History Of Oil Discovery In Uganda Politics Essay

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23 Mar 2015

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Introduction:

This theoretical research aims at looking into the underlying issues of the "oil gate affair" in Uganda as it has come to be called. Transparency, corruption, merging conflicts and conflicts that already exist due to unresolved partnerships, at this point in time when Ugandans should be rejoicing due to the news of oil exploration and commercial oil reserves rather the news has been met with mixed feeling. Some circles of people believe that we are headed for doom, others are optimistic that the oil will give the Ugandan national budget the much needed boost it has been waiting for.

Uganda is a land locked country within the east African region and it covers a total area of about 241,038 sq Kms. Land coverage is 197,100 sq Kms while water covers 43,938 sq Kms. with an estimated population of about 33.4 million Ugandans as of 2010) [2] . In addition, "Uganda has one of the youngest and fastest growing populations on the African continent and, thus, faces the associated challenge of providing quality employment for the majority of the young people. In 2009/10, it was estimated that 19.3% of the population were between the ages of 15 and 24. Youth unemployment was estimated at 4.3%, higher than for the labour force as a whole, at 3.8%.The lack of employable skills, limited access to financial and technical resources, the insufficient emphasis on vocational training and a mismatch between skills and requirements in the job market are some of the factors affecting employment in Uganda. To address the challenges posed by youth unemployment in Uganda, the government is pursuing a number of interventions aimed at improving the employability. For instance establishment of a Youth Venture Capital Fund to support entrepreneurial bankable ideas and initiatives, and the national Business, Technical and Vocational Education and Training (BTVET) programme" [3] .

On the other hand, Democratic republic of Congo with whom Uganda shares a border and the oil resources in the Albertine region has been described by some as Africa's First World War formerly known as Zaire, it has had conflicts since its independence. In the month of august 1998 another rebellion broke out and since then about 5.4 million people have died from either diseases or wars and to make it worse there are reportedly around 1.5 million internally displaced refugees [4] .

Furthermore, the country faces a major challenge in youth employment. More than 70% of those aged 15 to 24 have no jobs, with urban areas particularly affected. The DRC (Democratic Republic of Congo) does not yet have a real policy to get young people into work. The shortage of jobs helps increase the size of the informal sector and the weakness of supportive structures which leads many young people into a life of crime. "Gross Domestic Product (GDP) growth slowed in 2011 in the DRC to 6.5%, as a result of global inflationary trends and a highly charged political atmosphere inside the country, and is expected to fall to 5.1% in 2012 before picking up again to about 6% in 2013" [5] . Also areas of the country especially the eastern part of the country which borders Rwanda and Uganda still remain beset by violence.

History of oil discovery in Uganda:

An important question posed so far is who should really be attributed with the discovery of oil in Uganda, is it the colonialists, President Yoweri Kaguta Museveni or the historical natives of the land? Owing to research by Kizza, Bategeka and Ssewanyana (2011) "Oil in the Lake Albert basin was really discovered by the native people of Bunyoro kingdom. The Banyoro natives observed the oil seeps in the Kibiro-Butiaba areas long before the advent of British colonialism in the nineteenth century. The Banyoro discoverers faced one problem though Observation of seepages is one thing; confirmation of recoverable supplies is another. The Banyoro did the former, not the latter." [6] 

Contrary to media reports oil exploration in Uganda first began in the 1930's when Lake Albert was considered an attractive region for oil prospecting due to the natural oil seepage in the area, at this time Uganda was under the British colonial government with time some companies explored the area and the first deep well was drilled in the 1938 before World War two intervened and the ensuing political instability in Uganda of the 1980s. [7] 

Furthermore, Kizza, Bategeka and Ssewanyana state that "under the government of Milton Obote (1981-1985) surveys were conducted over the Albertine region and these particular surveys increased Uganda's stock of knowledge on the existing hydrocarbons thus bringing about the enactment of the exploration and production act of 1985 to regulate upstream activities such as oil exploration and extraction. Consequently, the overthrow of Obote in 1985 did not kill interest in the oil. President Museveni confesses that soon after capturing power in 1986, he learned about the Albertine oil when Shell BP and Exxon approached him. The two oil companies wanted exploration rights over the Lake Albert basin. Their problem was the timing; the oil companies faced Commander Museveni who, in the 1980s, had a strong sense of economic patriotism. Fresh from a bruising guerrilla war (1981-86) that propelled him to power, the new leader was cautious" [8] .

The extent of the oil find is not limited to Uganda though, it stretches beyond the country's borders along the entire East African Rift system and the rift valley extends 1000s of kilometres in Africa alone through Uganda, northern Kenya, Tanzania and Somalia. It is of course not yet known whether the oil finds across the eastern rift valley are commercially viable if they are then East Africa could be the next new frontier for oil production. [9] 

The late 1990s and 2000s saw renewed interest in Uganda's potential natural resources and this brought about signing of production sharing agreements (PSA) between government and Hardman petroleum, Energy Africa and Heritage oil ( Lay, pg 4-5). However, the problem arising out of the contracts is that they have never been made public and this has raised a lot of suspicions from the diverse population, politicians and the media. Lay furthermore, unearthed that there are three court suits outstanding against the government by African institute for Energy Governance, Green watch and the daily monitor respectively all using the Access to Information Act. Until November 2009 the contents of the PSA's has remained a closely guarded secret, with both the Ugandan government and the oil companies only releasing decontextualised snippets of the agreements [10] .

