Following the oil money; What else has Uganda reaped apart from Fighter Jets?

At any Oil and Gas revenue workshop economic experts, will always weigh in on how Uganda should better utilise its returns from the nascent sector.

So far, the argument has been that Uganda invests the money in infrastructure and social services like education and health and to focus on improving the traditional sources of income like agriculture to avoid the infamous Dutch disease and rent seeking.

However as the debate on how to use the money grows tougher, how much oil moneys so far has entered Uganda’s economy since its commercial viability was announced in 2006?

Daily Monitor’s oil reporters, Isaac Imaka and Fredric Musisi, step away from the expert and social commentators’– how-to-use-oil-revenue– arguments to look at how much money has so far come in, and what it has done.

Oil producing countries mainly get oil money in form of signature bonus, training fees, annual surface rentals, data purchase, permit fees, withholding taxes, capital gains tax, value added taxes and royalties

Most of the money is paid directly to governments in form of taxes but also oil money comes into the economy through payments to local labour, through corporate social responsibility (CSR) expenditures, and through payments to the local service providers.

This story will ignore the $1.5 billion (shs3.9 trillion) paid by Total and Cnooc respectively to Tullow on the farm down– that money did not enter the economy, because it was Tullow’s.

At the onset, it is important to note that apart from CSR expenses, most of the money spent by the oil companies in their quest for oil will be paid back as recoverable cost.

The auditor general will audit the total recoverable cost and the oil companies will recoup their expenses through a percentage of the oil produced called cost oil.

In its submission dated 9th November 2011 to the Parliamentary committee investigating the oil sector, Uganda Revenue Authority gave the total amount of revenue collected so far from all the oil companies as $449,424,960 (shs1, 686,164,870,551). The money was got as capital gains tax and stamp duty when Heritage sold its interests to Tullow oil plc.

URA also reported that it received tax payments from subcontractors exclusive to the petroleum sector amounted to shs149, 759,281,477.

The subcontractors include those with offices in Uganda and offering services exclusively to the petroleum sector.

The ministry of Energy also reported a $4,490,047 (shs11.6 billion)  non-tax revenue collection from signature bonuses, permit fees, data purchase from over four years over ten year period.

According to the oil ad hoc committee’s report, the total government revenue collection from oil to shs1.8116 trillion– mainly from non-tax revenues, stamp duty, and capital gains tax.

Oil companies on the other hand say they have injected an extra shs10 trillion in the economy bringing the total figure to shs11.8 trillion.

UK’ Tullow Oil PLC (Uganda) takes the biggest chunk of the shs10 trillion with a shs7.3 trillion investment since 2004. The company, however, spent $1.45 billion (shs3.8 trillion) of its current investment on the acquisition of Heritage oil’s Ugandan interest. This means it has so far directly injected $1.35 billion (shs4 trillion) in Uganda.

Of the shs10trillion, Total and Cnooc say they have injected $600 million (1.5 trillion) and $500 million (shs1.3 trillion) respectively in the economy.

The money and the lack of transparency in government

The last time anything was communicated about whereabouts of the oil money collected by government was when Emmanuel Tumusiime Mutebile, the bank governor, told parliament that the president had used the money to buy fighter jets. Since then, secrecy and confidentiality has mired the sector as regards revenue collections.

Currently, Bank of Uganda maintains four categories of Oil Revenue related accounts: Uganda Revenue Authority – Tax Collection (USD), Government of Uganda-Oil Revenue Account (USD); Government of Uganda-Oil Revenue Account (UGX) and the ministry of Energy and Mineral Development (MOEMD) Non Tax Revenue (NTR) that holds Non-tax related oil revenue (UGX) alongside other non-tax revenues.

However, all those will be replaced by a petroleum fund, into which shall be paid all petroleum revenue, which accrues to government.

That notwithstanding, the lack of transparency and the continued refusal by government to sign up to the Extractive Industry Transparency Initiative (EITI) which challenges it to declare what it gets from the sector calls for a question whether Ugandans will easily know what government gets from the oil– even before the demand for better usage of the revenues starts.

The lack of openness on the government side, in an environment where oil companies claim to be willing to publish what they pay makes it hard to juxtapose the figures from the two sides and easily follow the money.

“Government recording of oil revenues is largely different from the way companies do it. If what they agreed on is not known to the public then it becomes difficult to ascertain the missing links,” Mr George Boden, a Global Witness-campaigner told journalists at a recent oil and gas discussion.

Where is the shs10trillion injection?

Oil companies claim to have injected shs10 trillion strewn over a 10-year period, although from the presentations from the three biggest players shows that most of the money has been spent in the last five years.

With a shs10 trillion injection from one nascent sector with over shs5 trillion of that injected in the last five years, Uganda’s economy, according to the African Development Bank Economic outlook, grew by 4.4 per cent in 2012, the lowest in ten years.  Does this mean that oil, as a sector or a resource, has a light footprint?

