Archive for the ‘Oil’ Category

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The quality of a country’s policies and governance depends on the strength of its Institutions and those appointed to led in those institutions. The ongoing Parliamentary inquiry into the Presidential Handshake tells you how easy it is for a patronage system to misuse institutions to share or loot resources meant for the entire nation.
As a country, we have a crumbling economy that was brought due to systematic indolence and incompetence. In a normal functioning country, institutions can easily change their policy instruments to be able to rectify emerging problems or challenges. In a serious country where good governance is taken seriously heads roll, people lose jobs for abusing their authority.
Power is in the hands of a certain socio-economic group, that controls institutions to their benefit rather than the entire population of Uganda. The fact that millions of dollars were signed off to the pockets of a few people using unlawful means entirely reveals the oil presidential handshake a true image of a patronage led economy and an act that has robbed the entire population.
The Presidential Handshake is just but the smallest question in the oil tax scandal that Ugandans should be asking. The question is why should a tax body Uganda Revenue Authority whose job was to make sure that Uganda gets her taxes amounting to US$407 million in capital gains tax in a such a big case that had been heard and won before Uganda Tax Appeals tribunal be pulled out from the same court where Uganda won a case against Heritage Oil? The precedent set by the Heritage Oil case would have been the guiding principle to stay the Tullow Oil versus Uganda Revenue Authority case in the same court hoping to win it for Uganda.
The reason Government of Uganda took this case to the International Tribunal they were convinced they had a good case, why would they go in for settling out of court through a confidential Memorandum of Understanding with Tullow Oil for a lesser amount?
On 15 March 2011, they rushed to the International Tribunal and applied to withdraw the case and settle of out of court? And Tullow made an announcement on their website; Tullow settles Capital Gains Tax dispute in Uganda
We are setting our eyes on just US$20 million but there is a problem, those who might have benefitted from the out of court settlement must have walked away with millions of dollars close to US$157 million. We must ask serious questions in whose interest was that memorandum of understanding between Tullow Oil and Government of Uganda? Why has that Memorandum of Understanding been never made public? Was it a private or personal document and yet it was made on behalf of the people of Uganda?
So this so called Presidential Handshake is just a mirror of other handshakes and that is why it points back to the patronage. You see if that case had not been tampered with, the money it would have brought would have benefited the entire population, but because we are living in a patronage led economy the economic fortunes of many are shared with those who they know rather than what they know and can do for the whole country. The continual circumvention of the tax laws is abused in order to favour their group.
If you look at the way the list was generated the biggest number of the beneficiaries depend on the good will of their master and personal contacts within the group. You have seen that everyone is questioning how the list was generated but no law was followed in generating the list and so the same happened with the way they accessed public funds to reward themselves. That group of people have a problem with a well-functioning government and institutions, that would make it difficult for them to be able to circumvent the laws for their personal gains.
We live in a system that does not care about educational qualifications, that doesn’t care about hiring people on merit because of their skill-set, where institutions are led and controlled by a certain class of people and the socio-economic group that is interested in enriching themselves as opposed to serving the population. This group is behind the Presidential handshake on oil and their role is to cover up for the bigger handshake.
We must ask the real tough questions regarding our oil money. Over US$180 Million was stolen and that is what we should be looking for not just US$20 Million.
Hon. Nathan Nandala-Mafabi Chairman BCU & MP Budadiri West

