Oil Contract Rows Rock Uganda Ahead of Production

KAMPALA, Uganda (Dow Jones Newswires), Jul. 1, 2009

The Ugandan government is embroiled in disputes with politicians and activists over its failure to reveal the contents of contracts with oil-exploration companies operating in the country ahead of the start of oil production on the Ugandan side of the Albertine Rift on the country's western border.

Uganda's largest opposition political party, the Forum for Democratic Change, said Wednesday that it would petition Transparency International to compel the government to reveal the oil production sharing agreements to the Uganda public.

Ugandan activists have also petitioned the Ugandan high court to compel the government to make public the contents of the agreements in line with the Ugandan constitution and laws regarding access to information.

According to Dickens Kamugisha, chief executive officer of the Kampala-based Africa Institute for Energy Governance, the failure of government to reveal the agreements and its reluctance to subscribe to the Oslo-based Extractive Industries Transparency Initiative could create trouble when production begins.

"Expectations are high among the locals about the impending proceeds from the sector once production starts. This is likely to breed chaos," he said.

Simon Dujuanga, Uganda's junior energy and minerals minister, said the government is bound by confidentiality clauses in the oil pacts but remains committed to using oil proceeds to fund development.

Stephen Birahwa, a lawmaker heading the national economy committee in the Ugandan parliament, told Dow Jones Newswires separately that the government had shown the contents of pacts to some lawmakers.

"I have personally looked at the oil contracts and they are in the best interests of the Ugandan people," he said. The Africa Institute for Energy Governance's Kamugisha dismissed Birahwa's statement as political rhetoric.

Uganda has oil production and sharing agreements with U.K.-based Tullow Oil PLC, Tower Resources PLC, Heritage Oil Ltd. and Dominum Uganda Ltd.

An official with Tower Resources told Dow Jones Newswires that the admission document for the company's London listing contains the basic terms of the contract with Uganda. However, activists insist that government has to disclose its copy of the deals.

Company officials said the Albertine Rift has the potential of becoming a multibillion-barrel oil region after recent oil discoveries. Confirmed oil reserves are estimated at 2 billion barrels with extensive exploration continuing.

The Albertine Rift stretches from the northeastern Democratic Republic of the Congo up to Rwanda, and is shared by Congo, Uganda, Rwanda and Burundi. Oil exploration and drilling are only in advanced stages on the Ugandan side of the rift.  

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