Sunday June 16 2013

Harmonise royalties from natural resources

By Editorial

The clamour for royalties from areas where oil deposits have recently been found, and government’s mixed
signals – extending favours to some areas on one hand to buy political support, while at same time
posturing to a national audience – is bound to cause trouble for the country in the long-run.

Bunyoro has been at the forefront of this, demanding between 10 and 12.5 per cent of revenue from oil to
be sourced from its area. The government has on its part offered seven per cent royalty to the 25
districts in addition to locating key infrastructure in some of the areas like the Petroleum Training
Institute in Kigumba and the proposed oil refinery in Kabaale – both in Bunyoro.

Unfortunately, these demands and counter offers are not in conformity with existing royalty arrangements
thus only add to the confusion. For instance, the Mining Act of 2003, the Electricity Act of 1999, and the
Uganda Wildlife Act of 2000 all specify different sharing arrangements.

The Mining Act allocates 17 and three per cent of royalties to local governments and owners or lawful
occupiers of land respectively where the minerals are (oil is regarded as a mineral), the Wildlife Act
allocates 20 per cent of the park entry fees to the local government where the park is located, with the
money channelled directly to communities living around the park, while the Electricity Act subjects the
sharing to agreement between the electricity generator and the local government. Jinja and Buikwe
districts currently receive Shs150 million each annually as royalty for the Kiira and Nalubaale dams along
the River Nile.

There is no doubt that areas where these natural resources are located, deserve some special consideration
given that they bear the brunt of any environmental and social disruptions arising from these projects. It
is, however, important that we have standard royalties that will not cause disharmony in the country and
in addition ,properly define what resources are eligible for consideration.

Short of this, it will not be surprising for areas that neighbour Lake Victoria, for example, to demand a
share of revenues accruing from fish exports or border areas demanding a share of revenue from customs