The Independent Uganda: You get the Truth we Pay the Price
“And that has to come from the top, from Ugandan President Yoweri Museveni. The pipeline is not a simple undertaking. If Uganda is not careful, they’ll miss the boat,” says one James Hopkinson from a company called Assaye Risks.
It says Total has a number of projects that it is working on and it has already moved key personnel from the Uganda project to other roles. So too does Tullow, which noted in its statement on the failure of the sales process that it has exciting work in Kenya and Guyana.
The report cites the public comments by Tanzanian President John Magufuli that Uganda should give the oil firms the “small” tax concessions and stand to gain the “big” rewards when oil starts flowing.
It says pressure has been piling on Museveni domestically about the oil developments being slow.
“Uganda is moving towards elections and this is one of the issues that have seized attention. The government needs to demonstrate progress. It has taken a number of steps to support the oil plans, such as road and an airport construction, but local people are questioning why it’s taking so much time,” according to Tom Ogwang of Mbarara University of Science & Technology’s (MUST).
Museveni `ready to fight’
Other reports citing highly classified diplomatic sources indicate that that President Museveni has assured Tullow and Total that they would not get a tax waiver.
Museveni reportedly said he was ready to fight it out but would not let Uganda become like Nigeria, Equatorial Guinea and Angola; countries he said are not getting a fair share from their oil.
He reportedly explained that Uganda has made many concessions and infrastructural investments that the oil companies need to appreciate. Museveni reportedly met them on Sept.06 on the sidelines of the recent Uganda-Tanzania Business Forum in Dar es Salaam.
“You asked me for an airport, I went to London and borrowed $350 million. Now you are saying you don’t want to invest even after I delivered the list of things you asked of me,” he reportedly said.
He reportedly also listed major roads, including the so-called oil roads, an international airport under construction, numerous concessions on taxes and tariffs, and laws that support the oil sector.
“You told me you had money to invest if I fulfilled a list of conditions. I have met those conditions, so why are you not investing?” the president reportedly said.
He termed the tax waiver demands as new preconditions to signing of the FID. The oil companies also want to raise the transportation tariff from $12.2 per barrel to at least $15. According to the Permanent Secretary in Uganda’s Ministry of Energy and Minerals, Robert Kasande, the oil roads alone require Uganda to raise $1 billion.
President Museveni has also raised eyebrows with recent remarks that implied that Uganda could start pumping oil in two years; this amidst a public face off with oil firms – something many assume killed any prospects for Uganda oil in the short-term.
The President was on Sept.12 speaking at the signing off a joint cross-border integrated programme for sustainable peace and social-economic transformation for Turkana, West Pokot, and Karamojong in the far northeastern Uganda town of Moroto. Museveni was explaining that the integration requires a road to connect to Ethiopia through Kenya when he made the quip which has become a talking point. He said, in any case, if the UN fails he would build the road.
“Once my oil comes out in two years, I will build the road myself,” he said.
The Permanent Secretary, Kasande on Sept.17 followed up Museveni’s remark during an oil sector meeting in Kampala. He said “the collapse of Tullow Oil’s Purchase and Sale agreement would not end Uganda’s oil and gas industry”.
In the context of Museveni’s dispute with the Joint Venture Partners in Uganda’s oil development, their optimism has sparked speculation.
Museveni’s remark is significant because the road he wants would connect to Turkana’s main oil producing town of Lodwar. Kenya is developing an oil pipeline from Lokichar to the coastal town of Lamu that could be an option in case of failure of a pipeline deal Uganda agreed with Total, CNOOC, and Tullow. The agreed pipeline would go through Tanzania and is designed to run for 1,443 km from Lake Albert to the Tanzanian port of Tanga and take three years to construct.
Speculation has been rife that Museveni could lock out Total and do a deal with CNOOC which favours the Kenya route. But analysts have spoken of secret meetings between Total and CNOOC and the Chinese frustration over Museveni slow bureaucrats. In any case, CNOOC has also pulled back on staff and activities in Uganda.
Pouyanne an oil executive and expert in oil and Africa …
“He also understands Africa, having worked in Angola and has visited Rwanda to see the gorillas.”
Maybe this expert on Africa and oil would realise Uganda’s economy is independent of oil and Uganda would lose almost nothing if the oil remained in the ground as compared to Total that has sunk in costs that need quick recovery and the shareholders of total may start getting impatient and kick out an executive that is failing to deliver.
The article clearly spells out how some salient investments in Uganda are contingent on oil production. As well, BOU considers Uganda’s debt to be sustainably managed only if the 2023 oil production land mark is achieved. These r clear examples that Uganda’s economy is dependent on oil. Besides, our debt is ever increasing. Soon we shall hit the 50% debt to GDP ratio.
What these IOCs have invested in Uganda, though huge, is very little given that the major investments pertaining development of the fields haven’t commenced. The move to suspended operations works more for them and not Uganda whose focus is on short term gains.
I hope the Government of Uganda realises sooner than latter before it makes a worthy decision.
Uganda’s population of 40million plus who need shelter, food, clothing, banking, security is a much greater resource than oil will ever be to Uganda’s economy…. So its hubris for Total and other oil companies to imagine Uganda’s economy will grind to halt for not exploiting a few billion barrels of oil
Lest you have forgetten for the past 100years of Uganda’s existence has depended on its rapidly expanding population and agricultural earnings from coffee, cotton etc building universities,hospitals, etc and this agriculture and a rapidly expanding population are still around and will likely be around in the next 100 years. The oil revenues if they ever come will supplement this economic foundation and the hullabaloo about oil this, oil that is uncalled for excitement.
