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Oil deals: MPs boycott Museveni meeting

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By YASIIN MUGERWA & SHEILA NATURINDA

A group of NRM MPs yesterday boycotted a meeting called by President Museveni at State House, Entebbe to try and convince members to back him on a $2.9 billion (Shs7.3 trillion) oil deal to bring Total-CNOOC into Uganda’s oil industry through a farm-out by Tullow Oil.

Addressing a news conference at parliament independent-minded MPs described their colleagues who went for President Museveni’s meeting as “hypocrites”. Lwemiyaga MP Theodore Ssekikubo, Kampala Central MP Muhammad Nsereko, Vincent Kyamadidi (Rwampara) and Wilfred Niwagaba (Ndorwa East) said they couldn’t be party to a State House meeting that seeks to help the President overthrow Parliament.

“We passed a resolution in Parliament stopping the signing of oil contracts without relevant laws in place,” Mr Niwagaba said. “We were not drunk when we passed this resolution. We had given the government 30 days to table these laws but it’s now two months and they have not acted yet the President wants to sign new contracts.” He added: “We want to warn Oil companies that if they dare sign, Ugandans will not be party to illegal contracts signed with the President because as far as we are concerned Tullow doesn’t have any license.”

In an unprecedented response to what they called “a sinister plot to hijack the independence of Parliament and entrench corruption in the oil sector”, a group of the same legislators in October this year walked out on President Museveni at the party’s stormy Kyankwanzi retreat.

Those who witnessed this drama, this newspaper that the trouble began after the President proposed that the NRM Caucus resolve to overturn the Parliament resolutions on oil that placed a moratorium on executing oil contracts and oil transactions on the Executive until the necessary laws have been passed by Parliament.

The President reportedly argued that the resolutions of Parliament on the matter would affect the $2.9 billion deal to bring Total and CNOOC into Uganda’s oil industry. But sources who attended the Friday NRM Caucus Meeting at State House told Daily Monitor that President told members that Speaker Rebecca Kadaga assured him that the resolution didn’t affect on-going contracts.

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But the lawmakers led by Mr Ssekikubo and Abdul Katuntu who was part of the press conference, the chief petitioners in an on-going House inquiry in to the allegations of corruption said the $2.9 billion deal with Total-CNOOC in a farm-out deal will be challenged in courts of law. Kyamadidi and Nsereko accused Tullow of peddling air. The MPs want government to withhold its consent to signing of a deal expected to be concluded as soon as the two parties agree on the tax component.

“Self-indulgence is what is taking place at State House,” Mr Ssekikubo said. “I don’t know what my colleagues have gone to do at State House. If it’s to help the President sign Total-CNOOC deal with Tullow, then they are making a very big mistake. Our position is that Parliament must be respected and the President should wait for the oil laws to be put in place before entering into any contract.”

But Mr Katuntu, an established lawyer said: “Tullow doesn’t not have any legal contract. The Memorandum of Understanding they signed with the government is illegal and should not be a basis for entering into new contracts. It’s up to those companies which want to be hoodwinked to proceed and sign otherwise what the president is trying to do is illegal and unacceptable.”

While the independent-minded NRM MPs boycotted the meeting, majority of the friendly NRM MPs attended the meeting with the President which started at 4pm. Details of the meeting were not readily available by press time. But sources said the President wanted MPs support him on the deal. This was a follow-up meeting to the one at Kyankwanzi meeting which allowed the president to proceed with the deal.

At Kyankawanzi meet, after some MPs walked out on the President, Soroti Municipality MP Mike Mukula moved a motion which was seconded by Mr Alex Ruhunda (Fort Portal Municipality) binding the NRM Caucus to allow the President to proceed with the signing of the $2.9 billion Total-CNOOC farm-out deal with Tullow.

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Uganda: Minister aims to present oil bills this year

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By Elias Biryabarema

KAMPALA (Reuters) – Uganda‘s energy minister said she expects to send three petroleum bills to parliament by the end of the year as the government moves quickly to put laws in place to regulate the country’s nascent oil sector before the start of production.

Earlier in the week, President Yoweri Museveni said he would discuss a parliamentary vote to delay UK exploration company Tullow Oil‘s planned sale of stakes in local oil fields, pledging to defend the country’s interests in the case.

Earlier this week, Uganda’s parliament passed a resolution urging the government to withhold consent for Tullow‘s proposed deal with France’s Total and China’s CNOOC until laws were in place to regulate the industry.

“We’re working very hard, and we expect that by the end of this year we’ll have brought the three bills — Resource Management Bill, Revenue Management Bill and Value Addition Management Bill — to parliament,” Energy Minister Irene Muloni told a news conference on Saturday.

“The problem is that I can’t control the process thereafter. So how fast the bills will be debated and passed into law will depend on parliament, but at least on my side we’re moving very quickly.”

Last year, Tullow agreed to sell stakes in its Ugandan assets to Chinese group CNOOC and French oil company Total for $2.9 billion.

In March, Tullow said Uganda had assessed taxes of $472 million on its earnings from the sale, and it was disputing that figure. It has since begun an arbitration process before a tax appeals tribunal in Kampala.

The company, meanwhile, has been awaiting final government approval for the partnership, which would allow it to move ahead with a project to develop oil reserves.

Endorsement of the deal is expected to kick start a $10 billion investment to develop the country’s oil fields and start production.

Muloni said government officials expected to extract more favourable terms from companies in future oil deals because the discovery of oil has diminished the exploration risk for oil firms.

“Before the discovery we didn’t know what we had. We didn’t know whether we had oil or not, and for an oil company to bring in a big investment they needed stabilisation clause,” she said.

“Now we’re operating with certainty, we have the oil. So when we’re negotiating new deals, we’ll put up tough positions on the table.”

Hydrocarbon deposits were discovered along Uganda’s border with the Democratic Republic of Congo in 2006.

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