Transparency will end all disputes over oil

Government must conclusively end it’s dispute with Heritage Oil over $405 million or Shs900 billion in unpaid in capital gains taxes.
Energy Minister Hilary Onek has declined to renew Tullow’s exploration licence in the contentious Block B until Heritage pays the taxes, but the company says it owes nothing. Tullow have also urged their counterparts to pay. This dispute points to the explosive nature of oil money, sometimes referred to as the ‘oil curse’.

All of a sudden, the camaraderie that coincided with the discovery of two billion barrels of oil in the Albertine Graben is history. The three protagonists are literally at each other’s throats, and while we are at it Tullow has seen it’s company value plummet $500 million. Not surprisingly, ordinary Ugandan citizens are perturbed by the turn of events. If properly utilised, oil revenues have the capacity to transform the lives of all Ugandans, end the government’s dependency on foreign aid, and lift the nation into a middle income country.

The $5 billion or Shs10 trillion boost to the national economy that will follow the commencement of commercial production, is to double Uganda’s GDP overnight. This should free resources for infrastructure development, healthcare and education. In addition, thermal energy harvested from heavy diesel can end the country’s endemic energy shortages. Indeed, nine out of Africa’s 10 largest economies are driven by mineral wealth. Problem is, we have not got the basics right. Government’s steadfast refusal to reveal details of the Production Sharing Agreements, suggests Ugandans might have been shortchanged.

For starters, the disdain with which Heritage has steadfastly refused to pay taxes points to their knowledge that there aren’t enough petroleum industry experts to prevent this nation from being shortchanged. But the PSAs are already a bad deal, with government basically taking all the risks by undertaking to ensure the oil companies’ revenue.

In fact, Heritage Oil made over 100 per cent in profits, but is still determined not to pay taxes. This is disrespect to the Ugandan people. Africa already loses $150b each year in tax concessions and hidden revenue to mining companies.
We need not fall prey to such exploitation. Government must reveal details of the PSAs now, while Heritage should pay taxes.