Total and Cnooc failed to share with this newspaper how and where there money has been spent so far but in its country report launched a fortnight ago, Tullow says it has spent  $4.8 million (shs1.2 billion) on social investments.

This includes two schools in Kaiso Tonya village worth $600000 and a $2.8 million that Tullow says it has spent on a health centre five hospital in Buliisa district.  The oil company has also spent $150,000 on Kyehoro health centre II since 2007.

Tullow also claims to have spent $600000 (shs1.5 billion) as a discretionary investment to support the opening of an enterprise centres in Hoima in partnership with Traidlinks, a not-for-profit specialist in enterprise and market development.

This initiative, Mr Conrad Nkutu, the Tullow Corporate Affairs manager says, has helped over 2000 farmers get advice on how to use compensation funds, access seeds and market.

Uganda’s UN Mission in a mess

ON THE SPOT: Appointments of first-timers, including of  a couple, to same mission raises concern as Kutesa plans to take rotational UN General Assembly presidency next year

KAMPALA - The government has secretly appointed US-based Duncan Muhumuza as deputy head of Uganda’s Permanent Mission in New York as Kintu Nyago, whom President Museveni named a diplomat in August, last year, prepares to leave Kampala to assume the same office.

Ministry of Foreign Affairs, however, defended the sudden change as “normal”. It followed the promotion of Mr Muhumuza, reportedly on the direction of State House, from First Secretary to an Ambassador, skipping the career Foreign Service ranks of Counsellor and Minister Counsellor.

Mr Nyago was the President’s deputy principal private secretary until he was politically re-deployed as ambassador and deputy Head of Uganda’s New York Mission during the general reshuffle of the country’s envoys on August 18, 2012.

A year later, Nyago is yet to assume the new role. He previously told this newspaper he was to take up the New York post by early July, and in an interview last week, said he expected to report as “the substantive deputy head of mission” this month.

“You can have two Captains in a battalion; one a commander and another without command responsibility,” he said in response to Mr Muhumuza’s elevation. He said he expected no challenge to his authority or duplication of duty because “I should imagine they (New York Mission staff) are professional.”

The goings-on at the Ugandan Mission in New York have become of interest and under greater scrutiny as Foreign Affairs Minister Sam Kutesa prepares to take over the rotational presidency of UN General Assembly next year. Analysts say now is the time for Uganda to deploy its most experienced and knowledgeable career diplomats to the post since running the UNGA presidency is demanding and a mistake during the period could cause irreparable damage to the country’s international standing.

On Tuesday, Foreign Affairs permanent secretary James Mugume said it was “normal” to have both Muhumuza and Nyago as deputies reporting to Amb. Richard Nduhura, the substantive permanent representative.

“The Appointing Authority can appoint anyone to anywhere at any time,” he said in response to the timing of the deployment of Muhumuza, a son to Eliphaz Laki, a county chief in Ankole slain in 1972.

There are several procedures, including financial considerations, to be fulfilled before Mr Nyago can take office, the PS said.

According to Harold Acemah, a retired career ambassador and Uganda’s former diplomat at the New York Mission, wealthy nations such as the United States, the UK and Russia do assign one ambassador for each of UN’s political; economic; social and humanitarian affairs; de-colonisation matters; finance and budgets; and, legal committees.

There is no precedent of Uganda appointing two deputies to the UN Mission and Amb. Acemah said parachuting Mr Muhumuza from First Secretary to Ambassador would be “irregular”. “Unless his appointment is political, it would be outside Foreign Service guidelines,” he said.

A senior government official told this newspaper, an account we could not independently verify, that Mr Muhumuza - a lawyer - is a US Green Card holder, meaning he would, as an American citizen, not fully enjoy diplomatic immunities and privileges such as local tax exemptions.

In the Tuesday interview, PS Mugume also defended developments at the New York Mission where the Minister Cousellor Beatrice Pacunega, a former State House Protocol official, allegedly worked to have her husband and former Kyambogo University lecturer Manano Pacunega, deployed as Counsellor at the same UN Mission.

He said: “It is okay because we have many couples [working at various diplomatic missions].”

Arthur Kafeero and Margaret Kafeero, who were both incidentally deployed to the New York Mission, are the latest Ugandan couple to serve at the same station. Prior, a Ugandan couple assigned to Nairobi often fought in office and eventually divorced to the embarrassment of the country.

 DRC plunder case returns to haunt Ugandan officials

UNSAVORY DETAIL: Justice Sebutinde says defence lawyers gave country away, and World Court likely to set amount of reparation to DRC in 2014

KAMPALA- Uganda lost the case brought against it at the International Court of Justice by the Democratic Republic of Congo for plunder of its natural resources due to an avoidable mistake by defence attorneys, a senior official has said.

Justice Julia Sebutinde, whom the UN voted as a judge of the World Court in December 2011, in the first of an insider’s account on a verdict likely to cost the country $10 billion, said Uganda’s legal team erred when they submitted to the court as its evidence a report of a commission of inquiry chaired by Justice David Porter.