THE OIL AND GAS INDUSTRY OF UGANDA:

In order for oil companies to explore and prospect for oil resources in any country they must attain PSA's, which are agreements between the oil exploration companies and the governments of the people.

In an interview with Mr. Makana an environmental geo scientist he had this to say " the Ugandan PSA's, government opted for as an understanding between itself and the oil companies is because it's a hybrid agreement that incorporates some of the good elements between a concession contract and a service contract. He went further to explain " that when a company's application for a license is successful then the government invites that same company for negotiations of some of the components of the PSA and once the negotiations are done the agreements are signed. In the PSA's the petroleum resource remains in the hands of the state as opposed to say a concessions contract where the resources become an asset of the company". In total there are 64 wells currently that have been dug to date between various exploration and prospecting companies each of these wells is named after a particular majority species of animals or plants found in the area where the prospecting is being carried out. [11] 

The annual report of June [12] , (2004 pg 8) by the petroleum exploration and production department the government concluded negotiations for petroleum exploration and production rights over exploration area 1 with Heritage oil and gas ltd in a joint venture with Energy Africa ltd/Tullow oil which led to signing of a PSA on 1st July of the same year and again on the 8th of September 2004, government signed another PSA with still the same joint venture between Heritage oil, Energy Africa for exploration area 3A.

In addition, global witness report (2010) states that exploration area 4B (southern lakes Edward and George basin) was licensed to UK's dominion petroleum where as exploration area 5 went to Neptune petroleum which is a subsidiary of the UK's listed tower resources. The same report by global witness states "Tullow oil then bought out Heritage shares in august 2010 leaving it with 100% in exploration areas 1, 2 and 3A. Tullow oil then announced it would form a partnership with CNOOC of china and TOTAL of France. However at the time of writing the global witness report government had ordered Tullow oil to stop all its activities until a dispute between the government and heritage over unpaid capital gains tax had been resolved." [13] 

The capital gains tax dispute: Heritage, Tullow and the Government of Uganda:

On July 26th ,2010 one of the major oil companies in Uganda's petroleum sector Heritage oil sold its exploration licenses in the Albertine area to Tullow oil in blocks 1 and 3A for US $ 1.45 billion thus making Tullow oil the only company licensed to operate in these areas and after which Heritage stopped all its operations in Uganda. However, according to Izama and Mulangwa "Uganda revenue authority acting on behalf of the government of Uganda requested US$ 434 million or 30% of the sale in capital gains taxes" Heritage disputed the tax, saying that its lawyers believed that the sale was not taxable, given that the PSAs which the company signed with the government failed to mention such a payment. Heritage further argued that the sale of its assets to Tullow oil was not taxable in Uganda because the sale itself took place outside Uganda (in the Channel Islands off the coast of France) and because the company itself is not incorporated in Uganda (being domiciled in Mauritius). The government of Uganda, meanwhile, has argued that the assets sold were located in Uganda, and that their sale was done with the consent of the Ugandan government, making the transaction taxable under Ugandan law." [14] 

The Payments

The Money

Total amount of sale (for Heritage's stake in Blocks 1 and

3A)

$1.45 billion (or Ush 3.77 trillion)

Capital gains tax that government of Uganda wants Heritage to pay

$434 million (or Ush 1.13 trillion) (30% of total sale)

Money not given to Heritage from the sale of Blocks 1 and

3A

$283 million (or Ush 736 billion)

"Refundable deposit" paid by Heritage to government of Uganda

$121 million (or Ush 315 billion)

Total amount that government of Uganda has, and that Heritage wants

$405 million (or Ush 1.05 trillion) *

"Tax" payment made by Tullow to government of Uganda

$313 million (or Ush 814 billion) **

What Tullow will receive from the "farm-down"

$2.9 billion (or Ush 7.54 trillion) ***

The figures above are rounded off, which accounts for minor discrepancies

Source: ACODE infosheet, No 16.20 [15] 

Government of Uganda versus Heritage oil;

The government of Uganda is locked in a row with Heritage oil over unpaid capital gains tax since last year 2011, according to Izama and Mulangwa (ACODE infosheet, 2011.pg 1-4) in may 2011 the said case commenced in the London court of arbitration which the PSA signed between the government and heritage designated the united kingdom as the jurisdiction for resolution of disputes. Heritage is seeking the release of approximately US$ 405 million currently on deposit with the Uganda Revenue Authority (URA) or in escrow with Standard Chartered Bank following the sale of Heritage oil shares to Tullow oil Company. The government of Uganda mean while is seeking to keep the US$ 405 million and an additional US$ 30 million which it claims to be the US$ 434 million capital gains tax. [16] 

((NEXT IS THE MAP))

EXPECTATIONS FROM THE EMERGING OIL SECTOR IN UGANDA;

