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Uganda Executive, Parliament Divided Over Oil Bill

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KAMPALA, Uganda - A fresh rift has emerged between the Ugandan executive and parliament over proposed ministerial powers in the country's upstream oil bill, delaying the enactment of the long-awaited legislation, which is expected to pave way for the resumption of oil licensing in the oil-rich Lake Albertine Rift Basin, officials said Monday.

The Upstream oil bill, which was expected to be passed last week has now stalled after law makers rejected the executive's attempts to reinstate section 9 of the bill, that grants the minister sole powers of approving, granting and revoking oil licenses.

Earlier this month, law makers amended the section, allowing such functions to be primarily discharged by the Petroleum Authority, a statutory body that regulates the sector. The law makers also trimmed the minister's powers to "ensure accountability and transparency", according to Wilfred Niwagaba, a ruling party law maker.

"Any attempt to reintroduce section 9 would change the entire bill…this is the future of Uganda if we are to avoid the oil curse" Mr. Niwagaba said.

However, according to Amama Mbabazi, the Ugandan prime minister and leader of government business in parliament, trimming the minister's powers is tantamount to removing "the executive and the president from the control of the country's oil resources."

Uganda, Africa's is tipped to be the next major oil producer in Sub Saharan Africa following the discovery of huge oil reserves along its western border with mineral-rich but restive Congo. Government geologists estimate the country's oil reserves at 3.5 billion barrels, with less than 40% of the oil region explored so far.

Uganda suspended issuing new licenses in 2007 to put in place enabling legislation, following a flurry of huge oil discoveries. At least six oil blocks and 10,000 square kilometers of acreage will be available for licensing once the bill is passed.

According to George Boden, a campaigner with U.K.-based Global Witness, by reinstating the section about the ministerial powers, the minister will be allowed to circumvent the bidding process, once the oil licensing resumes.

"If the executive has its way the minister will be able to circumvent the bidding process and negotiate and approve contracts behind closed doors, the contracts will not be made publicly available and those that leak them face harsh penalties." Mr. Boden said.

Uganda's long-serving leader, Yoweri Museveni has presided over several meetings of his ruling party law makers in the past few weeks in an attempt to convince them to reinstate the ministerial powers. Observers say that an increasingly assertive parliament continues to offer Mr. Museveni a stern challenge to his tight grip on power.

There were calls Monday for law makers and the public to resist attempts to install a powerful oil minister without any checks and balances.

"Now is the time to step up and call your MP and ask whether he/she will vote with Ugandans or with the Executive" Godber Tumushabe, the executive director of Uganda's Advocates Coalition for Development and Environment said in a statement.

France's Total SA, U.K.'s Tullow Oil PLC and China's Cnooc Ltd. are expected to start pumping as much as 200,000 barrels-a-day of oil by 2017. However, the three are yet to agree on a development plan and refining options with government.

Copyright (c) 2012 Dow Jones & Company, Inc.

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