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Museveni’s oil spin

By Agather Atuhaire

Government officials tell blatant lies even as Museveni begs public to trust him

On Oct. 12 journalists in Kampala received messages at around 9am summoning them to a meeting with President Yoweri Museveni later that day at State House Nakasero.

This was unusual because press conferences of that nature are always scheduled and journalists informed a day or two before.

But the journalists were aware that on October 10 and 11, parliament had heard that three senior ministers had received bribes from Tullow Oil.

Tullow says they are determined to clear their name and have already written to the Speaker of parliament saying they will be glad to appear and defend themselves from “the baseless allegations that were raised during the oil debate in parliament on October 10”.


But Keith Myers, the Managing Partner of Richmond Energy in UK says “Whether true or not, this shows a high level of mistrust between the government, companies and the people”.

He said if the allegations of corruption against Tullow are true, they would result into legal proceedings against the company and possible imprisonment of the culprits in the UK law.

The story was moving fast and by 3pm the journalists were at State House’s Sheraton gate.

By the time president Yoweri Museveni arrived at around 5pm journalists had already been shifted to three positions and one could see expressions of impatience on their faces.

When the president took his seat, he did not start addressing journalists right away as expected. Instead, he asked the Permanent Secretary in the Ministry of Energy, Kabagambe Kaliisa, to “clear the air” about the oil issues that had incited one of the most fascinating debates in parliament the day before.

Most of the issues raised were the concealment of the Production Sharing Agreements (PSAs) and the alleged corruption between some senior ministers and the oil companies.

Kabagambe took a longwinded route from 1986 when Museveni came to power to explain the much debated oil agreements.

At the heart of Kabagambe explanation was a claim that Uganda has signed some of the best Production Sharing Agreements (PSAs) with the oil prospecting firms.

“In cases of the worst negotiated deals, countries get one point and in the best negotiated cases countries get 112, Uganda has 78 points which is way higher than most countries like Ghana, Trinidad and Tobago,” he said.

The fact is that Kabagambe’s claim cannot be verified because the government has kept the PSAs secret. But expert groups like Platform, a London based organisation that advocates for social and environmental justice, has based on leaked documents to show that Uganda’s PSAs offer a worse deal compared to other countries.

Apart from giving companies incredibly higher returns on their investments, Platform says, Uganda’s contracts fail to capture increased rent as the oil prices rise.

Kabagambe says Uganda will get between 36.5%, 72.6%, and 80.5% depending on the stage of production while the oil firms take the balance. Critically, the share for Uganda will only be determined after the oil firms have recovered their costs of producing the oil.

But Advocates Coalition for Development and Environment (ACODE) Deputy Executive Director, Onesmus Mugyenyi, says there is nothing to boast about because the oil firms will ensure their costs are so high there will be nothing left to share with government.

“The companies inflated expenses will leave Uganda with little or nothing if the investors continue setting the terms for us,” Onesmus told The Independent.

Onesmus wondered why the government seems to be desperately begging these companies as if they are doing Uganda a favour by investing in its oil.

Dickens Kamugisha , the Chief Executive Officer, of the Africa Institute for Energy Governance (AFIEGO),  says Kabagambe’s claims are pointless  if  the PSAs are shrouded in secrecy.

“The issue is not necessarily about the ultimate take even if its 95 percent to government,” said Dickens. “There are many factors that will determine the relevancy of such a percentage.”

Dickens says Uganda cannot compare itself with Ghana which made oil discoveries much later than them but are already producing oil.

“It is not right for Mr. Kaliisa to compare Uganda’s oil sector with other countries when the oil and gas policy has no law to operationalise it,” Dickens said adding that it’s a shame that 11 year after discovery there is no Oil Authority and National Oil Company (NOIL).

At the press conference, Kabagambe said Tullow has so far invested US$100 million but Tullow says it has put in US$2 billion so far.

Tullow Corporate Affairs Manager, Jimmy Kiberu, said costs are projected to rise to over US$10 billion during the development phase.

Observers say that without the required government supervision, participation and transparency, the costs could go even as high as US$50 billion.