In Uganda land continues to be a contentious issue when it comes to land ownership, politicians, businessmen and ethnic groups have openly been involved in conflicts with the government and some individuals over who owns which piece of land and in what quantity since land is an essential pillar of the existence of the people and national development of the country. Uganda is in the age of oil discovery and exploration, land has become a "hotcake" of sorts with every one wanting a piece to own. The constitution vests its power in the state to make sure Ugandans gain a lot from the exploration of this mineral resource however this does not mean the state will do with it whatever it wants without questions being asked. Currently the oil exploration has raised a lot of expectations from the people which is a breeding ground for wrong sentiments that could encourage conflict and rebellion culminating from the emotions of the people should their expectations from this resource not be met or managed effectively to their satisfaction. These expectations are elaborated on below;

Uganda is currently being referred to as the hottest inland exploration frontier by the oil industry with reserves estimated to be around 1.5 million barrels [17] (International alert report, 2009 pg 4) And basing on the current situation of Uganda's economy it is most likely that if exploration and production go ahead without hitches then the country's budget will receive a major boost from the revenue collected. Such a boost will help government alleviate poverty through creation of jobs and building of infrastructure such as roads to connect rural areas to the city so as to make it easier for people to access resources. However, the economy is not yet stable since the "Annual headline inflation accelerated rapidly from 5.0 per cent in January 2011 to 30.5 per cent in October 2011 before declining to 29.0 percent in November 2011. This high inflation is likely to continue exerting pressure on household disposable income and will remain a major challenge to the macroeconomic stability objective" [18] . and food prices soaring to their highest in a long time, in addition there is a sense in which the timing of the discovery of oil in Uganda coincides with the falling away of confidence in governments transparency due to the various corruption scandals and embezzlement cases against it top most officials.

In addition, from the look of the way oil issues are being handled if there are a number of delays this will see the country be thrown into media speculations and conflicts of self interest from different ethnic groups and politicking which will lead to fragmentation of the people of Uganda along ethnicity and politics. For example, currently there is a strong disbelief in government's intentions for national development and the oil resource specifically. All this has been brought about by the government not being clear about the issue of distribution of resources from the oil which has given opportunity for some wrong characters claiming that the Ugandan government wants to undermine the rule democracy in Uganda [19] .

Furthermore, to the above, some evidence suggests that as much as Uganda is making great advances towards building pluralist political system and a multi-ethnic identity, current press reports and political commentary suggest that the government favours members of President Museveni own tribe- the Banyankole and other ethnic groups from the western region of Uganda. [20] 

Finally, due to the high expectations from the oil resource discovery fuelled by the political parties, policy makers and other various individuals another question has come up that is creating new conflicts and alliances. The lack of clear transparency, Lack of information has fed suspicion, mistrust and created division this clearly shows that there is an urgent need for greater public availability of information and sensitization so as to enable citizens become empowered and have more realistic expectations concerning the exploration and production of oil. The availability of information will also help Ugandan policy makers and development officers to plan for the future and not fall prey to false rumours coined by people who are after self interests that will not benefit the country. [21] 

Cross border cooperation:

This will focus more on the relationship between Uganda and the Democratic republic of Congo (DRC), who according to world maps actually shares Lake Albert. This implies that despite these two countries military history if they are to share the resources from off shore sites known to exist in the lake it will take an immerse level of technical knowledge, political manoeuvring, cooperation and transparency. Basing on the fact that they are close neighbours and the site in question is the Congolese part of Lake Albert and the lakeshore down towards Lake Edward and the Virunga national park.

According to my understanding since it is a shared resource, the oil is going to create an era of cross border security and good relationship between Uganda and the Democratic republic of Congo because they don't want a repeat of the same mistakes of the 1990's, where Ugandan military officials were implicated in reports linking them to trafficking of DRC mineral resources such as gold, diamonds and timber however, there is room for holdups as the saying goes " crime doesn't pay but it sure costs" the crimes of Uganda generals in DRC are definitely costing the Ugandan government in terms of cross country relations with its neighbour DRC.

To date, there has been little or no transparency as to the precise volume of oil production taking place in DRC, or any revenues from it and basing on such a finding it will be hard for these two countries with a volatile history to actually deal together in exploitation of a resource that will have an impact on their economies. [22] This is not a good selling factor when it comes to future oil production in the east. According to local NGOs in Bas-Congo, offshore oil production is simply loaded into awaiting tanker which leaves when it is full. There are many revenue figures which are unclear on how they came to be and even still the partnership contracts between the government and oil firms are also not clear at all or ready for public viewing.

Also Other issues raised by NGO's in the DRC are that the community around these oil exploration areas is not happy because they are missing out on employment opportunities and even still the companies do not care if they destroy the environment and this could bring about irreparable harm which will not be reversed. If this is happening in the exploration stages and only oil producing area at the moment, which is the Coastal Basin at the mouth of the Congo River around the town of Moanda on the DRC's small Atlantic coastal strip the cooperation between these two countries, Uganda and the DRC especially concerning offshore oil viable areas in Lake Albert will be brought into question and hardly come to realization [23] .

Furthermore, with current occurrences of civil war in DRC especially concerning the M23 rebels the eastern part of remains a high risk area to carry out any kind of business especially when it comes to mineral exploration one has to keep in mind that the fundamental factors that have been affecting this area are still persistent for example, land rights, access to natural resources, deficient or non-existent governance and justice systems, and major deficiencies in the security sector.

POLITICAL INVOLVEMENTS IN THE OIL SECTOR, MAJOR CORRUPTION INCIDENTS IN UGANDA AND IMPACTS OF OIL DISCOVERY ON THE COMMUNITY;

This section is devoted to understanding the progression of different perspectives of political involvement in the oil sector in Uganda, internationally and regionally between Uganda and any other international countries and nationally within Ugandan political scene.