The said report confirmed pillage of DRC’s resources, but absolved implicated top Uganda government and military officials including President Museveni’s brother Salim Saleh whom a 2001 UN panel of experts named adversely in its report on illegal exploitation of Congo’s wealth.

It would appear the government acted in haste to clear the names of those close to the centre of power, and inadvertently ended up legally selling out the country.  

Commenting on the Porter commission findings during a public lecture in Kampala on Friday, Justice Sebutinde wondered what more evidence Uganda needed to incriminate itself than admitting to the World Court that an inquiry it commissioned established Congo’s resources were looted.

“One undoing was the famous [Justice David] Porter report, which I understand Uganda attached as its evidence [yet] he (Porter) himself had found plunder took place,” she said.

According to media reports, Uganda had by the time court ruled on the case in 2005 paid foreign lawyers representing it $865,000 besides expenses on the Attorney General and other officials. The DRC government subsequently made claims of $6-10 billion in compensation, a figure Kampala disputed. 

On Friday, Justice Sebutinde said ICJ is preparing to determine the final reparation for the 1998-2003 war plunder since Kampala and Kinshasa failed to make headway in diplomatic negotiations authorised by court, mainly due to frosty political relations.

“The damages to be paid to Congo will affect the lives of Ugandans who pay taxes. We should, therefore, be mindful of what our country gets into, and what it might lead us into,” she said, exhorting Ugandans not to live in the delusion that proceedings of the foreign won’t affect them.

ICJ is one of the six organs of the United Nations, and its verdicts are final and binding on states such as Uganda that submit to its jurisdiction.

In Kampala, Foreign Affairs permanent secretary James Mugume said high-level political negotiation with DRC are still ongoing and was hopeful an agreement could be reached without the World Court having to determine it.

He said: “We are currently at the verification stage [of the reparation claims], and when done then we shall go back and inform the court in Hague.”

The PS said there was no working figure for the compensation and the widely reported $10 billion fine was a media creation, and hinted the reparation payment could be swapped with expenses that Uganda incurs in diplomatic and security undertaking to stabilise the restive eastern Congo.

Charles Okoto, the DRC ambassador to Uganda, was not available for comment but his government has always wanted the payment expedited.

Justice Sebutinde was in Uganda at the invitation of The Netherlands embassy in Kampala to, among other things, deliver a paper on the Role of International Law in promotion of global peace to mark 100 years of the existence of the Hague-headquartered Peace Palace.

She said the court’s President had cleared her to sit on the bench in 2014 when the Uganda-DRC case comes up for review, although her Ugandan nationality initially raised concerns of probable conflict of interest. Sebutinde said she would act without bias and stick to the laws, and that Kinshasa would be allowed to choose a judge to sit in to represent its interests.

Utilities

The December 2005 World Court ruling:

“The Republic of Uganda, by acts of looting, plundering and exploitation of Congolese natural resources committed by members of the Ugandan armed forces in the territory of the Democratic Republic of the Congo and by its failure to comply with its obligations as an occupying Power in Ituri district to prevent acts of looting, plundering and exploitation of Congolese natural resources, violated obligations owed to the Democratic Republic of the Congo under international law… and unanimously, decided that failing agreement between the parties, the question of reparation due to the Democratic Republic of the Congo shall be settled by the Court…”

Context

During hearing of the case, Uganda made a counter-claim that DRC forces ransacked Uganda’s embassy in Kinshasa during the war and mal-treated Ugandan in violation of the 1961 Vienna Convention on Diplomatic Relations. Court, however, dismissed the counter-claim.

Is KCCA jumping gun over Kampala-Jinja highway?

Is KCCA jumping gun

over Jinja highway?

NON-STARTER? Experts pour cold water on capital’s flagship infrastructure project as City Hall admits the blue-print for the Shs9b contract it has already awarded isn’t even ready!

KAMPALA: A proposed flagship infrastructure project to widen the section of Jinja Road connecting to Kampala central business district into a six-lane carriageway is being scorned up by experts as not well-thought out, and unlikely to abate traffic gridlock.

Kampala Capital City Authority Executive Director, Ms Jennifer Musisi, broke news of the re-construction on her twitter handle in August, announcing then works should have commenced early last month. 

The exercise stalled, and City Hall now expects Energo Projekt will begin the road expansion later this month.

According to KCCA officials, three lanes on either side of a separator alienating oncoming traffic will be created when the work is completed in about six months.

The section of the thoroughfare to be upgraded stretches from Katalima Road junction in Nakawa satellite town to the light-controlled Jinja Road intersection, meaning KCCA will dig up the road on which it in the past year spent billions to beautify.

City Hall officials say an expanded Jinja Road will ease motorised traffic flow in and out of the central business district where most gainful employment activities are concentrated.

Infrastructure experts agree a broader motorway permits speedy traffic movement, but challenge the KCCA plan because it is piecemeal and does not address likely heavier traffic build-up at narrower points where the widened road merges into narrower carriageways after Nakawa and Jinja Road junction.

