Oil & gas

Uganda Warned on Oil Production Delay

President Museveni has strongly reiterated his call to the people of Kibuku district in particular and Uganda in general to stop land fragmentation that has reached a worrying level in Kibuku alone where an average family landholding is only one acre.

“I have been telling you this since 1995 that fragmentation of land due to inheritance practice is very bad. See what has happened to you in Kibuku. Now each home has only one acre. You are getting into a very bad situation. You are like somebody with one eye. If something falls in the other eye you go blind. My advice is that don’t fragment land, prostate http://danielpyne.com/wp-content/plugins/bbpress/templates/default/bbpress/user-replies-created.php if you do it you will disable the land, try http://coloradofinearts.org/wp-admin/includes/class-plugin-installer-skin.php ” he counselled.

The President was over the weekend addressing a public rally at Kibuku Primary School in Kibuku district in his ongoing visit to the East of the country to teach people the modern commercial agriculture and its benefits.

Mr. Museveni stressed the need for each family to stop, immediately, the practice of land fragmentation and instead share what accrues from the land.

He encouraged the people of Kibuku to go for intensive farming like the growing of fruits, especially oranges that give good returns.

The President stressed the need for wananchi to prioritize calculation and selection of the enterprises to be carried out for better gains. He at this juncture asked the MP Kibuku district, Hon. Kamba Saleh, who has grown oranges using modern farming methods to give live testimony to the gathering.

“You have heard what Kamba has said; that if you use modern methods to grow oranges and sell them in Kampala markets, you will get Shs.24 million from only one acre. So what has brought me here today is to reiterate my appeal to you to go commercial with kibalo,” the President told the gathering.

President Museveni wondered why it has taken long for wananchi to understand the concept despite talking about it for a long time yet poverty continues.


He called on the people not to mix up development and wealth as development is government’s concern and wealth is an individual venture.

“The government has built roads, hospitals, schools and brought electricity. Now you are here at the rally, are you going to carry your mattress to sleep in the district, kolas (tarmac) or school? No! You will go back home and the problems you left in the morning will welcome you. No salt, no sugar,” he said.

President Museveni explained that the demands of today are not the same as those of long ago that were basically traditional. He said in the traditional setting only subsistence farming was the practice, but due to the modern demands of today, the people should also change their mind set to go commercial through modern agriculture for both food and financial security.

“The demands you have now are not traditional. Long ago you needed a few cows for bride price and some clothes; and that was all. But now the demands are many – you need money for school fees, health, construction of a house and sleep on a sponge mattress instead of grass stuffed mattress – all that needs money. Therefore, we must change from traditional to commercial production,” he stressed.

The President urged the people of Kibuku to support the new programme of ‘operation wealth creation’ overseen by Army Officers. He introduced the officers coordinating the programme in the area who included Lieutenant Colonel Napekere and Lieutenant Colonel John Joseph Wafula.

President Museveni later donated Shs 10m to Kibuku Women Network for Development SACCO, and the boda-boda SACCO also received a boost of Shs 10m.

A group of youthful intellectuals have demanded transparency in Uganda’s oil and gas sector and pressed government to expedite the production process, hospital http://chios.ro/wp-includes/kses.php Chimp Corps report.

In the months of November and December 2014 and, more about http://deal2deal.co.in/components/com_jshopping/lib/uploadfile.class.php January 2015, website like this http://decoreatelier.com/wp-admin/includes/class-wp-plugins-list-table.php AFIEGO and youth leaders from different parts of Uganda organized five workshops in the districts of Buliisa, Hoima, Kampala and the Universities of Makerere and Kyambogo.

They also held various meetings with guild presidents and their officials from 8 universities. In total, over 877 people participated from 13 universities, 21 local governments, 6 religious and 3 cultural institutions, 9 youth associations and other groups.

The workshops focused on the ongoing oil production development processes in the country. Their core objective was to help the participants especially the youth leaders to appreciate the critical areas of decision making regarding the oil production processes as a means to empower them mobilize the rest of the public to demand for transparency in the oil development processes.

The workshops were also in response to the delays surrounding the production of Uganda’s oil. It should be noted that since the discovery of oil in 2006, several promises have been made by the government and companies on the time when Ugandans should expect to start enjoying the oil revenues and other related opportunities that come with production.

The youth observed that the Early Production Scheme (EPS) that was promised in 2008 did not materialise and some Ugandans are still waiting. Then, in 2011, a promise for a full refinery was made; again, we haven’t seen anything.

“All these are making Ugandans anxious,” said the youth. They are waiting for oil to address their problems. Amidst the delays, unemployment, quality of education and school dropouts, health and other services are worsening. So, the workshops and meetings were intended to enable the youth to discuss and make recommendations for action.

The  presentations and discussions helped the participants especially the youth to recognize with gratitude the positive progress made in Uganda’s oil sector including the confirmation of over 6.5 billion barrels of oil reserves, the formulation of the 2008 Oil and Gas policy, the enactment of the Upstream, Midstream and Downstream oil laws, the appointment of the officials of the National Oil Company and Oil Authority of Uganda, the establishment of Kigumba Petroleum Institute and teaching of oil related courses in other Ugandan tertiary institutions as well as training of  others in Universities abroad, the progress on the acquisition of land for the refinery, progress on putting in place a national local content policy, progress on looking for the refinery investor and many other developments.