Interstate politics, diplomacy and oil sector;

Natural resources (oil) have always been linked to conflicts both directly and indirectly such as in Nigeria and southern Sudan, the recent discoveries of oil in the Albertine region in western Uganda has indeed generated excitement but also with the current events taking place a lot of pessimism has been accumulated not only by the politicians but the citizens as well. The potential for the oil to create new conflicts and exacerbate existing ones is high since the relationship between Uganda and the DRC the two countries who share the oil rich Lake Albert will ultimately require their political and technical cooperation to see to it that their citizens benefit from the oil discoveries. However the relationship is not all still water under the "bridge" as people think and this is why.

The neighbourly relationship between DRC and Uganda has been troubled, throughout the period of DRC's civil wars for example, during the 1990's Uganda's military was involved in the DRC but evidence shows that during this time a good majority of high ranking as well as low ranking military personnel from Uganda were involved in the trafficking of the DRC's mineral wealth and even still they were also implicated as backers of some of the country's most brutal militias active in the same period in which thousands of Congolese fled their homes and towns, currently some of the former military leaders are now high ranking politicians in the government of Uganda. This kind of legacy has left a lot of mistrust between the two countries, the international court of justice was working on an agreement for reparations awarded to the DRC from Uganda and the ongoing diplomatic initiatives to establish a more peaceful and neighbourly relationship remains a source of ongoing tension [24] .

In addition, both governments handling of the exploration agreements concerning oil in their territories has been the subject of heated debates DRC parliament in 2008 and the Ugandan government in 2011. In DRC Heritage together with Tullow announced in 2006 that they had signed a PSA with the government but a year later, the Congolese minister Lambert Mende forced Tullow to cede 40% of its shares to a Spain based H oil company. Tullow representatives denounced the move putting the quarrel down to DRC oil ministry wanting more money [25] . Also on the other side the government of Uganda is currently involved in a case with Heritage over unpaid capital gains taxes to the URA which is going on the courts of arbitration both within the country and at the international court of arbitration. These kinds of quarrels and comparisons with the governments make their own citizens lose faith in their governments. [26] 

Besides the both governments being involved in heated debates it has come to the attention of civil society organizations such as the cadre de concentration (CDC) in the DRC who presented their findings to parliamentarians as well as in a conference in Uganda. They observed that the population is badly informed about oil developments and rumours are causing mounting anxiety. For instance, at the borders of these countries untold or undocumented conflicts have started to be visible especially when it comes to issues to do with land and oil exploration. Some of the incidents include those of herdsmen crossing into DRC and being arrested as well as employees of oil companies who crossed over into DRC unknowingly getting shot at by the military. [27] 

Furthermore, international alert report states that" any re-escalation of conflict in Ituri as has been since the 1990's such as the wide spread human rights violations and the inter-communal violence that steams from political up risings like the one by the Alur people ( Ugandans in the northern region) who are upset because "foreigners" that is the non-Alur people have been appointed to important posts in local administration is most likely to jeopardize the chances of a joint production agreement(JPA) between the two countries which is very necessary if the full potential of oil resource in the Lake Albert is to be realized" [28] .

According to Westerkamp and Houdret there are disputes over Rukwanzi Island in Lake Albert region. Initially the border between Uganda and DRC running through Lake Albert was established by a colonial agreement between Belgium and the United Kingdom in 1915. Indeed the situation is complicated because due to erosion of the Semiliki river mouth leading into Lake Albert the old boundary has blurred and as a direct result of new oil activity the boundary is now the subject of dispute which on several occasions has led to violence [29] . For instance, in the report by international alert (2009) in July 2007 Congolese soldiers landed on Rukwanzi Island and captured four members of the Uganda marine unit and later they attacked a Heritage oil barge which led to the killing of one of its contract seismic crew. This tentatively led to Ugandan ministers threatening to push for air strikes and an invasion of DRC in retaliation. Furthermore, to complicate matters "in the same year in august the Congolese government accused Heritage of carrying out illegal exploration with the help of the Ugandan government army leading to eight Congolese fatalities." [30] 

In addition, the international alert report of 2009 goes ahead to link the competition for power in the region which has become apparent between the DRC and Uganda following competitiveness over the oil resource as influencing the suspicions of the DRC government concerning the intentions of the oil companies already active in Uganda to be somehow colluding with the Ugandan government to increase its political power in the east African region [31] . As much as observers in both countries blamed each other for the tension they came to the same conclusion that the DRC government does not want any oil company already involved in Uganda on its territory. However some analysts think this is just a tactic by Kabila to delay the emergence of Uganda as oil producing country while Kabila consolidates his political hold back home.

The use of Economic hit men (EHM), "Economic hit men (EHMs) are highly paid professionals who cheat countries around the globe out of trillions of dollars. They funnel money from the World Bank, the U.S. Agency for International Development (USAID), and other foreign "aid" organizations into the coffers of huge corporations and the pockets of a few wealthy families who control the planet's natural resources. Their tools include fraudulent financial reports, rigged elections, payoffs, extortion, sex, and murder. They play a game as old as empire, but one that has taken on new and terrifying dimensions during this time of globalization". [32] 

They are hired and employed by international consulting firms and they job is to justify huge loans for the developing countries where by these loans are for major engineering and construction projects which are carried out by companies such as Halliburton, stone and Webster to mention but a few. Secondly they help to bankrupt countries that receive these loans after multinational companies are paid, this countries remain indebted to their creditors and are easy targets when the more developed countries such as the US need votes or favours such as military bases as well as access to natural resources like oil [33] .

