Ugandans are excitedly awaiting the start of drilling by Tullow Oil of the UK and other multi-nationals. But analysts are concerned about the environmental impact of the move and its effect on local communities. Tullow Oil has said the deal was “standard” and that company practices would ensure environmental protection. But the pressure group Platform last year said Tullow had framed a deal with no provisions for the potential environmental or social fallout from oil extraction.
Environmentalists are worried that oil fever and inadequate legal protections could jeopardize the area’s rich biodiversity.
”Whatever investment [in the oil industry] is going to be done must be in line with, conform to, and mindful of the sensitivity of the rich ecological diversity of the area,” said Stephen Biraahwa Mukitale, the member of Parliament for Buliisa County, in Buliisa– a district that has the majority of oil wells now under exploration.
He said although there is no substantive law yet on environmental protection, there are relevant provisions in the two oil bills now before parliament. “But we are pushing for proactive way to deal with this issue [environment].
Mukitale said a legal framework should be created that provides the institutions and regulations to deal with oil-related environmental issues. “We cannot depend on the good name of the oil companies. We want an institutional framework, legal framework, and a government regulatory framework that compels them [oil companies] to perform according to some [internationally accepted] standards.”
Mukitale also lamented rampant land grabbing in his area. “This is a remote, rich, rift valley area occupied by peasants, and since oil was discovered land speculation has become a problem. We have been battling individuals who have primitive accumulation tendencies.”
Oil drilling in his area, he said, was initially an apprehensive venture. But the last seven or eight years has led to an improved understanding of oil excavation issues– and to increased interaction between investors, the government and civil society.
Mukitale said he doesn’t believe everybody in his area will be involved in the oil sector. “I believe in co-existence. We are promoting comprehensive land use planning where fishing and farming can continue alongside the new industry.”
He called for the gradual integration of some young peasants with minimum skills and some level of education graduate into oil-related jobs.
In March, Tullow Oil signed production-sharing agreements with Uganda's government before finalizing its new partnership with France's Total and China's CNOOC.
Collaborative agreements with the foreign companies supports the construction of a refinery and an export pipeline from the Lake Albert oil fields.
They’re estimated to contain 2.5 billion barrels of oil, enough crude to supply all of Uganda's domestic needs and for export to neighboring countries.
In Uganda, critics argue for public access to details of contracts between government and oil companies.
When billions of barrels of oil reserves were found in Uganda five years ago, the discovery seemed like a gift from heaven to many in this East African, poor, landlocked country.
But as Douglas Mpuga reports in this first of a five- part series, Uganda’s oil sector has so far been characterized by high level secrecy that critics say is unlawful.
Oil wells are expected to start pumping within five years, and bring along with it about two billion dollars per year, according to government officials.
Many analysts are hopeful that could propel Uganda into the strata of middle-income countries, where few sub-Saharan African countries rank. A refinery will be built – providing revenues for improved roads, bridges and other infrastructure.
Three foreign companies are involved in oil exploration in the country: UK-based Tullow Oil, which has been operating in Uganda since 2006, and two other companies to which it has sold part of its investments -- France's Total SA (TOT) and China's CNOOC Ltd.
The government has signed deals with the companies. But few Ugandans know what is in the agreements. The government insists that it will not release details of the agreements citing confidentiality clauses that bind it and Parliament from disclosing their contents to third parties.
Two senior Ugandan journalists took government to court seeking this information after the failure of repeated calls for the release of the details.
“We are suspicious why the government wants to handle this oil exploration program with a lot of secrecy,” said one of the journalists, Charles Mwanguhya Mpagi, the political editor of The Daily Monitor newspaper. “We are looking at examples such as Ghana where they have their agreements on the internet. We are looking at Norway which has this information available.”
According to Mwanguhya Mpagi: “We suspect government has always been reluctant to share information with the Ugandan public. The other thing we have been told, from what has leaked out, is that the agreements are not entirely bad. So we are puzzled why the government is reluctant.”
But the legal process has not been smooth: a lower court dismissed the journalist’s initial request but now the High Court may consider the appeal.
“Our initial petition to the court was not limited,” said Mpagi, adding “What we asked government to do was to rely on the constitution to be more transparent in its dealings with the oil industry, what agreements it is entering into with the prospectors.”
“We lost in the lower court, “ he continued, “because the magistrate wasn’t convinced that accessing this information would benefit the Ugandan public. But he forgot that we are journalists who would share this information with the public. This is what we intend to push for in our appeal.”
The journalists’ campaign has been boosted by four organizations seeking to become party to the case. Describing themselves as friends of the court, they say they are advocating for the right of the public to know about national and regional energy policies that aim in part to help eradicate poverty.
Meanwhile, Ugandans wait for the day when the first barrel will be exported.
Ugandans will have to wait 3-5 years for commercial oil production to begin, according to senior government official. The delay, said Bukenya Matovu, the spokesperson for Uganda’s ministry of Energy, is due to “some other things that have to be done in terms of [putting in place] infrastructure before production can start.”
Output from the Ugandan fields, which hold an estimated 2.5 billion barrels of oil, is expected to reach more than 200,000 barrels of oil a day, according to Tallow Oil, the London-based company that signed oil production agreements (PSAs) with the government.
The oil production agreements signed in February, despite a resolution of Parliament halting such agreements until an enabling law was in place, fueled calls for public disclosure of oil production contracts and their revenue streams.
Matovu, however, dismissed accusations of lack of transparency in the oil deals and instead accused some parliamentarians of failure to read these agreements and explain their contents to their constituents.
“Once we have spoken to parliament we have spoken to the country, said Matovu, “these PSAs are in parliament. Parliamentarians have had them for almost two years; therefore they cannot claim ignorance of their existence.”
He said government doesn’t have a policy of secrecy [in regard to oil transactions] but added that these are business agreements that have areas that cannot be disclosed to the public. What is important, he added, is people to have trust in government to act on their behalf.
Matovu said even a court case filed against the government compelling it to release the details of the PSAs had been dismissed by court.
He said there are two oil bills currently before parliament giving the legislature a chance to add their input.
“Uganda has an environment management law,” he said, in reference to concerns that oil waste disposal and environmental issues were not adequately addressed in the oil contracts.
The law, he explained, states that no activity shall go on unless that activity is subjected to an environment impact assessment.
He advised those who think the current [environmental] law isn’t adequate to call for its revision to bring it in tandem with what is happening [in the oil sector].
In February, Tullow Oil, France's Total and China's CNOOC completed their long delayed $2.9 billion partnership venture that gave each of them a one third stake in Tullow's five Uganda exploration blocks.