Thursday, April 29, 2010

Ugandans should buy shares in the Oil undertakings

The World Bank Vice President for Africa, Ms. Obiageli Ezekwesili

There is good evidence that if oil mining if not well handled, many Ugandans will remain impoverished. I am of the opinion that there should be sell of shares to Ugandans not only as a means to raise capital for the works, but also to ensure that Ugandans keep interested in what is going on as oil under normal circumstances should pay off if the public invest their money in it.
For instance, if a core investor is given 30% shares, Ugandans also 30%, Government 20% and interested foreign interests 20%, chances that the oil deal would be managed well may be possible.
William Kituuka
World Bank Vice President for Africa to Visit Uganda, Tanzania
KAMPALA, April 30, 2010— The World Bank Vice President for Africa, Ms. Obiageli Ezekwesili, will visit Uganda and Tanzania (May 2 – 7) to re-focus attention on how best the governments of the two countries can seize the opportunity offered by the discovery of vast natural resources (oil in Uganda and significant reserves of gems in Tanzania) and a rebound in growth to strengthen the momentum for poverty reduction.
While in Uganda, May 2-4, Ms. Ezekwesili will meet with President Yoweri Museveni, and will, during her stay in Tanzania, attend the 20th World Economic Forum on Africa which will be hosted by President Jakaya Kikwete in Dar es Salaam.
The forum, convened under the theme, “Rethinking Africa’s Growth Strategy” is expected to attract over 1,000 participants from 85 countries, including eleven African heads of state/government.
Ms. Ezekwesili will discuss the Ugandan government’s preparedness for the management of oil and the growth prospects that would transform Uganda into a middle-income country. She will also meet with civil society organizations, private sector, and the key accountability institutions to consult them on the Bank’s Africa Regional Strategy, and how to strengthen the governance and anticorruption agenda.
Ms. Ezekwesili’s participation at the 20th World Economic Forum on Africa will involve attending sessions covering the Global Education initiative; Opportunities for Trade and Development in Africa; and the opportunities and challenges brought about by Africa’s fast-growing population. She will also participate in discussions on energy, agricultural development and new models of collaboration for economic development in Africa.
Ms. Ezekwesili’s visit to Uganda and Tanzania comes just a week after the World Bank member countries voted in favor of a capital increase for the institution; boosted the share of emerging countries on the Bank’s Board of Executive Directors from 44 percent to 47 percent; granted Africa an additional (third) chair on its Board of Executive Directors which will later this month discuss a new Country Assistance Strategy (CAS) for Uganda. The new CAS is aligned with the recently launched National Development Plan.
Ms. Ezekwesili was appointed Vice President of the Bank in May 2007. Prior to joining the Bank, she held various senior positions within the Government of Nigeria, including Minister of Education and Minister of Solid Minerals Development.

Need for Transparency in Uganda Oil Deals
Oil contracts in Uganda do not provide enforceable protection standards regarding the environment or the human rights of Ugandan citizens, relying on the oil companies to operate reasonably and altruistically. In this context, it is clear that extracting the oil discovered in the Albertine Graben is highly unlikely to bring overall benefits in terms of economic development, let alone environmental protection or human rights to the region. The Ugandan government and companies have repeatedly criticised comparisons with Nigeria, Angola, Ecuador or other oil producing countries in the global south, asking why the focus is on those countries with negative social & economic outcomes from oil. Yet despite their promises of corporate responsibility, the oil companies foremost legal responsibility is to maximize profits for their shareholders other commitments can be sacrificed to achieve this. This is made explicit in Heritage 2008 Prospectus to potential shareholders. The failure of the contracts to protect Uganda is compounded in that national law and oil policies do not currently provide enough specific and enforceable obligations to promote responsible regulation of [the oil & gas] sector, especially with regard to protection of the environment. While the government claims that it will present a new oil law to parliament imminently, there is as yet no sign of it. Current negotiations over development plans with the oil companies continue to place the cart before the horse.