National politics and the oil in the Albert region:

The British colonial rule of divide and rule in regards to Uganda's history did little to build a functioning nation led by Ugandans. In the years after independence Uganda experienced almost constant civil wars as different individuals and ethnic groups competed to control the post colonial state to their own advantage. The NRM on coming into power in 1986 made addressing what it termed as "sectarianism" a central element of its political agenda, critical milestones during this period include the 1995 constitution of Uganda and the incorporation of representatives of different ethnic groups into both government and the army. However as much as there has been greater stability overall under the NRM era there is some evidence to showing that social legacies of Uganda's turbulent past are far from over. For example current press reports say that the government favours Museveni tribe mostly. [34] 

The mining act stipulates that 80% of the oil revenues will go to central government, 17% to local governments and 3% to the landlords [35] however, the local politicians and the traditional institution of Bunyoro kingdom have reportedly been insisting on a 50% share until more recently when the King of Bunyoro kingdom Omukama Gafabusa appeared before the parliamentary committee on natural resources to witness the handover of Bunyoro's petition demanding 12.5% of the oil revenue and stated "being the valid trustee of the Bunyoro customary lands and natural resources; he needed a fair share for the kingdom and his subjects to boost development." [36] 

Furthermore, the same report goes ahead to stress on the ideas of a few politicians in Uganda whose view is that neither oil or poverty is confined to one particular region of Uganda but instead cover the entire western rift and given the perceived potential for oil to spark off regional, social and ethnic divisions the benefits should be for everyone in Uganda. A member of parliament interviewed by International alert had this to say "oil has to be viewed as a national resource and not tribal […….] national rather than local interest should prevail" [37] .

The limitations of the Access to Information Act, severely limits the public's access to key pieces of information. According to some members of parliament who are against this act say it does not define the full scope of confidentiality thus posing a risk that this act will prevent disclosures in very many other cases that deal with a high level of corruption and patronage especially with the elite class thus a lack of accountability and transparency which will be a threat to good governance. [38] 

In the months approaching the 2011 presidential elections, there was a surge in elite led claims regarding the sharing of revenue from the oil one opposition leader is quoted saying "if there were proper service delivery mechanisms such as schools, good roads and hospitals the people of Bunyoro would not be demanding a share but these are not there. The scaring part about this kind of political talk over time it will lead to sharpening of divisions between regions, districts and central government which if not handled with a high level of sensitivity a full scale conflict could be eminent. [39] 

The struggle for transparency and accountability on corruption and oil issues has been the highlight of the parliamentarians and the wanaichi in 2011. Politicians from both the ruling and opposition have been calling for the disclosure of contracts signed between the state and oil producing companies. For instance this has led to prominent ruling party fellow politician to stand down pending serious investigations, others resigning from their posts as well as facing censuring by other members of parliament. Furthermore, concerning the issue of transparency government signed secret PSA's with oil companies, in august 2009 engineer Hillary Onek the energy and mineral development minister said "that the agreement that government signed with Tullow oil provides for confidentiality and government would risk being sued if it publicized the document". The global corruption barometer noted that Uganda loses about 500 billion Ugandan shillings to corruption every year. [40] 

In conclusion, the discovery of oil resources in the western rift has heightened the level of land disputes and conflicts in the region. Local politicians have been instrumental in organizing the local population against oil companies and government officials by being at the front of halting sale of land until the oil situation is clarified. This is due to the fact that the oil companies have been dealing directly with central government and not the local government and this has created a rift so some communities such as the Acholi have called upon the government to create new and clear channels concerning land purchase. For example, according to correspondents to an interview in Nebbi by international alert (2008,pg50-51) it was revealed that the RDC of Arua district was forced to resign by the population after it was suspected that he was conspiring with the Balalo or herdsmen to sell their land. [41] 

Major Corruption incidents in Uganda:

A selection of major corruption scandals in Uganda over the past 12 years, according to global witness report

CORRUPTION SCANDAL

YEAR

Uganda Commercial Bank shares

1998

Junk Helicopter procurement

1998

Valley Dam development Funds

1994 - 2003

Ghost Soldiers Payroll

2003

Grants from Global Fund for AIDS,TB and Malaria

2005

Fuel Supply Contracts

2007

Global Alliance for Vaccine and Immunization ( GAVI) Funds

2007

Commonwealth Heads of Government Meeting ( CHOGM) Funds

2007

Uganda National Security Fund ( NSSF) Finances

2010

Oil exploration and PSA's in Uganda

2011

For more information on the scandals see annex page 1:

Source: global witness report (2010, pg8)

Impacts of oil discovery on the community:

Kathman and Shannon noted for the African studies quarterly (2009) they define the "resource curse" as a phenomenon in which macroeconomic forces create pressures for over-reliance on the oil sector leaving other domestic economic sectors to deteriorate which in the short run brings about the "Dutch syndrome". Consequently, the over-reliance then increases the state's economic susceptibility to dramatic swings in the global price of petroleum. Below, we discuss several of the impacts on the community due to the discovery of commercial oil reserves in the Albertine region as they relate to the current state of affairs in Uganda. [42] 