So clearly Total needs Uganda more than Uganda needs Total. Maybe Total and these other oil companies should desist from making silly threats unless they are willing to use miltary force to extract this oil and are also willing to miltary guard against sabotage by Ugandan patriots of the oil pipeline from hoima to the coast this plus the cost of heated oilpipeline and you should realize the uganda’s oil becomes uneconomical so Tullow should just pay the tax and move on
Oil companies are minded by making profits, yet Uganda government is looking at the best and sufficient means on how its oil resiurces becomes profitable and benefit the entire country in terms of service delivery and financing infrastructure projects. Oil refinery and pipeline are both lucrative business investments which are supposed to be put in place, Uganda can flood oil supply on the african market globe. Know need to hurry up such agreements because might be costly on the uganda side unlikely oil companies.
Uganda is perhaps unlucky with geography as the $20Bn investment required here is to get the oil produced and transported to market is simply too big and far too risky.
So this dispute could not have come at a better time for the oil companies – much better to fall out now before you invest that $20Bn than afterwards.
They now have a last chance to step back and ask themselves were we actually stark raving mad to think of investing $20Bn in an oil project in Uganda in the first place?
The answer of course is absolutely yes!!
They will lose it all to corruption or expropriation, every single cent!
So as a shareholder I am hoping this will not be resolved as I want them to reverse out of this investment altogether while there is still time as Uganda will destroy these companies.
The ordinary Ugandan citizen would not have benefited anyway, the big men would have taken it all.
Oil is a finite resource and it’s discovery is diminishing, almost reaching peak discovery. With that is mind Uganda have an upper hand in dictating rent on its resource knowing that sooner or later IOCs will come back begging for it. Moreover, geological uncertainty has been reduced, the other hurdles (or seemingly) are just a matter of attitude of the IOC which will change. No deal is better than a bad deal.
Kakuta sacrifice less now for more in the future. Think positive
Well Uganda needs Total (E&P) more than Total needs Uganda. Whether we argue from the debt analysis point of view or living standards etcetra. Uganda came to the world picture after the discovery of oil short of that it was only known as General Idi Amin’s country of Origin. This current impasse and show down without repeating contents of comments above only serves rather as a warming to total Investment decision desk to rethink their previous “go invest decsion” what comes to the risk analysis irrespective of sunk cost are three things going forward. Taxation, expropriation either in present regime or any change of government and security of tenure of the concessions granted. Just as governments communicate, corporations communicate too. So Uganda ends up a no investment zone in natural resources for majors and medium companies. So sacrifice now picture the future.
Uganda’s population of 40million plus who need shelter, food, clothing, banking, security is a much greater resource than oil will ever be to Uganda’s economy…. So its hubris for Total and other oil companies to imagine Uganda’s economy will grind to halt for not exploiting a few billion barrels of oil
Lest you have forgetten for the past 100years of Uganda’s existence has depended on its rapidly expanding population and agricultural earnings from coffee, cotton etc building universities,hospitals, etc and this agriculture and a rapidly expanding population are still around and will likely be around in the next 100 years. The oil revenues if they ever come will supplement this economic foundation and the hullabaloo about oil this, oil that is uncalled for excitement.
So clearly Total needs Uganda more than Uganda needs Total. Maybe Total and these other oil companies should desist from making silly threats unless they are willing to use miltary force to extract this oil and are also willing to miltary guard against sabotage by Ugandan patriots of the oil pipeline from hoima to the coast this plus the cost of heated oilpipeline and you should realize the uganda’s oil becomes uneconomical so Tullow should just pay the tax and move on
We know them. Colonizers and robbers of wealth. One day it’s fair trade this, fair trade that… the next it’s this kind of nonsense. They can take their dirty tricks and try them elsewhere.
In fact this may be another God-given chance for Ugandans to double check and cross check all the things we have been told by these companies about our oil and gas, this time while appreciating their true colours which they have now shown. They cannot be trusted AT ALL. Let any company that wishes to trick Ugandans know that we are not simple people.
Uganda stand firm here… these oil companies would never dare to evade tax in Europe.. but they are here evading tax in Africa.
Museveni won’t give a damn on those exploitation companies , uganda should stand firm .
The reason Africa has remained poor is because of our selfishiness. These companies are bringing in USD 20 billions and we are already frustrating them over USD 0.06 billion! We are already fighting even before half a billion dollars is invested. We should not stamp our feet over 6 billion of oil reserves. Mark you, Saudi Arabia has over 265 billion barrels of Oil reserves. We should not therefore think Uganda’s oil is too much to scare these companies. Comparing our oil reseves to those of Saudi Arabia, Iran, Venezuela makes it like a drop in the ocean.
With the evolution of electric cars, climate change the world moving away from fossil fuels. In 15 years, the value of oil will have depreciated significantly. The US is now pumping out its oil at record levels of more than 13 million barrels per day. The US plays a significant role in determining the price of oil. When it depletes its reserves, it will influence key decisions in combating climate change. Probably by then, Sanctions on Iran will also be removed and the oil price will come crushing.
Looking at a bigger picture, Uganda needs to start plans for production now. Look at the coal industry just 20 years ago, it was booming and the talk of the town. Where is it today? That should be an important lesson.
Mbu, “The reason Africa has remained poor is because of our selfishiness.”
…these are the ones who were just daydreaming during history lessons. *smh*
We should stand firm as a country and support these decisions made by our government