When the petrodollar cannot save Nigerians from food insecurity
Okello Oculi
The British coloniser robbed villages of the men who would have produced food while, buoyed by petrodollars, the generals silenced everybody —
including farmers — into inactivity as the sector stagnated, writes Okello Oculi
It has become a cliché to blame oil wealth for the food insecurity in Nigeria . This widely-held view ignores the destruction of the agricultural sector by the colonial and post-1966 military dictatorships.
To appreciate the destruction brought about by British military dictatorship, politicians and officials of the Ministry of Agriculture should read doctoral theses and other researches by historians at the Ahmadu Bello University in the 1970s and 1980s.
For instance, Mahmoud Tukur’s doctoral work contains reports by provincial commissioners in which British settlers and District Officers celebrated deaths from famine of hundreds of thousands of villagers and traditional Hausa urban communities.
The famine had been predicted by them after they had herded thousands of able-bodied males to build government offices, construct railway lines and roads; and dig soils on the Jos Plateau to extract tin and other minerals. No provision had been made to feed families whose crop productions had drastically fallen because the women, old men and children left behind could not compensate for the labour stolen from their traditional agricultural sector.
Orphaned farmers
The new regime of famine only deepened as British colonial dictatorship grew in length and economic greed. No wonder, Nigeria ’s independence in 1960 was welcomed by profound food insecurity.
The post-1966 military regimes denied political power to the voices and hunger of the over 80 per cent of the population that lived by agriculture and agricultural trade in the rural areas. Military dictators banned elected parliaments, state assemblies and local councils.
The groups of politicians that rural farmers could have put pressure on to improve agriculture were silenced. The orphaned millions of rural farmers and urban food marketers and processors had no voices to demand that huge amounts of wealth earned from oil exports be invested in agricultural development.
Instead, hundreds of millions of naira was spent to import beef and frozen chicken from Brazil and elsewhere; canned juices and beer from Holland, Israel and elsewhere thereby denying investment in new levels and forms of production by rural communities.
The silencing of rural communities also had the terrible effect of stopping them from making demands on the education sector. Village communities could not demand that the content of primary school education should reflect the needs of their economic activities. Likewise, with the subjects taught in secondary schools.
Village communities could not put pressure on technical schools and colleges to create tools for sinking boreholes and building small dams and methods of preserving mangoes and fruit juices over long periods. In fact, the vast local food sector, including cassava, yam and vegetable sub sectors were insulted as non cash crops.
That exciting legend in American economic history of black Americans inventing technologies for storing pounded fried groundnuts (into peanut butter) making and preserving marmalades and jam, etc, remained unknown and shut out from these military epochs in Nigeria’s economic history.
The contrast is more dramatic at university levels: Whereas American farmers and local tax payers demanded that their local and federal governments should create and support 106 “land grant” universities to serve their needs for scientific and industrial knowledge and tools for economic progress, the American scenario had very limited echoes among the vast majority of Nigeria ’s economic producers.
The experiences of thousands of Nigerians who studied in America’s land-grant universities (like Stanford, the Massachusetts Institute of Technology, Rutgers University, the University networks of Wisconsin and California) failed to resonate back into Nigeria’s policy towards agriculture and agribusiness precisely because the political pressure group that would have forced politicians to do so vegetated in silence under military boots.
This political disease was not limited to Nigeria . It is remarkable that it is only at its January 2007 summit that African presidents (meeting as the African Union), announced that they would encourage “more African youth to take up studies in science, technology and engineering, and invite Member States to pay special attention to the teaching of science and technology”.
To achieve this they stated that they would ensure “the enhanced role and the revitalisation of African universities and other African institutions of higher education as well as scientific and technology and engineering education and development...”
This new wisdom came after over 40 years of independence for most African countries. Military dictators all across Africa had failed to see that the military might of the United States and the European Union countries had vital roots in agricultural and agriculture-related industrialisation. Not needing votes from rural communities, military dictators worried more about guns and death from bullets as key tools of their power.
Yet the post-1966 military rulers are not the only ones to blame. Nigeria ’s private sector also remained blind to the linkage that the Japanese, Koreans, Americans and Europeans had always made between universities and economic productivity. Those of them who were merely retail and wholesale traders were comfortable with dealing with goods whose production techniques they cared little about and were not interested in supporting research that would have resulted in their being produced locally.
They were comfortable with having their stomachs and throats colonised by whiskies, brandies, beers, imported beef and confectioneries that were products of external universities and technical institutes.
Bankers remain contemptuously indifferent to calls for loans to kick-start the growth of cottage technologies to fuel small and medium scale enterprises. The rich field of scientific innovation (from work in biotechnology, raw materials-related technology, and from agricultural products, etc), remains too imagination-intensive to compete with more exciting money-spinners like recycling foreign currencies or funding oil bunkering, or holding in their vaults salaries for staff of ministries, parastatals and universities and funds for capital projects.
Bankers have also failed to intervene in the vital field of effective transport for moving agricultural products. In their book: Nigeria’s Economic Crisis: Causes and Solution, a team of academics at the Ahmadu Bello University, showed that British companies that once controlled the importation of motor vehicles for the Nigerian market, conspired with local officials in charge of railway administration to cripple the country’s railway transport system.
In the 1970s, these British companies found new local allies in owners of oil tankers as and road building contractors. Oil tankers destroy roads thereby sustaining demands for contracts for road repairs.
The reliance on roads and non-existent roads causes severe problems for farmers. Cattle alone are tortured and starved in trips from markets in Maiduguri, Yola, Sokoto, Kano (in the far north) to consumer sites like Port Harcourt, Enugu, Lagos, Ibadan (in the far south). Tomatoes and mangoes rot under un-refrigerated conditions as they are trucked to the markets.
Strange banking logic
Despite their awareness of this destructive economic regime, Nigeria ’s bankers have failed to lobby for and put pressure on the media and civil society groups to campaign for pro-rail transport policies.
A strange banking logic has grown as more branches are opened to serve increasingly impoverished and stagnant rural agricultural and semi-industrial sectors.
Finally, the banking sector has continued to ignore the fact that of the highly developed economies of the world, only Switzerland has a record of less than 50 per cent of its population being university graduates.
Moreover, industrial success stories like Japan , South Korea and Singapore have combined compulsory universal primary education with heavy investment in large numbers of students and professionals in high technological colleges, academies of engineering, and institutes engaged in the promotion technological innovation.
By a bizarre conspiracy, bankers have remained silent as high visibility has continued to be given by the media and elite culture to student enrolments into Law degree courses and the practice of Law that have no planned linkage with increased productivity in agriculture and industry. In this blame game, Nigeria ’s diplomats may not be innocent.
It is clear for example, that Gambia imports rice from Thailand in massive quantities. The imports enter markets as far away as Mali and Nigeria .
In this game, the immediate losers are rice producers in the inland delta on the River Niger inside Mali ; rice producers in the Niger , Kano and Ebonyi states in Nigeria .
Gambia is, therefore used as pathway of economic sabotage. It is not clear that Nigeria ’s diplomats (who habitually work behind the backs of peasant farmers who lack this information and its implications for their prosperity), have evolved a policy for dealing with this challenge of economic diplomacy.
They have certainly not mobilised students of colleges of agriculture to mount demonstrations against Gambia ’s economic diplomacy and its implications for the prosperity of citizens of Ecowas. Neither have they urged these students to demand that Japan ’s monopoly of the car market in Nigeria be compensated by capital to support technological innovation in processing shea-butter nuts into products ranging from cosmetics to medicines.
The way forward is to view Nigeria ’s food security within a framework that is historically and sector-wise wider than ensuring adequate supplies of cereals.
The vital issue of democratic politics; of developing the power of voices of the rural communities in influencing economic policies and economic diplomacy; of industrially innovative and relevant education; and the role of the intellectual leadership of the private sector, must all be brought into debates and policies relevant to the agricultural sector.
Insight is an initiative of the Nation Media Group’s Africa Media
Network Project.

