Kampala — The Government has tabled a Bill requiring that oil companies provide the Uganda Revenue Authority, details of their annual returns.

When the Income Tax Amendment Bill 2010 becomes law, the non-compliant companies face a penalty of between $50,000(sh110m) and $500,000(sh1.1b). While the Government should be commended for trying to put in place measures to guard against this valuable natural resource, the tabling of this Bill now is a confirmation that the existing agreements with the oil companies were flawed. The bitter truth is that at the moment, we are relying on the goodwill of these oil companies as far as any revenue is concerned.

Uganda is, therefore, in a very precarious position and is likely to lose the $404m(sh808b) tax claim against Heritage because there was no legal framework governing such a payment.

We are even not sure whether what we are claiming is accurate because the existing agreements lack methodology of estimating what Uganda should be getting. This was how Hardman Petroleum went away without paying almost anything.

However, it is better late than never. This is not the time for the blame game, but for finding lasting solutions to avoid the oil curse. Uganda was desperate for foreign investors who could have taken advantage of our inexperience in the oil sector to put in place a skewed agreement.

Uganda should, therefore, suspend all transactions on oil exploitation and go back to the drawing board to ensure the country gets a more favourable deal.

For instance, it is ridiculous for Ugandan crude oil price to be fixed at $15(sh30,000) per barrel when the international market price is $80(sh16,000) per barrel. The oil exploitation phase is rather delayed until a solid legal framework is in place than rush and lose everything.