Dr. Kiggundu Amin Tamale, a Makerere University lecturer at the Department of Architecture and Physical Planning, who discounted the proposed project as “another problem with the poor planning in this country mainly to eat money.”

“Planning for a city goes beyond expanding roads alone, which KCCA is majorly focusing on while turning a blind eye on issues like the destination of vehicles and parking spaces,” he said.

Dr Tamale is not alone. Officials of Uganda National Roads Authority (UNRA), a central government agency responsible for national roads excluding those under KCCA jurisdiction, say the city’s approach is a non-starter.

First, if each lane is approximately 3 metres wide, a rough estimate shows a minimum of 25 metres of space would be required to enlarge the carriageways and as well provide for the island separating them; the side-drains, pedestrian walkways and road reserve for, among other things, conveying utilities.

Such vast land may be secured from Jinja Road junction if KCCA encroaches on southern part of Centenary Park, but no big chunk will be available from around Jinja Road Police Station and on the stretch straddling via Game shopping mall onward to Nakawa township centre. The alternative would be for KCCA to knock down private roadside property, which would require public sensitisation and prior compensation none of which KCCA has done or appears ready to do given the stated project take-off timeline.

So, how does City Hall escape from the trap and justify value-for-money in the planned Shs9 billion investment?

Mr Johnson Akankwasa, the project site supervisor, said “the stretch between Lugogo Indoor stadium and Game stores shall be not expanded because that width is too small and we don’t have money.”

He added: “It will maintain a two-lane driveway because widening it may involve compensations, money KCCA doesn’t have although a few modifications will be carried out. Poor planning in Kampala did not start yesterday or today.””

KCCA’s self-contradictions on the infrastructure whose detailed plan it admits is “not ready”, has prompted UNRA to christen it as “shallow” from conception.

“I cannot comment much on their development but am also skeptical if it will improve traffic problems,” he said.

When asked for the project’ master plan and artistic impression of the project, KCCA officials said they under review and “not ready”, yet a Yugoslav construction company, Energo-Projekt, has already been enlisted to start work for a period of six months.

“Widening this particular road section is to allow smooth flow of traffic in and out of the city,” Mr Akankwasa said, without explaining how motorists poured from three lanes will maneuver on narrower carriageways in the usually most crowded city centre.

The road upgrade is to cost Shs9 billion, money KCCA says was mustered from internally generated revenue. Industry specialists say the money is inadequate to finance credible reconstruction of 8.4 kilometers to a high caliber surfaced highway.

A Traffic and Transportation engineer, who asked not to be named in order to speak freely, said Jinja Road as an export/import gateway conveys the largest traffic volume in the country and questioned where the huge traffic would be diverted to pass when the section of the highway is under construction.  

“It seems KCCA officials first act and think later,” the engineer said. Experts say sorting out traffic bottlenecks in cities requires a comprehensive approach - tackling development of traffic networks broadly since changes on one are likely to affect the operational capacity and efficiency of another.

In the Jinja highway re-building project, key stakeholders such as utility providers have not been consulted yet the engineering works will affect under-ground installations such as water pipe and telephone cables.

National Water and Sewage Corporation (NWSC) managing director, Eng. Silver Mugisa, said they have a network of water and sewerage pipes along the site earmarked  by KCCA, but have not been formally notified by the Authority.

The telecommunication companies promised to consult one another on the development, but had not reverted to us with their joint position.

A consequence of the exclusion of utility providers in the planning process is that if no under-ground ducts are prepared for them to convey utilities; they are likely to dig up sections of the newly-built road for a conduit to pass the utilities, creating a weak spot for emergence of potholes.

Our investigations show that UNRA has prepared an infrastructure master plan with proposed changes to Jinja Road and its intersection at Kitgum House, contrasting with what KCCA plans to implement.

For instance, the Roads Authority has an ambitious blue-print to construct a fly-over from the Wampewo Avenue-Jinja Road-Old Port Road round-about, running above the existing Jinja Road bit and a 90-degrees left side bend at the traffic lights to connect to Mukwano Road via Access Road.

Both plans do not appear to integrate the adoption of rapid bus transit system as recommended under a 2010 World Bank-sponsored study done by UK consultancy, Integrated Transport Planning (ITP).

The feasibility study appraised the existing public transport system and suggested a mass passenger movement option other than the 14-seater taxis and commercial motorcyclists or boda dodas. Reforming the transport mode would require investment in supporting infrastructure, which neither the Jinja highway upgrading nor UNRA’s exotic fly-over project addresses.

That would be crucial considering that Integrated Transport Planning confirmed Jinja thoroughfare as the busiest gateway in the country with daily passenger volumes higher by 15, 000 than on Entebbe Road.

The specialists warned that if nothing was done to tackle Kampala inner-city’s messy transportation, forecast demand levels on Jinja Road in 2013 reveal would surge to 175, 000 passengers per day, representing 45 percent on (countrywide) demand levels

KCCA Spokesman Peter Kauju said the World Bank pulled out of the rapid bus project, but he evaded discussing details of the Jinja highway reconstruction project, saying over several days that “the plan was not yet finalised and our engineers are still reviewing it”.