Economic impacts:

There has been improvement in public infrastructure and social services undertaken by central government, local government and the mining companies in support of the oil prospecting activities on the ground such improving and opening up roads, schools and building of community health centres, this has led to an increase in local economic activities through improved movement of goods and services that are supported by the increased demand for the goods as the population numbers within these areas has increased. For example, one of the respondents in a survey carried out by Rugadya and Kamusiime in Bundibugyo district had this to say "……the oil company built us two bridges; transport in this area was a big problem." However, in the same survey by Rugadya and Kamusiime (2009) the improvements and new infrastructures have also brought about some conflicts in the community as well "some infrastructures have been placed on individual lands and without compensation and this have increased the potential for conflicts". [43] 

The oil discovery and prospecting activities have brought about employment opportunities for the locals. The companies have employed community members as casual labourers, porters and drivers. According to Rugadya and Kamusiime (2009) the people employed have improved their income which is boosting local demand for goods and services as well as the service provision businesses. However there is a downside to this local economic boost which is a general rise in the cost of living for everyone in the region, commodity prices have gone up. In addition, employment and recruitment processes are unclear and some communities are complaining of corruption as well as recruitment of foreign people in these areas which shows a laxity in government's role to protect its own labour force. Further, the payments for the service providers have been long overdue and thus on the verge of conflict. For instance, one of the respondents from Arua district in the survey by Rugadya and Kamusiime had this to say "some people have not been paid up to now for the murram that was dug from their plots; I request whoever is concerned in the oil company to pay these people before war erupts…" [44] 

The oil exploitation and eventual production could also negatively impact on other previously productive sectors of the economy in terms of competitiveness such as the fisheries, agriculture and animal husbandry which in the long run could lead to declining wealth, social and political unrest and eventual emergence of rebel groups thus leading to destabilized domestic security. For instance, Kathman and Shannon reported agriculture alone accounted for 25% of Uganda's GDP [45] . In addition, a survey by Rugadya and Kamusiime claimed that fishing and farming in the Rukwazi area came to a stand still for almost over 6 months due to the presence of oil exploration companies and the army which set up boundaries and anyone who crossed these boundaries was whipped. [46] 

Political impacts:

Increased presidential power and instability in tax revenue collections; usually governments are dependent on citizens to remain in power or fund their operations through paying taxes but in the case where the governments have massive access to oil revenue then they do not require much in revenue from taxes to carry out their operations and maintain their hold on power. Kathman and Shannon note (2009), "in a country like Uganda where the government is a strong presidential system power is becoming more centralized in the hands of President Museveni therefore in the onset that the President gains free unchecked access to substantial oil revenue the combination of considerable oil funds and strong presidential powers could increase the ability of his government to remain in power indefinitely as he was reported to have said in the media that he sees no potential replacement to his role as president within his own party. (Daily monitor) Therefore, a reduction in government transparency in oil and tax revenue management would then make President Museveni government to become more autocratic in its relationship with public and political opponents as has always been the pattern in other oil producing states" [47] .

In addition, the oil exploitation issue has brought about the galvanization of the political elite, in recent years most especially 2011 the country has seen the emergency of a new breed of political leaders who despite belonging to different political parties they have put their political differences aside and grouped together so as to pursue one goal which is to see that the interests of the general community are met. For example, on the 11th of October 2011, Uganda legislators blocked a contract with Tullow claiming that the United Kingdom based company paid bribes to influence decisions. This vote to suspend any new deals was carried out with the backing of ruling party members of parliament and the opposition. [48] 

Social impacts:

Despite the fact that currently the LRA has been weakened by the military cooperative attempts between the UPDF and the DRC forces its persistence though remains a threat to the regions stability since the location of oil reserves in Uganda is very near to areas where rebel activity has been very significant in the past years. Kathman and Shannon reported that the activities and atrocities of the Lord's Resistance Army (LRA) towards citizens of both Uganda and the DRC have taken place in the north western territories of the country nearest to exploration blocks licensed to Neptune petroleum Uganda limited. Whereas oil is not easily exploited by the rebel groups such as in the case of opium and diamonds in western Africa to finance their operations they can easily sabotage the extractive and distribution systems constructed by the oil rich states such as in the case of the Nigerian delta. [49] 

Furthermore, the exploration of oil has led to straining the already tense relationship between government and the media. The government has tried to silence the media by arresting reporters and keeping the dealings between it and the oil companies' secret from the media citing legal material but the media has become more resourceful and sophisticated in its reporting and this has brought to light the information gap between government and its citizens. Due to such sophisticated reporting by the media despite government efforts to curtail information flow, this has brought government problems in the courts of law where it's been sued by various citizens and civil society organisations. For instance, in a statement issued by Tumushabe a policy analyst and widely respected civil society activist "the government needs the citizens to be on its side in order to engage effectively with the oil companies" [50] 

lastly, the discovery of commercial oil resources has put government in a position where they have to think in the long term continuity of the sector, through the concerned ministry they have emphasized national institutional capacity building especially in the field of petroleum exploration and development by providing formal and industrial training as well as facilitation for the workers and students interested in oil studies that are joining higher institutions of learning. [51] 

