22 April 2013

Uganda: Corruption Charges Mar Oil Sector

Kampala — Every day that dawns there is renewed anticipation over the future cash returns of Ugandan's oil and gas industry that is estimated to be in region of 3.5 billion barrels of crude oil.

From the peasants far across in the countryside to top government officials, all are looking at oil and gas resources as the next best thing to deliver this country from widespread poverty. Last week President Yoweri Museveni launched an ambitious Uganda Vision 2040 with detailed plans to transform this country from a developing to a developed first world country.

At the centre of all these projections are the revenues from the oil sector, a sector that has a potential to grow bigger as firms are still carrying out exploration in northern Uganda and the Albertine region.

President Museveni has spent much of this month explaining how the oil revenues are going to improve the country's infrastructure and facilitate other sectors like agriculture.

But amidst this hullabaloo there lies a behavioral monster called corruption a key characteristic of developing countries world over.

Bribery is not a new thing in the oil and gas industry either, let alone across the whole natural resource extraction industry the world over.

Allegations that government officials lobbied for bribes from oil firms therefore should not be surprising.

It was bound to happen considering how other less funded sectors like agriculture, education and other government programmes have been compromised as a result of corrupt people being entrusted with vast amounts of resources.

Corruption is the biggestchallenge Uganda has to tackle.

There are countless cases in court and an overwhelming numbers of commissions of inquiry being undertaken to fight this vice.

In 2011, youthful MP Gerald Karuhanga, presented documents before parliament implicating that former Foreign Affairs Minister Sam Kutesa, former Minister of Energy and Mineral development and Prime Minister received bribes to advance business in the favor of oil firms.

Well as the truth has remained unknown despite numerous inquests into the matter, the matter ruptured parliament including demands from MPs calling for Mbabazi to resign from government.

Similarly in one of the several US diplomatic cables released by whistle-blower website, Wikileaks, in August of 2011 the name of President Museveni popped up in a bribery scandal.

Apparently Tullow Oil, a UK oil and gas exploration company operating in Uganda,alleged Italian oil firm ENI made personal payments to Museveni and Ministry of Energy officials in return for Tullow's offshore exploration rights.

While responding to the accusations Museveni dismissed as "absolute rubbish" allegations that he was bribed calling Tullow official Andy Demetriou who is quoted by WIkileaks, an idiot.

Though Tullow, government and individuals mentioned have refuted the allegations, Ugandans are worried the corrupt vultures will devour all proceeds from the oil and gas industry.

Uganda is progressing towards attaining its set goals in the oil industry, despite delays, key laws have been agreed to in parliament and that is a right step in the right direction.

The contentious Petroleum (Exploration, Production and Development) Bill, 2012 and The Petroleum (Refining, Gas Processing and Conversion, Transportation and Storage) Bill, 2012 have been passed by parliament.

Weak laws?

The Petroleum (Exploration, Production and Development) Bill, 2012 was contentious because of clause 9 which gives Minister of Energy powers to make important decision on behalf of Ugandans.

In the eyes of critics, they saw it as a move by President Museveni who is the appointing authority to easily swing key decision pertaining to the oil industry in the executive's favor and those in his government.

"That Clause (clause 9) would not have been bad in countries that have a backbone, where ministers can say no to a president, but here we have ministers that are yes ministers, ministers that are ideally told what to do by the president," Cissy Kagaba, Executive Director Anti Corruption Coalition Uganda said in an interview.

The opposition politicians and members of the civil society believe the laws being passed now are weak and that they can easily be manipulated by corrupt people including oil firms.

"Am not happy with the laws being passed and as you know as NGOs we struggled and lost the battle, on the upstream law the key section in that law was section 9 that provides for who has powers over management of oil, the minister means the president," Dickens Kamugisha the Chief Executive Officer of Africa Institute for Energy Governance (AFIEGO) also said.

Like Kagaba, many critics say that the country doesn't have the right laws in place onto which a mechanism to fight corruption in the oil sector can be based onto.

"There are certain laws that must be put in place, there are certain clauses that have been put in the laws being made that are not going to enable transparency," Kagaba adds.

Kamugisha points out that with a corrupt government you will always get peanuts, this he bases it on the very many corruption cases the country has witnessed.

"As a country we have examples of projects that have become white elephants and at the end the tax payers suffer," He says adding

"We already have government officials implicated in bribery scandals, ministers who entered into agreements with oil firms, made stabilization clauses, agreed on foreign arbitration of disputes, so what do you expect from such people," he commented.

"I I think we pass laws that are no different from the old ones only these ones are called 2012, the content of these laws is what can help Uganda." Kamugisha further said.

Kagaba acknowledges that these issues are rising now because Uganda as a country has failed to come up with clear infrastructures on how oil is going to be managed.

"With our country were levels of corruption are rampant we need the laws and particular institutions in place to manage oil revenues," Kagaba advised.

Kagaba says when you look at countries that have oil, there are issues of insecurity, whereby people think that revenues are not being shared equally which turns into fighting.

"I don't want to be a dooms prophet but the future of the oil industry is blick, we shall not achieve our revenues, the money will be stolen and eaten by the connected few. This confirms what CSOs have always told government to open up and be transparent." Kagaba says prophetically.

Copyright © 2013 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.