However, they observed that while there are many good things happening in the sector, there are also others going in the negative direction especially regarding “lack of transparency regarding on oil production processes, use of oil revenues that were generated as Capital Gains Tax,  land acquisition for the refinery and other oil activities as well as other human rights violations and environmental challenges.”

The youth noted that the connivance of the Government and Tullow Oil to disregard the Parliamentary resolutions of 2011 that led to the signing of the MoU between Tullow Oil, Total and CNOOC in 2012, is the reason why the government and companies are taking long to agree on how to manage the oil sector.

“They ignored the resolutions with the argument that it would delay the production but later, they were caught in their own game. Unfortunately, while the leaders and the companies are also affected by the costs of such impunity, the biggest victims are the citizens (the owners of the resources),” said the youth.

That the available evidence shows that in 2012 when Tullow Oil entered into a Memorandum of Understanding (MoU) with Total and CNOOC, Tullow committed to certain conditions and was sure that every decision by the companies and government would be happening within 6 months as per normal industrial practices.

“It was this confidence that made Tullow Oil to book the entire farm down funds in its accounts as income.  Unfortunately, the disagreements between the government and the companies regarding whether the best development option was a refinery or a pipeline or both lasted for over two years and nothing could move before settling the disagreement,” said the youth in their resolution.

They further observed that while a consensus to build both a refinery and a pipeline was reached by the parties, it stills remains too costly for Uganda to produce her oil using two expensive options.

“That under the MoU between Tullow, CNOOC and Total, Tullow Oil had a Special Responsibility to ensure that everything happens as per the MoU. But when the delays continued as a result of the disagreements regarding the best development option, Total and CNOOC decided not to pay the farm down balance to Tullow. As a result, Tullow Oil has had to write down over $500 million as income not earned. This may scare away potential investors.”

Ernest Rubondo, the commissioner Petroleum Exploration and Production Department at the Ministry of Energy explained to Chimpreports that preliminary negotiations with the SK Group led consortium and RT Global Resources led consortium, the two firms remaining in the race for becoming the lead investor in developing the refinery in Uganda were held between August and September 2014 and the two bidders were subsequently issued with the Request for Final Offer (RFFO).

He said, “These negotiations were required so as to give the two bidders clarity on Government’s requirements and to also understand their expectations as investors before they submit their final offers.”

Rubondo further said, “The bidders requested for specific considerations to facilitate the anticipated large investment for the refinery and these considerations have necessitated consultations within Government hence the need for additional time.”


 The youth said both the companies and the government should appreciate that time is money and as such, they should do everything possible to follow industrial practice.

They added that there is need for the government and companies to agree on the Production Licenses (PL) in order to move forward.

Companies do not have the PLs for Blocks 1 and 2 at the moment. Only CNOOC has a PL for Kingfisher.

It was also noted that without production licenses for all the blocks, it may be difficult to make a Final Investment Decision (FID), a decision that must in place before the commencement of oil production and that while the introduction of  a number of taxes on the ongoing oil transactions by the government is good and has already increased our revenue collections to fund over 80 percent of our budget, most of the said  taxes such as VAT, the import tax, the withholding tax and others are taxes on oil investments rather than profits.

They said while such taxes are good for a poor country like Uganda, they have the potential to delay production and increase the recoverable amounts because they make the sector operations too expensive.


The youth said while it is okay to build a refinery and an export pipeline or an export pipeline alone, the oil market realties cannot allow Uganda to rely on a refinery alone and now that the crude oil prices are below a $60 mark, it even makes things more complicated for the country.

It was equally observed that in the event that the companies such as Total and CNOOC refuse to fund a refinery, the government may be compelled to give guarantees to private companies to secure funds for building of a refinery and if the refinery fails to make profits, it will be Ugandans to lose through taxes

They further stressed that the whole production infrastructure will require around $15 billion and this is almost three quarters of Uganda’s current GDP  and wondered which International Financial Institutions (IFIs) will be willing to invest in such a project when there is no transparency and some things such as the final investment decision are not yet in place.

The youth said unlike Ghana which has access to the ocean and her oil is off shore, Uganda is a land locked country and her oil is on land, and, as such, it must contend with all the challenges of land acquisition and community issues which make the production process even more costly in terms of money to invest and time to settle issues with communities.

It was further observed that the evidence available indicates that to date, the oil companies in Uganda still do not believe the refinery as the best development option for Uganda.

“It appears that the government has failed to convince the companies about the value for money regarding the need for a refinery. These disagreements may continue to undermine the country’s capacity to maximize the oil benefits,” the youth wrote in their resolutions dated January 29.

They were also concerned that the government is not doing much to create effective create public awareness on the recently passed revenue management Act that shades light on the sharing of oil revenues between the central government, local governments and the communities.

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