Environmental impacts:

The Lake Albert region is a very rich region in terms of biodiversity and the local communities around depend on the this environmental broadness to survive and most especially on the water resources which supply drinking water for the human and livestock populations. In a report by Westerkamp and Houdret the planned exploitation of oil in the Murchison fall NP and other wild life reserve areas will impact negatively on the quantity and quality of water. This being due to the influx of migrants coming to look for work which in turn has brought about pressure on the available resources and services in the area and therefore brought about an increase in pollutants and contaminants into the water from the various towns where they are staying. In addition with the "probable building of an oil transformation unit close to Kabwoya wild life reserve, this will bring about deforestation consequently bringing about soil erosion which coupled with the seisemic tests being carried out to ascertain the quantity of oil underground have reportedly led to decreased availability of fish and also changed water quality" [52] 

Secondly, the oil companies prospecting in some of these areas disregard the local authorities' opinions especially those in charge of the environment as regards waste disposal. Indeed as reported by Rugadya (2009) in his surveys one of the Key informants had this to say "when you go down there (rift valley) you find that they (oil companies) are having a lot of challenges with industrial waste disposal and the district seems to be ignorant about the disposal of these wastes. Once they pour it on the grass it dries up immediately yet this is the beginning of the exploration." [53] In addition, in an interview with one of the environmental geoscientists he acknowledges that there have been a few issues to do with the waste disposal but government is working tirelessly to find ways of disposing of these wastes in an environmentally friendly way.

TRADITIONAL LEADERS AND OTHER LOW LEVEL CONFLICTS IN THE ALBERTINE OIL REGION OF UGANDA:

The constitution of the republic of Uganda chapter 16 article 246 ( 6 ) defines a traditional leader or cultural head as a king or cultural leader by whatever name called who derives allegiance from the fact of birth or descent in accordance with the customs, traditions, usage or consent of the people led by that traditional or cultural leader.

Traditional institutions Vs Central Government:

Bategeka, Kizza and Ssewanyana sighted that there was a potential conflict brewing between government and the traditional institution of Bunyoro Kitara kingdom. "Bunyoro kingdom on behalf of its people is demanding a significant share of the oil resources to work on a number of issues that have been present in the kingdom territory since the time of the British colonial master's civil war with the king at the time Omukama Kabalenga. Since the end of the civil war which left the British defeated and humiliated the kingdom has been ignored and thus it demands to have a share in the oil in order to sort out the following. " i) infrastructure development (mainly tarmac roads throughout the kingdom and a railway network); ii) education, particularly establishment of a polytechnic and a University (teaching oil related courses among others) and other tertiary institutions, which are almost totally lacking in the kingdom; iii) constant supply of electricity (once thermal electricity that will be generated using heavy fuel oils; iv) Jobs for the people of Bunyoro Kitara; and v) Strengthening the people's culture to mitigate the social evils (associated with migration, prostitution, HIV/AIDS etc) that may come as a result of the oil industry and if these demands are not met its alleged that the kingdom officials had this to say we either share the oil wealth or cause chaos" [54] .

Oil companies Vs the Banyoro community:

The conflicting relationship between the oil companies ( Hardman resources limited) and the community came about due to lack of initiative by the oil companies to engage the community in consultations and instead played a deaf ear and depended on the government to do their job while they went ahead to drill and carry out tests on the land. The Bunyoro community claim that due to the activities of hardman resources they have lost important historical sites such as the Waraga area where one of their oldest rulers king Waraga lived but hard man resources disregard this claim and state "that the area actually derives its name from the majority fish species", whether the site is named after a particular fish or historical ruler the oil company takes the blame for not consulting with the community because their operations in the area affect the way of life of the people one way or the other. The Banyoro community leaders countered their earlier statement and stated "Hardman resources limited came to Bunyoro and started digging without consulting the king as if the Banyoro don't exist" [55] 

The Media vs. Central government;

The constitution of the republic of Uganda stipulates in chapter 4, article 41(1) that "every citizen has the right to information in the possession of the state or any other organization or agency of the state except where the release of the information is likely to prejudice the security or sovereignty of the state or interfere with the right of privacy of any other person".

Media houses in Uganda have of late been rubbed the wrong way by state machinery which is interference to the constitution of the country. Threats to media independence in Uganda are two in nature, one commercial and the other political interference which though are connected as the report by the foundation for human rights initiative (2007 pg 41-42) shows "private media owners have been forced to exert pressure on individual journalists and editors to 'tone' down on their criticism of the government. A case in point is the daily monitor newspaper where the government allegedly complained to the Aga Khan the majority share holder of nation media group which the daily monitor is a part, in turn the Aga Khan was given the deal to build Bujagali power dam, in this case some of the journalists were suspended and others such as Andrew Mwenda resigned citing lack of editorial independence" [56] . In addition the government passed the Electronic media act 1996 and the Access to Information Act 2005. The EMA 1996 established the broad casting council to coordinate, control and supervise broad casting activities for example, the council suspended a Ugandan radio presenter for hosting a gay rights activist on his show. Furthermore, the ATIA in some of its provisions affect three particular areas of significance which contradict the constitution of Uganda; 1) the cost of accessing information. 2) procedures that citizens have to follow to request information and 3) the guidance provided for implementing public agencies this leaves the question of whether government passes all these contradicting Acts to limit the rights of access to information of the citizens [57] . As the minister of information was kind to state it in an interview with FHRI "the work of the government is to monitor activities in the country for security reasons. Sometimes, we must surrender sovereignty for security. Such activities are being done in different parts of the world such as the CIA in the states and the KGB in the former USSR countries. ISO has the machinery to record all radio broadcasts and screen them" [58] . This leaves one pondering whether the government of Uganda should wrong its own people all because some other super powerful countries are doing the same?

