act 2005. The Act states that every citizen has right to access information and records in the possession of the state or any public body except where it interferes with state security, the country’s sovereignty or the right to privacy of an individual. Ndifuna says since the law was passed government has not met its obligation to make public information in its possession as required by the act.

The Ugandan government has already approved a 1.5 billion dollar offer by Tullow Oil to buyout a 50 percent stake of Uganda’s other oil-production partner, Heritage Oil. This marked the end of haggling between the oil companies after Heritage Oil announced they would sell their 50 percent stake to Italian firm Eni Spa for the same amount.

Civil society organisations are, however, concerned that while government is set to start the early production of oil, the PSAs between Uganda and the oil companies remain secret. Ndifuna said the fact that Museveni was directly involved in negotiations was a bad sign as he had not involved the appropriate state organisations in the PSAs.

“Parliament is not involved, the Uganda Investment Authority (UIA) is also not involved. So who will prevail over (the situation) if things go wrong?” Ndifuna asked.

(The UIA is a semi-autonomous government agency that works in partnership with both the private sector and government to drive national economic growth and development.)

Dickens Kamugisha, the chief executive officer of the Africa Institute for Energy Governance, believes the contracts could be flawed and that is why government does not want to disclose the contents.

“Like many African countries producing oil, there is a conspiracy between the oil giants and governments to take citizens for a ride and the secrecy of the Uganda about the share agreements is suspicious,” Kamugisha says. Uganda minister for energy and minerals, Hilary Onek, insists Uganda has got a good share agreement with the oil companies.

He says if the agreements where to be made public it would scare away other would-be investors and would be contrary to the contracts signed with the oil companies that stipulate ultimate secrecy.

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