Petroleum authority sued over failure to prioritise local firms

Wednesday July 28 2021

Government officials inspect a Cnooc oil well site in Buliisa District in 2015. PHOTO/FILE

By Betty Ndagire

The Petroleum Authority of Uganda, together with Total E&P and CNOOC have been sued for allegedly violating laws on provision of national content in regard to ongoing procurements for the East African Crude Oil Pipeline (EACOP) project.
The EACOP is a 1,443 kilometre crude oil export pipeline that will transport Uganda’s crude oil from Kabale - Hoima to a maritime port on the Chongoleani Peninsula near Tanga in Tanzania.
Acting through Muwema and Co. Advocates, Mr Andrew Oluka, a Kampala-based lawyer specialising in oil and gas, wants court to direct Petroleum Authority of Uganda to conduct a legal audit of all petroleum procurement activities to ensure compliance with the national content provisions.
In a case filed against the Petroleum Authority of Uganda, Mr Oluka also accuses Total and CNOOC of connivance to contravene laws provide for national content in the petroleum sector.
In documents before the Commercial Division of the High Court, Mr Oluka also wants court to examine and halt ongoing procurements undertaken in respect to EACOP, Tilenga Upstream project and Kingfisher Development Area.  
He also wants court to declare that all business income derived from procurement under the said projects is taxable in Uganda.
Mr Oluka, whose case is filed in public interest, also wants court to stop infringement on the Constitutional and economic rights of Ugandans, who must be given priority in the provision of goods and services in the petroleum sector.
He contends that he is aggrieved by procurements worth $5b under EACOP, Tilenga ($5b) and Kingfisher Development Area ($2.5b) for giving priority to foreign companies in contravention of the laws.
“The applicant [Oluka] is interested in ensuring that … procurements is done in accordance with the Constitution and national content provisions …” documents filed before court read in part, noting that if allowed to continue, the EACOP shall occasion loss of public revenue and property.
Total and CNOOC are international oil companies, who, between 2016 and 2020 signed agreements with government to undertake exploration, development and production of petroleum products in Uganda.
Court document indicate that in the agreement for EACOP, Total has an interest of 62 per cent, while CNOOC has 8 per cent. Government of Uganda and Tanzania have 15 per cent each.
Mr Oluka alleges that Tilenga and Kingfisher are operated exclusively by Total and CNOOC.
In carrying out its functions, the Petroleum Authority of Uganda, he says, is required to ensure that all licenses uphold laws, regulations, rules, contract terms and fair practice.
However, according to documents before court, none of the expression of interest notices have included a qualification requirement necessitating a bidder to be a Ugandan company for purposes of participating in the procurement process.