Pioneer Easy Bus Company (PEBC), which began cheaper public transportation services in Kampala and to neigbouring districts in 2010 without proper policy framework and preferential infrastructure facility, folded up after a few months when saddled with debt of billions of shillings in unpaid taxes to Uganda Revenue Authority.

Mr Rashid Ssekandi, the chairman of Statewide Transport Agency, which owns more than 400 14-seater taxis, said the problems of traffic jams in the inner-city emanate from poor public transport regulation.

“Even if KCCA widened all the roads without improving how people use private vehicles and how publics use commuter taxis, then we are wasting resource.”

According to Eng. Andrew Kitaka, the Authority’s engineering and technical services director, there will be a provision for one-sided on-street parking on the new road from Airtel House to Lugogo Indoor stadium.

For a capital city whose last comprehensive structure plan was made in early 1990s, the housing boom and creation of new district plus urban population explosion has compounded implementation of physical plans, creating a motley land use challenges.

Any attempt to re-organise Kampala into a livable city of the future, according to Dr tamale, should address guided development of self-sustaining satellite towns to de-congest the central business district, link spatial patterning to investments in preferred traffic modes and undertake comprehensive, not piecemeal, infrastructure developments. 

The 2010 Kampala Capital City Authority Act, which transformed the city management from the troubled Kampala City Council to the more executive KCCA, created Kampala Metropolitan Physical Planning Authority (KMPPA) to superintend physical development planning in the city and the metropolitan areas. However, the metropolitan planning authority has not been constituted following power wrangles at City Hall, which has drawn in the line minister, stalling preparation of outline and detailed schemes as well as approval of development plans.

Dr Tamale argues that Kampala is a mono-centric city; hosting the country’s most key national installations, institutional headquarters, best schools and medical facilities as well as highest paid jobs, which collectively attracts more people yet the city grapples with housing shortage, and seems unprepared to invest in condominiums directly or through public private partnerships.

“What planning for a city would you expect from a setting like this? The result is the half-baked developments”.

Another downside to densification of these physical developments is that the country could drag to a halt in the event of a disaster requiring, say, a security lockdown over Kampala.

“And when you widen the road without first addressing a proper public transport system, you create an impression that the roads are wide so attract more cars leading to more congestion,” said Dr Tamale who runs Centre for Urban Studies and Research, a local not-for-profit organisation dedicated to the promotion of urban sustainability and development in Uganda.

Kampala’s resident population is estimated at 1.72 million, according to the 2012 mid-year Uganda Bureau of Statistics demographic and household survey report, although a million or people pour into or transit through the city every day, straining the available services.

Matters are made worse that Uganda as a country has no urbanisation policy, resulting in organic growth of most towns and cities in part due to acute human, financial and other resource constrains.

 

 

 

 

Waiting for a sip on the ‘h-oily’ grail: The state of Uganda’s oil sector and the 2017 question

KAMPALA- Public debate on the oil and gas sector was sparked by the October 2011 controversial Parliament debate that resolved that transparency and accountability must be the cornerstone of the oil sector.

Since then, Parliament has passed two laws for the sector and the last one on public finance management is in the works.

The inquiry into bribery allegations made in Parliament against top government officials is yet to be concluded but reliable sources say the report is done with the investigating committee which has neither acquitted the accused ministers nor exonerated them.

“How could we implicate them or acquit them yet our efforts to visit the countries (UAE and Malaysia) where the crime was allegedly done were frustrated?” one of the top technical brains on the committee said.

The report is most likely to suffer a still birth because it has been overtaken by events: Tullow has since farmed down to Total E&P and Cnooc and so far one production licence has been awarded.

The creation of a National Oil Company (Noc) is in final stages and licensing in the upper Graben was halted until the company is formed– it will be the one farming down to any interest companies.

It appears, as one Petroleum Exploration and Production Department official said, pushing for the report will be dragging the sector several steps back from progress so far made.

Evaluation
But where does this progress stand? According to a 2013 KPMG report, Oil and Gas in Africa: Africa’s reserves, potentials and prospects, the discovery of enormous oil reserves in Uganda in 2006 and subsequent discoveries- so far standing at 3.5 billion barrels- have sparked hopes among investors and large oil companies that the country could become a lucrative new player on the global oil stage.

It is now believed that Uganda could be sitting on one of the biggest onshore oil reserves in Sub-Sahara Africa. If events go according to plan, the report notes, Uganda could transform itself into a mid-size oil producer in coming years, with the reality being that it could be one of the top-50 oil producers in the world.

When the government awarded Cnooc a production licence in September, the question among journalists who attended the press conference was why not Tullow, a company that has been here longest and actually brought Cnooc and Total on board.

The official line is that it does not matter who gets the licence first since the three partners have an equal share in all the fields.

