Museveni’s twin-track approach to oil policy raises eyebrows

Saturday February 25 2012

Oil exploration works in Uganda. Picture: File

The fact that President Museveni chose to sign fresh contracts with the new array of oil companies in direct contravention of a recent parliamentary resolution, is significant. And the fact that he then saw it necessary to go to the House and offer an explanation for his decision is also significant.

Since then, some parliamentarians as well as industry watchers have expressed their concerns as to where this twin-track approach to oil policy may end up.

Alice Alaso, secretary general for the opposition FDC party, flatly accuses the president of being deceitful in his explanation that further delays would have placed the country at risk of losing the current investor offers as well as future investor confidence.

Beyond blaming earlier parliament for obstructionism, the president offered no actual reasons as to why the current laws were never updated, given that the country has been gearing up for the industry for over a decade. More so, the new contracts were merely verbally outlined to the House and not tabled on paper.

Since the arrival of the oil industry, the old tactic of choking the MPs’ throats with large wads of cash every time they open their mouths to say something seems not to be working that well anymore.

This should provide pause for thought for those charged with strategic thinking among the whole ensemble of regional corporate giants currently making plans around the business opportunities spinning off the Uganda president’s decision to unilaterally sign new concession contracts with Tullow, CNOCC and Total.


Uganda civil society is already planning litigation against the agreements. It could go further if the long-standing opposition belief that the NRM has rigged every election since 1995, and has therefore never been a legitimately elected government, were ever proven true.

Already, the Ugandan civil society is up in arms over reports that successful negotiations between the Parliamentary Commission and the Treasury will result in Ush36 billion ($15.4 million) being used to buy new cars for MPs. At roughly $44,000 per legislator, this spending must be understood in its size, manner and timing.

Unkind observers could easily read this as the executive trying to hang on to its previous near-monopoly on oil policy in the face of an increasingly assertive and inquisitive parliament, with such generosity being used to soften up the House prior to having to discuss the details of proposed new oil laws whose drafting was demanded by the legislators late last year.

The law-makers’ first business should be to identify and define the native Ugandan material interest in all of this, and then build law and policy to protect that. All else: The interests of the state, oil companies, capital markets and foreign workers would then come second. If this does not happen, it will not be for the first time.

The week before, the High Court sitting in northern Uganda ruled that the Amuru district land board was well within its rights to grant a government-partnered sugar corporation 40,000 hectares of land that Acholi people always believed to be communally theirs. After their two-decade sojourn in war displacement camps, land matters in Amuru continue to evolve against the Acholi people of Amuru and elsewhere, despite their making it clear that they do not want investors imposed upon them.

In the same time-frame, Uganda’s Wildlife Authority has resumed its muscular eviction campaign against hundreds of Amuru families that it says have been squatting on gazetted land. The evictions were only halted last year after local authority intervention, and have been halted again by the Parliamentary Speaker.

One of the causes of suspicion is the fact that this project was being proposed in perhaps the one (recently-created) Acholi region district where oil deposits exist in significant quantities.

In fairness, all these developments may be purely coincidental, and have absolutely nothing to do with oil. However, the presidential determination to keep the industry’s workings opaque, while dominating all proceedings inside it, do nothing to alleviate such suspicions especially when considering other recent Cabinet actions.

Uganda’s public education sector witnessed the face-off between teachers late last year, which was only ended through the cold-blooded government warning that any teacher not found in class would be summarily dismissed.

The teachers, whose work rate is more clearly quantifiable than an MP’s, were assured that there was “no money” to meet their demand for the doubling of their current roughly $100 monthly, whereas the cash available now for each new MP vehicle could support a possible annual increment for 35 teachers.

This will be the third instance of such largesse made to MPs in the middle of making laws. The first was the Ush5 million ($0.002 million) “constituency consultations facilitation” on the eve of the parliamentary debate to lift terms limits nearly a decade ago.

Unlike the furtive queuing up for that payment, parliamentarians may now have money wired to their accounts. This explains why, more recently, some opposition members were seen entering parliament weighed down with shrink-wrapped bundles of local currency amounting to $10,000 per bearer, that they said had been deposited into their accounts and wished to hand back. The nature of the temptation has changed, and members must now proactively reject it.

The country should now be on notice that President Museveni will not surrender executive monopoly of the oil policy easily. However, the resultant uncertainty regarding the legitimacy of the agreements upon which the sector is being built, may yet return to haunt all interested parties in the long run.