It is alleged by the Observer; a Uganda Newspaper in a story run on February 8, 2010; " Deal tilted in favour of oil companies.
Contract could make Uganda poorer" The 40-page report titled: Contracts Curse: Uganda%u2019s Oil Agreements Place Profit Before People, that extensively quotes the agreements the government has kept under wraps, reveals that oil firms will reap extra-ordinary profits. The report by PLATFORM, a London-based organization, says that as a result of this, extraction of millions of barrels of crude oil on Block 3A is most likely going to exacerbate poverty, increase human rights violations, entrench the power of military forces and distort the Ugandan economy.
Don't you think a petition to the Government of Uganda over this matter is rightly placed now?
The matter has a new twist when a Member of Parliament for Mbarara Municipality; John Arimpa Kigyagi says that the Parliamentary Committee on Natural Resources received copies of the oil sharing agreements but are barred by a confidentiality clause to release the information to the public; while the New Vision newspaper of Friday, 5th March 2010 reports that, "yet another company in the name of Dominion Petroleum, a UK firm exploring for oil and gas in Kanungu and Rukungiri districts is to sell $50million to raise funds for its drilling campaign."
The above developments call for greater transparency by the Government of Uganda. It is not clear why an organ of the Government of Uganda; Uganda Securities Exchange (USE) does not handle the transaction.

Oil Drilling to Start in Uganda by 2010
Source: 9/5/2006, Location: Africa
Uganda is expected commence oil drilling by 2010 following the recent impressive exploration results by Australian-based Hardman Resources Ltd., Minister for Energy and Minerals Development Daudi Migereko told Dow Jones Newswires Tuesday.
Migereko said that, based on the current exploration results, Uganda could produce an estimated 14,000 barrels of oil a day. The ministry is currently formulating a national gas and energy policy that will guide the oil exploration and exploitation, the policy is expected to be in place by the end of this year.
The Ministry of Energy and Minerals says Hardman plans to present an oil development program to the government by 2008, to secure a petroleum production license. For its part, the government says it is working hard to provide a peaceful environment to ensure that the oil exploration and mining companies carry out operations without any disruption.
As part of its move to develop the mining industry, the government has signed a $5-million contract with South African-based Fugro Airborne Surveys to conduct mineral surveys, Migereko said.

