March 9, 2010 / 11:24 AM / 10 years ago

Uganda opposition seeks to revoke oil deals

KAMPALA (Reuters) - Uganda’s opposition will revoke existing production sharing agreements and force oil companies in the country to renegotiate their deals, a senior official said on Tuesday.

An oil rig prepares to drill in western Uganda, near the shores of Lake Albert, June 15, 2007. REUTERS/Tim Cocks

The east African country struck vast oil deposits around the Lake Albert region along the border with Democratic Republic of Congo in 2006, prompting a giddy scramble by foreign oil firms for stakes in the nascent sector.

Civil society organisations have attacked the deals, saying they favour the companies and have asked for more transparent and equitable revenue sharing with the Ugandan government.

“These agreements have a lot of loopholes and that’s why the government has obstinately defied the wishes of its citizens and refused to disclose them,” Beatrice Atim Anywar, shadow minister for natural resources and environment, told Reuters.

“Our objective is to immediately revoke these agreements and renegotiate with the companies afresh once we come into power.”

Uganda is due to hold elections in February 2011 and the main opposition party, the Forum for Democratic Change (FDC), is seen posing a formidable challenge to incumbent President Yoweri Museveni, whose support has shrunk during his 24-year rule.

Uganda has five production sharing agreements (PSA). Among them, Tullow Oil has made the biggest advance in exploration and development and says it will begin commercial production later this year.

Anywar said her party opposed a clause in the agreements that says arbitration cases in any disputes with the exploration firms must be taken to London.

She said that if a dispute involved injustice suffered by local communities their members should be able to give testimony in person.

“How many people will our government be able to fly to London to bear witness to such a process?” Anywar said.

The opposition also objects to provisions compelling the government to compensate the companies in case of revenue losses resulting from amendments to PSA terms.

Anywar said that would curtail the government’s prerogative to regulate activities that imperil environmental safety.

The government dismissed the FDC’s threats.

“They are talking out of ignorance and populist propaganda. Let them come to government and may be they will appreciate how this industry works,” said Energy Minister Hilary Onek.

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