But a top executive of one of the partners said, during a meet up in his office, that it would have been a wrong idea for the government to entrust its first production with a company whose main expertise is in exploration. 

“Tullow is a small company and it has no experience in producing oil in an environment like Uganda and it knows,” he said. “There is no way any serious government would give it a production licence to gamble.”

The chief executive’s comments point to a serious issue in the sector– the lack of trust in Tullow’s production competence by the government and the ‘deliberate’ delay in approving their field development plans. 

Tullow submitted its first Field Development Plan (FDP) for the Nzizi Well last year, shortly after CNOOC’ Kingfisher submission, but are yet to receive a production licence.

An FDP is a detailed plan of how an oil company plans to produce the oil and in which capacities.

While addressing Parliament in December 2012, President Museveni expressed anger at an oil company which had submitted what he called “unrealistic and insincere” recoverable oil estimates in its field development plan.

He told the House that the company’s plan was rejected and asked to submit acceptable figures.

Although the President did not name the company, two officials from PEPD intimated that the said company was Tullow.

According to Mr David Onyango, Tullow’s spokesperson, the company has received “useful” comments from PEPD in respect of the FDPs to which they are preparing a response.

“We hope we will be granted a production licence in 2014,” he said.
Presently, Tullow has four FDPs under review by PEPD, with possibilities of submitting one more in 2014.

Total’ general manager Loic Laurandel says his company will submit its first FDP for Exploration Area 1 in the Nwoya belt on December 12 and then a plethora of submissions will follow next year.

Total’ general manager Loic Laurandel says his company will submit its first FDP for Exploration Area 1 in the Nwoya belt on December 12 and then a plethora of submissions will follow next year. 

The company, he says, is not in a “rush to produce and it is on course in terms on time”.

Skeptics say the government is holding back the appending of a Memorandum of Understanding (MoU) with the Tullow and its partners, to fully operationalise oil production.

The MOU defines a framework for production and commercialisation of the 3.5 billion barrels of oil resources.

Earlier this year, international media reports quoted Tullow’s chief executive, Aidan Heavey as saying the MoU with the Ugandan government was closer like never before and within the year, something which has come to pass.

However, Mr Onyango said: “Talks between Tullow and partners CNOOC and Total, with the government on the MoU are still ongoing, but will be signed anytime from now.”

On their part, Mr Laurandel, noted that yet the MoU aligns key principles on the commercialisation of oil, infrastructure like a refinery, a pipeline and roads, are all still on paper, “which calls for no rush.”

“We are majorly in the appraisal process of our area of operation, so we cannot rush for the MoU, but negotiations are ongoing.”

Why the delays?
Mr Izama, however, intimated that, “government is purposely delaying the MoU because of Tullow.”

He, further, revealed that, if Tullow’ FDPs are approved, it will imply that their oil fields are viable, and therefore can be sold off, “may be to one of its partners”. “Tullow has intentions of exiting but government is still uncertain of a period thereafter,” he said, “Therefore it’s in government’ interest if this MoU is delayed as we approach the said oil production date.”

The government has been criticised over delayed production of oil and giving different first oil years, with many critics pointing at Ghana as a perfect example of a success story in early oil production. 

Ghana produced its oil within three and a half years following its initial discovery at the jubilee field.

But according to PEPD, countries have rushed into production without clear understanding of their reservoirs which has caused inefficient production and ultimately increased the costs.

“Fast tracking production may lead to sacrificing a profitable future while settling for a “less profitable” but immediate cash inflow,” PEDP notes. 
However, as KPMG notes in its report, the delay in Uganda’s oil production can be excused because unlike in West Africa, everything about oil in East Africa is new.

The lack of infrastructure also plays a part in Uganda’s delay.

Mr Tim O’Hanlon, Tullow’s vice president for Africa, told Reuters that “[n]o matter where you are in the world, where there’s no infrastructure and no history of the oil business, it will take at least half a dozen years to go from exploration phase to development concepts”.

Experts in the sector say that with a production licence in hand, it will take Cnooc four years to develop the Kingfisher field-which contains an estimated 635 million oil barrels- to ready it for the first oil.

But Mr Laurandel says Kingfisher is the only hope to have oil out by 2017, adding that it is only possible provided there are no hiccups and delays from the government side.

With the production licence in hand, the second step for Cnooc is to carry out a detailed assessment and preparation of the field which conduct will also include and engineering, procurement and construction process and a Front End Engineering Design (FEED).

The processes, among other things, includes the assessment of technical requirements, layout of well pads, production and water injection, central processing facilities, storage and transport facilities’ analyses.

In a smooth uninterrupted environment, the two processes take about four years, hence the possibility of production by 2017.

But the government has to fulfill its part of the bargain especially on infrastructure. “You cannot produce the oil if the infrastructure is poor,” Mr Loic says. 

The government’s main interest is to refine the oil from Kingfisher. PEPD is currently receiving Statements of Qualifications (SOQs) from the appropriately qualified investors.

