Page 7 - DMEA Week 45 2021

DMEA COMMENTARY DMEA

NGO concerns provisions of Uganda’s Upstream Act, which
But there is at least one more new development gives the government certain prerogatives with
that may affect the economics of the Kingfisher, respect to the acquisition of oil and petroleum
Tilenga and EACOP projects – namely NGO products “for other strategic reasons, such as
criticism of draft legislation that the Ugan- war,” he explained, according to a report from
dan government drew up for the purpose of The Independent.
safeguarding its agreements with the pipeline
consortium. Kampala’s response
Civil society groups’ reservations about the Otaala responded to these critiques by saying
deal came to light on November 3. On that date, that Parliament should review certain sections
the Ugandan Parliament’s Committee on Envi- of the pipeline agreements in order to determine
ronment and Natural Resources invited repre- whether any of the controversial points could be
sentatives of multiple NGOs to comment on this renegotiated. It’s not clear, though, whether any
year’s East African Crude Oil Pipeline (Special of the revisions that the NGO representatives
Provisions) Bill. have suggested will actually be made.
One of the critics was Julius Mukunda, the On some points, Kampala may be able to
executive director of the Civil Society Budget argue that the proposed changes are not needed.
Advocacy Group (CSBAG). Government officials may argue, for instance,
He told chairman Emmanuel Otaala and the that they have already anticipated Mukunda’s
other members of the committee that he saw concern about the location of EACOP’s head-
several problems with the draft legislation – for quarters by pointing to the section of the bill
example, that the EACOP consortium’s 10-year that provides for the consortium to establish a
exemption from corporate/income tax was too holding company to build and operate the pipe-
long and that the bill could not prevent the pipe- line in the UK. According to previous reports,
line group from abusing its option to extend the this entity will be treated as if it were based in
term of its exemption. He also complained that Uganda for tax purposes, thereby ensuring that
the draft legislation could damage national inter- most of its payments are made to the Ugandan
ests, as it did not ensure that EACOP’s headquar- government.
ters were in Uganda. It remains to be seen, though, whether the
Meanwhile, James Muhindo, the co-ordi- questions raised about tax breaks and conflict
nator of the Civil Society Coalition on Oil and with the existing legal regime will gain any trac-
Gas (CSCOG), complained about the bill’s use of tion. If they do, debate on the East African Crude
“non-interruption” clauses. Under these provi- Oil Pipeline (Special Provisions) Bill may slow
sions, he pointed out, Ugandan authorities may the pace of work on EACOP – and, by extension,
not order oil production to be diverted from on the Lake Albert oilfields, which need the pipe
EACOP to the refinery that is slated for con- in order to gain access to world markets.
struction near Lake Albert, even in the event of a Even so, CNOOC’s decision to move forward
national emergency. with development is a positive sign for the Ugan-
These arrangements have the potential to dan oil sector – and perhaps positive enough to
compromise the country’s security, he said, since outweigh any concerns arising from NGO com-
the refinery will be turning out fuels for domes- plaints about the draft legislation now being
tic consumption only. They contradict several debated in Uganda’s Parliament.™

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