10 December 2012

Uganda: Delaying Oil Bill Will Impede Production

Photo: Rogers Okwany/NewVision
Members of Parliament failed to vote on the oil bill after a chaotic plenary.

Kampala — The standoff between the executive and the legislature in regard to the passing of the oil Bill over certain clauses has been cited by some as a delaying tactic in the oil production process.

Government's stand is that the licensing and revoking of licenses should be done by the minister and not the authority so that it (Petroleum Authority) can concentrate on its regulatory function.

The minister will however not act on his own, but will be advised by the authority and Petroleum directorate and his/her decisions will have to be approved by cabinet.

The contentious Clause 9 gives exclusive powers to the minister to grant and revoke licenses for oil companies.

The Bill seeks to put in place a legal framework for regulating petroleum exploration, development and production in the country.

International best practice in the petroleum sector requires responsibility for licensing to be distinct from regulation.

The argument is that, if granting and revoking of licenses is left to the authority, it would be monitoring or policing the same terms and conditions it negotiated and licensed.

Mr. Elly Karuhanga, the President of Tullow Oil Uganda and Chairman of the Uganda Chamber of Mines and Petroleum while addressing a public dialogue on oil and gas in Kampala last week said that if the country was to fast track the production of oil and realize its benefits, then there was a need for attitude change.

"This attitude that 'Lets legislate to punish these oil companies' will not attract capital into the economy because Capital is a coward, it only goes where it can grow. The companies need to be looked at as partners because they have injected huge capital in a risk venture," Karuhanga said.

He said despite the success rate in oil discovery of about 90% in Uganda, companies like Tullow had spent over $1billion on searching for oil alone.

He added that if Uganda had realized that oil is security, then they country would be benefiting from it just like Ghana.

Karuhanga said, "You cannot legislate on suspicion. You cannot put this resource in the hands of people who have not been elected, what will the level of accountability be?"

Joel Senyonjo, a lecturer who attended the dialogue said that the stand off between the executive and parliament was because some of the legislators did not properly internalize the bill before raising their voices in the debate.

"The MPs are not well informed. You have just listened to one of the parliamentarians over here speaking compradorically that there are many companies itching to invest here and so the ones that are feed up can go. I think we need to get serious at times and I am particularly worried because the people who are supposed to be our eyes are not doing their work," Senyonjo said.

Honey Malinga, the Assistant Commissioner petroleum Exploration and Production at the Ministry of Energy and Mineral Development urged the legislators to pass the oil bill so as to cut the waiting the game which will in turn defer the production date.

"I know our bills have come at a wrong time (time of allegations of misappropriation of public funds) but we need the oil bill in place if we are to make strides," Malinga said.

Dr. Omona Ken Olusegun, the Member of Parliament for Kaberamaido, Eastern Uganda also told this newspaper that there were some members who were pursuing other interests other than national interests.

"People need to know that oil is not like any other commodity, it is a strategic resource. Oil is important for international relations; we just cannot afford to leave it in the hands of people who are not elected. The role of the executive needs to come out clearly in terms of who comes in to trade in our oil," Omona said.

However, Mr. Frank Gashumba, the Coordinator of National Coalition for the Awakening of Uganda says that putting entrusting the minister with the powers to grant and revoke licences is just handing over 'our' oil to the President.

"This is just handing over the control of the oil to the president. People are swindling public funds and we are just watching. The president is the one who appoints and fires ministers and so the directives will always come from him," Gashumba said while appearing on a local TV station last week.

The contentious clause 9 of the Petroleum Bill 2012 has caused a major dispute between the executive and the parliament and by press time government stood its ground and wanted the original clauses of the bill maintained.

Copyright © 2012 East African Business Week. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.