3 January 2013

Uganda: Oil Laws Must Accommodate Bunyoro Needs


Exploration work undertaken in the Albertine graben has since confirmed the existence of extractable reserves of oil and estimates suggest that oil production could be sustained at around 150,000 barrels per day for 20-25 years, based on the estimated reserves of 3.5 billion barrels.

Production at these levels for 20 years would translate into production of 1,095 million barrels. Section 7 of the revised Public Finance bill now contains more detailed provisions on the 93% (for the government) and 7% (for the relevant districts) revenue sharing. The revenues intended for the districts are to be shared 50% based on production among districts producing petroleum and 50% based on population among districts located in production areas indentified by law.

However, there still remain a few uncertainties that should be clarified. First, this provision relates only to royalties rather than petroleum revenues (i.e., not bonuses, profit oil, penalties or other petroleum revenues), which seems to suggest that the government will keep 100% of the petroleum revenues other than strictly royalties.

Secondly, it is unclear whether this sharing will occur on the total amount of royalties collected or only on the portion of royalties that is transferred into the Consolidated Fund for the annual budget. We assume the latter, which means that the amount intended for the districts will be fairly small.

Thirdly, the exact mechanism on how it will work still remains vague. For example, it would have been best that any payments to districts go into the district bank accounts, backed by proper transparency rules.

Also, it is very unclear how the trust and stabilization concepts of subsections 12 and 13 will work. This is bound to create conflicts. I appreciate the discovery of oil and gas in Uganda, particularly in our Bunyoro kingdom. It presents a tremendous opportunity for the country and the kingdom to access the much-needed resources to overcome major social, economic, environmental and political challenges.

The revenues from oil and gas, if well used, can support strategic investments in key areas such as infrastructure, education, health, agriculture, clean water, employment creation, environmental conservation and others that guarantee a high quality of life for the people of Uganda.

I recognize that the government has made commendable investments and progress in promoting the development of the oil and gas sector, but we are concerned about the current lack of transparency and the disrespect of relevant institutions by the executive in the ongoing oil development processes.

It is now evident that oil is already a curse even before production. And if the trend continues like this, oil will cause more harm than good in our motherland and Bunyoro in particular. I observe that the Albertine graben is one of the richest biodiversity areas and an important region for Uganda in terms of tourism, agriculture, fishing and regional security.

As such, the exploitation of oil in the region must be done with the greatest care such that not only Uganda but also all her neighbours are not adversely affected.

While I appreciate that oil is a national resource and a matter of national interest, we wish to remind our government that the local 'oil communities' in Africa's oil-producing countries, right from Cabinda in Angola, Abyei in Sudan, Eastern DRC, Niger Delta in Nigeria, and others, face very unique problems.

They require special considerations as a reward and compensation for the suffering they always endure as a result of oil activities. The oil communities in Bunyoro Kitara kingdom deserve special treatment in as far as oil revenues are concerned. This should be over and above the shares to 'non-oil communities.'

Furthermore, as the country prepares to embark on full oil production, we call upon the government to recognise the many problems facing Bunyoro kingdom today, including the colonial mistreatment of the past, high levels of poverty, poor education, poor health services, poor roads, the lack of clean water, unemployment, lack of fertile arable land as a result of most of it being gazetted as protected, and lack of financial resources by the kingdom that would help its people out of poverty.

Therefore, there is need to critically review the Public Finance Bill 2012 to ensure that Bunyoro as a sub-region and as a kingdom is able to benefit from this God-given resource.

The author is president of 'Empagi za Bunyoro Foundation'.

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