On May 5, Energy and Mineral Development minister, Dr Mary Gorreti Kitutu, presented to Parliament the oil pipeline agreements the Ugandan government signed with their Tanzania counterparts and various companies involved in the implementation of the East African Crude Oil Pipeline (EACOP) project.
These agreements included the host government agreement, the tariffs and transportation agreement and shareholders agreement. However, she stated that the agreements are commercial agreements with confidentiality clauses and called upon the Members of Parliament to handle the agreements in a manner that preserves the confidentiality so that the government does not breach the obligation in the agreement
Agreements signed between Uganda and Tanzania are very important as they spell out obligations, rewards, rights and protections between the two governments and oil companies. .
Transparency while signing these agreements means that all parties are open to share the information with stakeholders.
It should be noted that Uganda has signed bad agreements under the cover of confidentiality clauses which cost tax payer’s money. Article 41(1) of the Constitution states that every citizen has a right to access information in the possession of the State or any other organ or agency of the State except where the release of the information is likely to prejudice the security or sovereignty of the State or interfere with the right to privacy of any other person.
The Access to Information Act, 2005 provides for access to public information by any citizen with some limitation and this violates the 1995 Constitution which is the supreme law. It should be noted that keeping oil contracts secret enables increased environmental degradation, human rights abuses, conflict, and displacement of communities, corruption and mismanagement of public funds.
Secrecy also prevents positive development outcomes while enabling corruption and environmental degradation on the part of the oil companies
It should be remembered that last year Uganda had a dispute with Tullow Oil (U) PTY Ltd, Total E&P (U) B.V over a tax disagreement because of secrecy while signing the agreement.
This tax disagreement between the government of Uganda and Tullow Oil (U) PTY Ltd, Total E&P (U) B.V led to suspension of all operations on the EACOP project.
Such disputes in the oil sector are caused by secrecy while signing agreements because the government officials who sign these agreements lack capacity to negotiate and sign good PSG that favour the citizens.
Such tax disputes in the oil sector, which is a young developing sector in the country, cause immense implications to our revenue and the investment climate:
Such disputes scare away other investors that would be willing to invest in Uganda even though Uganda is endowed with different resources.
Wastage of tax payers’ money, we remember after the tax dispute between the government of Uganda and Heritage Oil emerged in May 2011, arbitration commenced in London to resolve the dispute which way very costly in terms of legal fees and other expenses.
Abuse of public funds, such disputes have accelerated the misuse of the public fund, on November 23, 2011 when the court in London ruled against Heritage Oil and in favour of the Ugandan Revenue Authority, President Museveni awarded Shs6 billion to 42 government officials who handled the Heritage Oil case. That being said we call upon the government of Uganda to ensure in line with Article 41 of the 1995 Constitution, the government should be transparent and share the agreements it signed with oil companies rather than to wait when its goes bad.
Ms Doreen Namara is a legal officer at AFIEGO.