More than 850,000 tonnes of material is needed to erect the two infrastructures, which government ambitiously states must be up by 2017 –the oil production commencement date.

Mr Izama says there is no need for rush. “Besides a refinery being so expensive, the course of its development is leaving behind eventful stains that will be something to reckon in the near future,” he says.

He argues that going by the country’ experience on such big projects, among others like Bujagali and Karuma dam, a refinery will similarly require time to sort out issues like corruption and the red tape.

The report notes that for all of Africa’s oil resources, refining capacity on the continent remains limited and as a result, countries like Angola and Nigeria export crude oil, only to import refined oil again later at an additional cost.

Challenges
According to the KPMG report, problems in the refining industry on the continent include corruption, poor maintenance, theft, and other operational problems. 

In some countries, conflicts have at times also interrupted the flow of crude into the refineries and forced them to shut down.

“Subsidies have also contributed to low capacity utilisation at refineries. In Nigeria... current subsidy schemes lead producers to sell crude overseas rather than to local refineries and therefore add to increasing volumes of refined product imports, which present an enormous cost to the economy,” the report reads in part.

However, engineers in Cnooc say everything is possible and they will do everything to deliver oil to the government refinery in time.

As Uganda teams up with its regional neighbours to hatch a best possible plan for the oil sector, especially as far as the oil pipeline is concerned speed and urgency is needed if the first oil is to be got by 2017. And yes, it is possible.

Timeline of oil discovery in Uganda

The search and eventual “discovery” of oil did not start with the NRM government. As early as the 1910’s, the colonial government had started digging up the Albertine Graben and documenting the behaviour of the rocks.

As Mr Angelo Izama, a journalist and gas researcher, who is writing a book on Uganda’s oil exploration experience, notes, this year marks 100 years of oil exploration in Uganda.

His research landed him on documents showing that the first application for oil exploration concession was filed in November 1913 by a Mr W. Brittlenank for 898 Sq. mile acreage. The application was accepted and it expired in 1922. 
Why was there a lull, then, that the oil issue was only reignited in the formative years of the NRM regime?

The reasons are many, and this newspaper will be running a longer piece about the history of oil exploration in Uganda.

But international political events of the time such as the Second World War and the discovery of huge deposits in West Africa, particularly in Nigeria forced the colonial government to shelve the Uganda project.

Fast forward to the return of peace in 1986 and President Museveni closes the doors on Shell BP executives who had come asking for concessions.
He instead chose to send a team of young Ugandans on an oil and gas study blitz. 

The outcome was the confirmation of the commercial viability of oil in 2006. 
Since then, a lot has happened in the sector and 2017 has been mentioned as a possible ‘first oil year’.

                      A version of this story appeared in the Daily Monitor of November 5 2013.

Bitter tales from the bushes of Luweero Triangle

Paul Lubwama loses his cool whenever one mentions the January 26 National Resistance Movement celebrations, which were postponed to today. However, unlike some people whose grouse against the celebrations revolves around wastage of resources, Lubwama’s reasons and concerns are inundated with gloom, grief and bitter memories of the war.

He rewinds to the events in the 1980s that he never thought would claim all his six family members. A portrait that was taken on Christmas Eve of 1979 is the only remaining memory of them.

He adds that with the escalation of rebel activities in presentday Luweero and Wakiso Districts, things started taking another shape on both sides.

Each group—the government troops and the rebels—had a specific character and means of persuasion to win over the local population and those who refused to take sides were viewed as enemies and were threatened, which led to the killing of many “innocent” people who wanted an ordinary life but walked a middle road.

“Day time was always for the government troops, while rebels always advanced in the night. However, as a tactic of war and as days passed, rebels began camouflaging in government army uniforms, stormed villages and acted anyway they desired to tarnish the government’s image,” Lubwama narrates.

On the night of August 10, 1984, a group of men dressed as government soldiers and speaking in Kiswahili raided their home in Wabusaana village and took away his father, whom they asked questions he never understood because he did not speak the language.

In the process, his mother and five siblings escaped into the nearby shrubs, leaving behind Lubwama, who was then 13, and had been a recruit of the rebels as a spy on Obote’s men. He associated with Obote’s soldiers during the day.

Little did he know that while he was away, “Obote’s men” had made a stopover at his home and had discussed some matters at length with his father, according to his elder brother, who died later in the war.

But according to Lubwama, while the government troops had earlier visited his home, they could not make a return at night because it was not their practice, which leaves a possibility that his father might have been killed by the same rebels he worked for.

Luweero Triangle, located to the north of Kampala, was where Yoweri Museveni led the National Resistance Army, to the bush in 1981, following his defeat in the 1980 elections, to fight “bad governance” until 1986, when he assumed power.

More still, Luweero Triangle is commonly remembered for the brutal killings, particularly of civilians during the war, which are mostly blamed on Obote’s government. But, little from this war has been chronicled to give a proper account of the killings that stretched across Kiboga, Nakaseke, Nakasongola, Mubende, Mityana and Wakiso. What is clear though, greater Luweero remains in a state of poverty, with unemployed youth, the sons and daughters of fighters and heroes whose skulls are being eaten away by termites in memorial graves dug by President Museveni’s government after he took over power.