Hon. Nathan Nandala-Mafabi Chairman BCU & MP Budadiri West

  1. On behalf of Ugandans who value knowledge and on my own behalf, allow me to congratulate Hon Dr. Ezra Sabiti Suruma, for availing this sincere piece of knowledge to us. It takes a lot of wisdom, courage and thinking above -self to come out with such a damning and insightful writing if you are a member of the ruling party and an Economic Advisor to the President. Suruma, I salute you and hope that others will come out to give their candid opinions about the affairs in our country.
  2. This is a comment on chapter 17 “Oil: Blessing or Curse”. I will mention the areas I agree with the author then move on to give some other considerations about Uganda’s oil management.
  3. My first point of agreement is that indeed, Uganda’s unemployment and under employment levels are turning into a security threat and as Dr. Suruma’s statistics on students enrolment show, in five to seven years, if nothing is done, the situation could go out of hand. If 366,423 students completed national secondary program in 2010 and only half proceeded to post secondary, it means that about 183,211 youth entered the job market[1]. This number is then added to the thousands   who graduate every year but find no employment. In simple terms, we are talking about thousands of young people on the street every year. These energetic but idle youth pose a bigger threat similar to Al’ Shabab, yet, government continues paying lip service to productive sectors like agriculture that could absorb this labour.
  4. I agree with the author that the oil sector if well managed will create a lot of opportunities such as drivers, wielders, accountants and many others as listed by Dr. Suruma on pg 138[2]. Yet, as discussed, this will also come with other distortions as many people are likely to be excited over oil money. We draw the example from Gabon, where oil money has created a feeling that other menial jobs are below standards of the people of Gabon[3]. Artisan work is left to other African migrants from neighbouring states like Congo, Togo or Ghana. Also, while the per capita income of Equatorial Guinea rose from $ 368 in 1990 to over $2000 in 2000 as a result of oil, it is documented that the country slipped ten places  down the United Nations Human Development ranking[4] and the country’s   agriculture and manufacturing sectors  fell to less than two percent[5]
  5. On ‘who has the right to oil money’ I again totally agree with Dr. Suruma that some of this money must go directly to address the dehumanizing conditions in which our people have been condemned to live. Actually government should not wait for oil money to address the plight of the unemployed, people with disabilities, the terminally sick and all other vulnerable groups.  We should have started this yesterday so that oil money can only make a boast. The money that the President carries in bags and dolls out to his cronies during his internal travels must be put in a fund and given to the very deserving vulnerable people.
  6. Indeed, corruption and absorption capacity are big threats to our oil revenues. The raging Mukono/ Katosi saga is an eye opener of what would happen if over $2bilion was allocated to the infrastructure sector. But beyond poverty and income insecurity causing corruption as highlighted in the book, there are other underlying factors that the author fails to bring out. In Uganda, corruption is on the increase despite the extensive institutional mechanisms aimed at curtailing the vice because of the lack of will by those in power.  Uganda is now the second most corrupt country in East Africa after Burundi[6]
  7. Having noted the above, I would like to state that Dr. Suruma has written with a lot of reservations perhaps due to his position in government. I am more inclined to think that Uganda’s oil has already turning into a curse and I have reasons to think so.
  8. Countries like Norway whose citizenry has benefitted from oil and other mineral resources are very transparent. This is missing in Uganda. Much of the information about oil is held by very few people. The country is yet to sign the Extractive Industries Transparency Initiative (EITI) agreements. The minister for Energy has in several foras promised to do so but nothing has materialized. The other guiding pointer to this oil curse is to consider the institution and persons guarding the oil fields in the Albertan region. Is it the Uganda police or some other security entities and why?
  9. Also, good oil management has been exercised in democratic  countries like Botswana which is in contrast with the stark dictatorship in Uganda. Eventually, it has become a reality that whoever aspires for the top leadership of the country is treated as an enemy of the President! I laughed when I read on pg 145, Dr. Suruma saying, ‘The NRMs original philosophy rested on two pillars; anti sectarianism and anti totalitarianism[7]. Am sure Dr. Suruma would want to revise this sentence given the circumstances that have unfolded in the last five days. President Museveni has already emulated the late Umar Bongo, whose management of oil was done by his family and a few loyalists in State House. Before he passed away, the late Bongo acted like a village super chief, resolving disputes, intervening in students’ strikes and handing out cash![8]
  10. Remember why Hon. Ssekikubo, Hon. Niwagaba, Hon. Tinka and Hon. Nsereko were expelled because they raised governance issues in oil sector. Umeme contract renewed for 20 years, without due diligence by same Minister of Energy who approved the contract while a Civil servant. This is same person managing oil sector.
  11. The other issue that I felt Dr. Suruma should have addressed is the role of the international agencies in Uganda’s emerging oil sector. Many times, development partners, multi-nationals companies, the World Bank and IMF have ignored local voices demanding for democracy and instead chosen to entrench the dictators who serve their interests[9]. We know that while oil is a cause of conflict, external actors like Private Security organizations, mercenaries, International traders, armed suppliers and other powers pursuing strategic and economic interests have fueled these conflicts[10] . Is Uganda able to maneuver these international lobbyists with multi-layered interests to ensure that Ugandans benefit from the oil resource?
  12. I agree with Dr. Suruma’s call that the opposition should “stand shoulder to shoulder with government to maximize an opportunity that at best arises once in a life time”[11]. However, this can only be possible if government revisits its perspective and begins treating opposition like partners in this country rather than foes. If government allies with particular multinational companies to oppress the opposition, there is no way the opposition will not ally with another.
  13. In Conclusion, I agree that oil is a great opportunity for Ugandans which could lift many Ugandan lives from the tortuous unemployment and humiliating poverty levels. I also have agreed that in using proceeds from oil, we need to think beyond roads and dams and provide immediate needs to vulnerable groups in the country; and that there is need to strengthen capacity and fight corruption which pose a threat to the countries oil sector.
  14. I however think that given the increasing totalitarian tendencies exhibited by the President and his ruling class, there is no hope that Ugandans will benefit from the oil resource. I have highlighted that as a country, we need to be keen about multinational companies and lobbyists who often fuel internal conflict in oil resource countries for their selfish interests. I support the issue of transferring 50% directly to the population and putting 50% to support the budget.
  15. Once again, I thank Dr. Ezra Suruma for finding time to piece up this very enlightening book.