Onesmus says government needs to audit these companies and come up with audit reports that will be open to the public.

Dickens says it is too early to be determining the companies’ costs.

“We are still in the production stages, we still have to construct an oil refinery and the other needed infrastructure all of which are completely in the hands of these companies,” he said.

On the issue of secrecy, Kabagambe said oil agreements are naturally confidential and that data on oil takes a lot of resources to collect for it to be put to public domain incautiously.

He says uncensored information on agreements can scare away investors or reduce government’s chances of negotiating better deals in future. “We cannot give out classified information and most of the information that we get in operation is classified,” Kabagambe said.

Kabagambe’s claims have been dismissed because many countries that have oil publicly display the agreement.

Transparency International chairman Charles Mubbale noted that countries like Ghana publish these agreements even on the internet.

Kabagambe claim that the PSAs have been released to the public have been equally refuted.

Several MPs say they have failed to get the PSAs in the parliamentary library where Energy Minister Irene Muloni and Speaker of Parliament Rebecca Kadaga say they are.

Lwemiyaga county MP, Theodore Ssekikubo, said the agreements are not in the parliamentary library.

“Even minister Muloni knows that is not true because Hon. Katuntu went to search for them when we were all in parliament and came back with nothing,” he said.

About one and a half hours into the press conference, it was URA Commissioner General Allen Kagina’s turn to explain allegations the president had heard that the US$ 404 million Tullow oil paid to government in form of capital gains tax took two weeks to reach the intended account.

“Allen Kagina you are a ‘mulokole’ I want you to explain to us what happened that made money to take two weeks from one account to another,” said the president.

Kagina denied the allegations and said the day the money was transferred from URA’s account in Bank of Uganda is the day it got to the Consolidated Funds account in the same bank.

Despite Kagina’s mulokole claims, however, the Leader of Opposition in Parliament, Nandala Mafabi, has said he has documentary proof that the money was transferred on July 14 and deposited on the Consolidated Fund Account on July 21. They used the money to make profits first, Nandala says.

The Executive Director of the Anti-Corruption Coalition Unit (ACCU), Cissy Kagaba, says it is secrecy and the personalisation of the oil sector by the President that have  led to the lies and misinformation. She cautioned the government to stop being secretive.

“The secrecy they are using to promote their selfish interests might prove more critical than they imagine,” she said, “social unrests may arise when the public discovers that the oil revenue is ending in the hands of their few rich leaders.”

“We all know that without transparenncy and accountability the corruption that is already unbearable in this country will increase,” Kagaba said, “Uganda’s selfish leaders will use that through concealment to enrich themselves when millions of Ugandans are languishing in abject poverty.”

Dickens Kamugisha says it is only transparency that can save Uganda from the much talked about “oil curse”.

“Transparency will enable Ugandans get the necessary information which they can use to demand for accountability if the government and companies that are not willing to account on their own,” said Dickens.  “It is secrecy that has made most oil producing countries in Africa autocratic and corrupt because it keeps citizens in the dark to ask for anything while it helps government ignore the citizens because it can get money from oil and not citizens taxes.”

Observers say lack of transparency is the major reason why these oil companies are exploiting Uganda.

Dickens says because of the government’s secrecy, weak laws, and selfishness on part of some government individuals, companies have gone as far as disrespecting Uganda’s High Court judgments and dragging the country to international courts.

Heritage oil dragged the government to a London court over a Capital Gains Tax dispute that, under Uganda’s tax laws, should have been resolved under Uganda law.

The oil companies are not safe either because there is no country which would want a corrupt and secretive company for an investor.

Tullow’s Jimmy Kiberu says the company has a zero tolerance approach on corruption but it is the government that wants the secrecy.

President Museveni is clinging on to the secrecy and wants Ugandans to trust him.

“Uganda will not fail Ugandans under my leadership,” he told the journalists and pledged that he will ensure government has even better deals when the agreements are revised.  Unfortunately, even if what he said was true, it would still be doubted by most Ugandans because of the thick blanket of secrecy covering the oil sector.

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