Those who survived the war by what they call the “grace of God”, the five years remain an unforgettable and unforgiveable period.

Who is accountable?
This is the big question whose answer you will not get from either party in the conflict. The rebels now the government in power, blame the Uganda Peoples Congress (UPC), who were the government then, and are prompt on reminding the population in those areas about what Obote’s men did to them.

UPC, on the other hand, has also never stopped calling for an investigation into what happened in Luweero and who was responsible. Yet many who witnessed the events have since decided to keep quiet, some are patiently awaiting justice for the looting, mysterious and brutal killings of civilians, disappearance of many people, use of child soldiers—most of whom died, the list is endless.

Rebel invasions versus government troops atrocities
John Kasozi (not real names), an elder in one of the villages in Luweero was also part of the guerilla movement, says the two groups killed people indifferently in large numbers and used different methods

For example, the rebels had a tendency of grabbing people in their homes, especially at night, dragging them to the forests, ferociously interrogating them about their relationship and information they held on government troops, establishments and plans, and later hacking them, he narrates.

He adds that their signature killing method consisted of blindfolding people, stripping them naked, and then hacking them one by one to death using axes and spears, among others.

Citing examples of who actually did such in the bush and their current whereabouts in or outside government, he notes that, the rebels mostly killed civilians to grab their property, their cattle and their food gardens.

He further claims that, in certain instances, the rebels wore government troop uniforms and conducted night raids on civilian homes to scare them off their property or acquire information from them.

In certain instances, they took away able bodied but mostly teenage children, whom they trained and used on the frontlines. This allegation is attested to by a former guerilla, who has since fallen out with the government but sought anonymity because of the sensitivity of the matter.

Mysterious deaths and disappearances
Mr Kasozi also affirms that the rebels were responsible for the disappearance of many people, who were linked to the Obote regime, held information that was considered an asset in the struggle while others were taken away for reasons still unknown.

According to some letters and documents copied to the Ministry of Luweero Triangle and Office of the President, families whose members disappeared have continued to write, demanding for explanations. But none has ever been replied to.

According to one official, who was in the NRA and now serving in the Uganda People’s Defence Forces (UPDF), and asked not to be named, most of the people were buried in the forests where they were killed, “in order not to paint a bad picture to the struggle”. However, the government has denied the claims.

Assassinations in the rebel movement
Initially, the guerilla struggle was instigated by the 1980 vote rigging and Obote’s authoritarianism, joining was not on the basis of tribe or denomination. They were bound by a common cause, especially in the early years.

Yet towards 1985 and to the ultimate capturing of power, things started taking a different course on tribal lines, now that a bigger composition of the guerrilla leaders were from western Uganda and some, Rwandese.

Suleiman (other names held), now a veteran recounts that, at this level, it became clear that the rebels had little in contrast with the Langi-dominated government, so most fighters considered pulling out.

“We were fighting tribalism yet it was growing in the bush, which signaled that it would become something big if we got into power”.

As a manifestation, many Baganda rebel leaders, who had been used to win hearts to their side began disappearing and others dying mysteriously, “which the rebel leaders attributed to the government but was not true,” Sulaiman says.

One other incident on how tribalism manifested itself was the killing of Andrew Lutaakome Kayiira in 1987, another guerrilla, who like Museveni, had taken to the bush to fight Obote, under his Uganda Freedom Movement (UFM].

Kayiira was a Muganda, likewise based in what is now Wakiso District and had been instrumental in winning over the hearts of many Baganda even in places where Museveni had remained unpopular, Sulaiman recalls.

He further allages that after the two (Museveni and Kayiira) struck a deal to return the Kabaka and kingdoms banned in 1966, towards 1986, government security operatives targeted Kayiira’s men; most of them were killed, others went into hiding while Kayiira himself died later.

Obote’s merciless men
According to many accounts, survivors accuse the UPC government of waging an open war in Luweero Triangle, butchering every human living thing they came across, looting, torching property, though utmost openly and without disguising as the rebels did.

Use and death of child soldiers
Although the rebels have denied using child soldiers, there are many tales of parents still grieving for their sons who died in the line of fire on the side of the rebels, yet they were ill-trained trigger happy young boys.

One such witness is Steven Kasibante (not real names], who joined the war in 1983 after the guerilla war disrupted his education at the age of 10. Although he has preferred to remain silent on what happened during the war, after surviving two assassination attempts in the 1990s, which pushed him to a quiet village life in Kiboga.

He recollects how he joined a group of 15, his age mates, after being persuaded by their acquaintances who joined earlier and were now fit for combat.

“We were as soldiers on the frontline, used to spy on government establishments, helpers in the camps but only a few of my colleagues survived for more than three years yet they kept on recruiting more, time and again,” he said.