Bagungu Vs Balalo (herdsmen);

The Bagungu are indigenous residents of Buliisa district while the Balalo basing on international alert report ( 2009) are collectively referred to as anyone who looks after cattle, whether his or employed by another person most prominent are the Banyankole and Bahima who the report goes ahead to state that today they tend to the cattle of the most prominent figures. "In 2007 the Bagungu accused the Balalo of grabbing their land using illegal means and on the other hand the Balalo claimed to have bought the lands from the Bagungu in 2003. This was followed by severe violent clashes and injuries which prompted the president to intervene and have the Balalo evicted; a subsequent court injunction brought by the Balalo against six government officials was also over turned by the high court of Uganda Rumours have come up that Balalo are occupying land close to oil activity including in areas such as Buliisa and West Nile that are far from their traditional grazing lands, the rumours go further to state that the Balalo are actually buying land In these areas illegally and moreover on behalf of powerful figures from the Banyankole and Bahima ethnic groups", variations of these rumours came to international alert attention in both their survey of 2008 and 2009 by numerous stakeholders however these rumours should be interpreted carefully because the movements of these herdsmen could also be due to longer periods of drought and scarcity of water for their animals which are their lively hood. [59] 

Civil society Vs the Government;

In the executive summary of a report by Rugadya and Kamusiime (2009) "economically most of the areas where prospecting is taking place have witnessed extensive public infrastructures and utilities such as roads, schools and health centres" [60] however most of these infrastructures are placed on properties owned by individuals with promises of compensation which has taken a long time to be remitted. This has breed tension and conflict between the civil society and government since the people have no alternative sources of income to take care of their families. Furthermore, the civil society wonders whether the government incentivized to prioritize security over the human rights of the local population. Basing on the contracts PLATFORM was able to obtain there were no clauses covering security provision however at the oil prospecting sites there is a clear presence of the military guard thus it is unclear what promises the government has made to ensure security and what rights the oil companies have been awarded. For example, do the oil company's securities or private military contractors have the right or authority to arrest, injure or kill those they perceive as a threat? [61] 

Government Vs the Oil companies;

President Museveni in a recent address to his fellow counter parts across Africa warned them not to be manipulated by oil companies that seek unfair agreements to exploit African resources, The Ugandan statesman attributed his country`s successful oil exploitation agreements to the presence of a local trained team that can counter the oil companies. It has been a real fight, "They opposed the building of a refinery because oil has been found in Southern Sudan, Kenya and Tanzania, saying that there will be no local market," explained Museveni, adding that he rejected the pressure because the population of Uganda is increasing and more Ugandans are acquiring vehicles. [62] 

CHAD IN COMPARISON WITH UGANDA'S PREPARATIONS TO THE OIL EXPLORATION:

Public consultation;

Chad:

Since the start and design of the Chad/Cameroon oil project in 1993, the project has conducted a total of 21,000 consultation meetings in hundreds of towns and villages throughout the project area and in the process contracted a number of NGO's to implement the community traditional dialog style consultations and compensations. For example, Micro-development projects have been chosen by the eligible communities following a consultation process, water towers and wells, schools, granaries, village markets and community gathering places, Roll Back Malaria projects, community compensation and the HIV/AIDS prevention education programs. [63] In addition, since the start of this development Project, "input from a number of public consultations has brought about the project to redesign facilities to reduce impacts on people and habitat. For example, the pipeline route was shifted more than 20 times to protect settlements and hunting grounds of the Bagyeli-Bakola people in Cameroon. Tens of millions of dollars were spent to move the pipeline route away from environmentally sensitive areas in the Mbéré Rift Valley and Deng Deng Forest areas." [64] 

However, Korinna in paper presented at The Hague she notes with concern that the World Bank and Exxon where downplaying the real risks of the project while being more concerned about their reputations. "The World Bank had approached Shandwick Public Affairs, one of the world's largest PR companies, to help promote the project (October 29, 1999). Exxon is already a client of Shandwick, which advertises itself on its web page as "Building the Best Reputations in the World". [65] 

Uganda:

In an address to the World Bank conference "Global Knowledge" in 1997, Kofi Annan, the then Secretary General of the United Nations, observed that "the great democratizing power of information has given us all the chance to effect change and alleviate poverty in ways we cannot even imagine today." [66] 

In an interview carried out by Schwarte the interviewees from a number of NGO's and media houses came to an assessment that in Uganda people were not aware of their participatory rights, in fact some of the interviewees knew in general terms about the statutory right to access information but few had heard of the ATIA of 2005 itself. "Nearly all of them felt the ability to access useful information depended on personal relationships and trust. They had all encountered a significant lack of responsiveness and described the "culture of secrecy" amongst civil servants as the main barrier. Explanations for the reluct



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