Nathan Nandala Mafabi

Chairman Bugisu Cooperative Union (BCU) 

MP Budadiri West

[1] Suruma E. Sabiti; Advancing The Ugandan Economy: A personal Account pg 135

[2]  Ibid pg 138

[3] Nicholas Shaxson (2007);  Poisoned Wells: The dirty politics of African  oil pg 66

[4]  Ibid pg 142

[5] Nicholas Shaxson (2007), Poisoned Wells: The Dirty Politics of African  Oil pg 142

[6]  http://www.google.co.ug/#q=corruption+index+2014

[7] Advancing  The Ugandan Economy: A personal account pg 145

[8] Shaxson  (2007), Poisoned Wells: The Dirty Politics of African Oil  pg 76

[9] Massey &May, (2010) Oil and War in Chad  in Southall Roger & Melber Henning  ; The Scramble for Africa, pg 223

[10]  Obi Cyril (2010), Scrambling for Oil in West Africa in Southall Roger & Melber Henning; The Scramble for Africa pg 199

[11]  Advancing The Ugandan Economy: A personal Account pg  146

Hon. Maria Kiwanuka

Hon. Maria Kiwanuka – Minister of Finance

Today I was privileged to be part of the conference organized by Global Rights Alert and Oil in Uganda on Extractive Industries Transparency Initiative – EITI a mechanism that fosters transparency amongst oil companies and oil producing countries. This is meant to create an avenue where the people of a given country see through the oil revenue and proceeds in a transparent manner that creates no suspicions or even could turn out to be a source of conflict in any country where transparency has lacked.

This conference opened by the remarks from the Vice Chairman of the committee on oil Hon. Michael Mawanda of Igara West MP also Member of Parliamentary Forum on Oil and Gas (PFOG) who invited the Hon. Peter Lokeris, Minister of State for Mineral Development. And in his words; “This conference comes at the right time when government is preparing to enact more laws to regulate the oil sector. Transparency is key in making sure the oil sector moves in the right direction.”

Uganda estimates to have more 3.5 billion barrels and US$0.2 billion so far has been invested in the oil sector. According the existing legislation, Uganda is expected to start a national oil company but there is fear that the process of the company is not on the table yet transactions are being carried out.

There is fear that the oil proceeds will be all kept in the consolidated fund, where taxpayers’ money has never been safe at least not when the president of Uganda still harbors strong financial indiscipline towards taxpayer’s money. The Minister of Finance Hon. Maria Kiwanuka reviewed that the proceeds of oil will be sent to the consolidated fund as she made her remarks and presented on Government’s preparedness for transparency in the oil sector. As a citizen I may ask what grantee I have if the president raided the consolidated fund in the past and went ahead to purchase jet fighters without the approval of Parliament. (more…)