How Uganda can get the best oil deals

By Independent Team

On October 16, 2009, University of Oxford’s Prof. Paul Collier in a public address at Serena Conference Centre in Kampala on the prospects of an oil windfall for Uganda criticized the decision making.

‘Avoid awarding oil contracts through secret negotiations because this increases the wall of suspicion. Uganda must award future contracts through transparent processes like public auctioning,’ he said.

He said auctions reveal true prices.

‘Most of the decisions in this government about oil are taken by mining engineers. They don’t have the training about harnessing oil for development,’ he said, ‘They are the wrong people to have the power of decision about oil.’

He recommended that the decision making be moved from the mining engineers to economic teams.

‘This is the biggest opportunity this economy has ever had and will ever have and it is letting a handful of mining engineers take the decisions! Uganda needs a top level task force to make these decisions; ministry of finance, central bank, Uganda Investment Authority,’ he said.

He recommended five steps to success: Discover the natural assets, build a good tax system that brings the revenues in, avoid armed conflict over oil, don’t ruin the environment, and spend money wisely.

So far, Uganda’s contracts with foreign oil companies at the exploration stage, or the little that is known about the highly secretive dealings, have drawn mixed reviews.

An International Monetary Fund (IMF) report recommended full disclosure of the contracts and any payments that the government receives from oil. The report claimed Uganda’s Production Sharing Agreements (PSAs)were the best compared to those of other African countries as a result of what it considers relatively high royalty interest rates- fees that the oil exploration companies pay to the government for their percentage of future gains- and government shares of oil profits.

The IMF report points out that the government of Uganda has made a commitment to the Extractive Industries Transparency Initiative in its National Oil and Gas Policy and should, therefore be open and publish all mining and petroleum agreements to improve transparency and accountability.

So far, however, the government is negotiating secretly with individuals like Heritage boss Anthony Leslie Rowland ‘Tony’ Buckingham who has a colourful past. His company’s 2008 prospectus has a section on him in its ‘risk’ section.

In 1989, he founded the paramilitary organisation, Executive Outcomes, which is considered one of the forerunners of the private military companies that proliferated in Iraq following the US invasion.

Buckingham has been mentioned as a former business partner of Simon Mann, the Briton convicted in 2008 of plotting to overthrow the government of Equatorial Guinea. The plot involved Mark Thatcher ‘ the son of former British Prime Minister Margaret Thatcher.