Battle for national oil company shows strains in the sector

The National Oil Company (NOC) is the entity that will receive Uganda’s share of oil from the oil companies and trade in it. As the company, which carries Uganda’s participating interest in the oil sector it will be a highly profitable company, holding acreage and eventually being groomed to compete with international oil firms.

Recent controversies in government processes have not helped the mood around how Uganda’s NOC will be birthed. Last week another scandal, this time involving the privatisation of Uganda’s best-known copper mine, Kilembe Mines, was also emerging. Sources said tension had gripped the process as top decision makers wanted to abandon competitive bidding in favour of a direct award to yet another Chinese firm.

Thus, with political interference and a checkered record of “ broad daylight thieving”, the issue of what sort NOC carries the hopes of Ugandans will likely dominate debate in the House.

Some MPs have said even the current language of compromise in which a private company is held 100 per cent by the government and prevented from selling its shares for a period is too risky. It has not helped that since Uganda discovered oil in 2007 (3.5 billion barrels so far) the relationship between Ugandan companies and the oil companies has remained opaque. Mr James Karama, who coordinates strategy for oil and gas at Stanbic Bank, says the lack of demand forecasting in which the requirements of the sector are made readily available has limited access to the sector. It has also allowed an attitude of familiarity to creep in the culture of the companies.

It’s against this background that this week’s debate on regulation will take shape especially on how a Ugandan NOC will eventually emerge.

Izama is a writer, journalist currently Open Society Fellow studying the political economy of oil and gas in East Africa