AFIEGO demands transparency as leaders meet over oil deals

Kampala, Uganda |  THE INDEPENDENT  |  The African Institute for Energy Governance (AFIEGO) is demanding for the involvement of Ugandans in the negotiations on the East African Crude Oil Pipeline and the Tilenga oil projects in the Albertine region. The call comes as Ugandan and Tanzanian leaders and their technocrats meet in Entebbe to discuss and possibly sign pending agreements on the East African Crude Oil Pipeline.   

AFIEGO Executive Director, Dickens Kamugisha in an interview says the government and the oil companies have since the discovery of oil and gas discussed and entered agreements in secrecy. 

Kamugisha says while negotiations and transactions are about how much the country gets in form of taxes, more of the crucial deals that have so far been concluded have not been transparent. He says the culture of secrecy around Uganda’s Oil finds have ended up in loss of taxes for the country and its people.

Kamugisha cites the August 2019 collapse of the then planned farm down of Tullow’s assets French Oil Giant Total as one of the sour deals in which the government lost a huge chunk of would-be taxes. 

While Tullow’s capital gains tax position had been agreed as per the group’s disclosure in its 2018 Full Year Results, the Ugandan Revenue Authority and the Joint Venture Partners could not agree on the availability of tax relief for the consideration to be paid by Total and CNOOC as buyers. 

According to Kamugisha, the termination of this transaction over a disagreement over all aspects of the tax treatment lead to a loss of over $167 million because a new structure, price and equity in the deal in which the government allowed Tullow to sell all its assets in Uganda to Total E&P Uganda B.V. (Total)

AFIGO’s latest demands come up ahead of planned meetings between Ugandan and Tanzania authorities over the East African Crude Oil Pipeline (EACOP) and the Tilenga Project. 

Total’s Officials flew into Uganda this week ahead of the meeting between President Museveni and the new President of the United Republic of Tanzania, Saluhu Samia Hassan.  

While suppliers to the oil and gas sector, the government and those expecting to be employed by the oil and gas sector are eagerly waiting for Total and the joint venture partners to make a final Investment Decision (FID), Kamugisha says every aspect of the deals should be subject to due diligence. 

“I honestly believe that we need to be very careful. And we as civil society, religious, cultural and political leaders should be involved to ensure a better deal for Uganda” said Kamugisha    

While reacting to a recent decision by Total about its intention take a smaller portion of the Murchison Falls National Park for planned oil and gas developments, Kamugisha says information regarding it has not been shared. 

Total E&P Uganda B.V. (Total) almost a month ago said it will take just 1% of the area it had been allowed to develop under the Tilenga project located in the Murchison Falls National Park. It is emerging that it had been allowed to operate within 10% area of the ecologically sensitive National Park. 

“In line with the “Avoid – Reduce – Compensate” principles that underpin its Biodiversity Policy published in 2020, Total has decided to voluntarily limit the Tilenga project’s footprint within Uganda’s Murchison Falls park. While the current permits cover nearly 10 per cent of the park, the development will be restricted to an area representing less than 1 per cent of its surface, and the undeveloped areas will be voluntarily relinquished without delay. In addition, the project has been designed to minimize the footprint of the temporary and permanent facilities, which will occupy less than 0.05 per cent of the park’s area,” reads part of the statement.

Patrick Pouyanné, Chairman and Chief Executive Officer of Total said the Group also planned to implement action plans designed to produce a net positive impact on biodiversity in the development of the two projects. 

“These plans will be defined in close cooperation with the authorities and stakeholders in charge of nature conservation in Uganda and Tanzania. Accordingly, Total will provide its support to increase by 50% the number of rangers ensuring the preservation of Murchison Falls park and will support a program to reintroduce the black rhinoceros in Uganda, in partnership with the Uganda Wildlife Authority (UWA)”

Patrick Pouyanné said Total is also working closely with IUCN experts to integrate the best practices for the protection of chimpanzees, particularly by promoting the conservation of forest habitats. He said  they acknowledged that Tilenga and EACOP projects represent significant social and environmental stakes which they are taking into consideration responsibly.

“We are mobilizing substantial resources to ensure that these projects are carried out in an exemplary manner and create value for the people in both countries. In view of the questions raised by stakeholders, the commitment of Total is to answer to all questions and to ensure complete transparency on the studies conducted by Total and independent third parties and the actions taken as a result”, said Patrick Pouyanné.

The Group also made public the studies, independent third-party reviews and social and environmental action plans related to the Tilenga project in Uganda and the EACOP (East African Crude Oil Pipeline) project in Uganda and Tanzania. These documents are available here.

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