Insight is an initiative of the Nation Media Group’s Africa Media
Network Project.
Eni to Buy Heritage's 50% Interest in Uganda
Source: 11/23/2009, Location: Africa
Oil & Gas Companies
Eni and Heritage have reached an agreement with respect to the assignment of the 50% interest which Heritage holds in blocks 1 and 3A in Uganda for a total amount of 1.35 billion US dollars. An additional consideration of US$150 million, in cash or assets, is also foreseen provided certain conditions are met in the future. The agreement also envisages the transfer of the operatorship in the two blocks to Eni.
Blocks 1 and 3A, which are located in the Lake Albert basin, one of the most important African sedimentary basins, have resources for more than 1 billion barrels of oil equivalent, of which approximately 700 million have already been discovered from about 28 wells drilled in the area.
The development of these resources will require great synergy with Uganda's infrastructure programs, in respect of which Eni intends to play a leading role in partnership with the Authorities.
The transaction is part of Eni's growth strategy in the African continent and in the Sub-Saharan region in particular, where the company is committed to pursuing an approach of sustainable development through its staff, expertise and technologies.
Eni considers Uganda, which has achieved economic growth through effective policies, an ideal partner for the development of cooperation programs aimed at sustaining the region's social, economic, and industrial development.
The agreement is subject to finalization of a full sale and purchase agreement, approval by the competent authorities and other customary conditions. Eni has been present in the Sub-Saharan region since the 1960s, and is currently also an operator in the main oil-producing countries of Angola, Ghana, Nigeria, Republic of Congo, Gabon and Mozambique. Eni's operated production in the region amounts to about 450,000 barrels of oil equivalent per day.

Cnooc May Join Tullow in Developing Uganda’s Oil
Source: Bloomberg 1/26/2010, Location: Africa
Oil & Gas Companies
China National Offshore Oil Corp. is interested in teaming up with Tullow Oil Plc to help develop Uganda’s energy resources, the president’s office said. Company officials from China National and Tullow held talks with President Yoweri Museveni yesterday, his office said in an e-mailed statement.
China, the world’s second-largest energy consumer, is seeking assets in Africa to secure fuel for its booming economy. Tullow is engaged in a battle with Eni SpA, Italy’s biggest energy producer, for oil assets being sold in Uganda by Heritage Oil Plc.
Last week, Tullow exercised its right of first refusal over the blocks which it co-owns with Heritage, in an effort to thwart an agreed $1.5 billion deal with Eni.
“The government of Uganda will reach a decision in the coming weeks on the current process of pre-emption that will respect the contractual rights of the existing companies,” the president’s office said.
International energy producers are competing for assets in Africa as traditional fields go into decline and after nations from Venezuela to Russia curbed access to their resources.
Uganda is an “attractive zone,” Jean-Jacques Mosconi, head of strategy at Total SA, Europe’s third-largest oil company, said last week.
The Financial Times reported today that Tullow has presented Uganda with the choice of Cnooc or Total as potential partners. Total spokeswoman Phenelope Semavoine declined to comment when reached by phone.
Uganda’s government is trying to maximize the benefits of its oil resources after economic growth slowed last year. Per- capita income in sub-Saharan Africa dropped for the first time in a decade in 2009, with 7 million more people falling into poverty in the region, the World Bank said on Jan. 21.
Uganda plans to bank all its oil revenue then use a percentage of the accrued interest to fund its budget, government minister Henry Okello Oryem said Dec. 29.
The Tullow delegation was led by Chief Operating Officer Paul McDade and Elly Karuhanga, the company’s president for Uganda.
The Ugandan government “looks forward to welcoming new companies” in the oil industry as well as discussing proposals by existing operators, the president’s office said.
Li Shiqiang, a Beijing-based press officer at China National, didn’t answer calls to his office telephone.
Tullow, the U.K. explorer with the most licenses in Africa, has drawn up a shortlist of partners to help with the estimated $5 billion cost of developing its Ugandan oil fields. Tullow had wanted to sell as much as 50 percent of three combined blocks in the Lake Albert region.
Detailed plans regarding field exploration, a refinery, power generation and a possible pipeline across Tanzania or Kenya to export oil will be presented to Uganda’s government in the first week of February, Tullow’s Chief Executive Officer Aidan Heavey has said.
Provisional Backing
Last week, Uganda’s Energy Minister Hillary Onek gave his provisional backing to Eni in preference to Tullow over the assets being sold. Heavey flew to Uganda late last week to press the company’s case with Museveni.
The dispute centers upon Heritage Oil’s 50 percent share in Blocks 1 and 3A in Lake Albert which are up for sale. Shareholders in the St. Helier, Jersey-based company approved the proposed asset sale yesterday, with 99.99 percent of votes cast in favor. The sale is expected to be completed in the first quarter.
Eni said Nov. 23 it had signed a letter of intent with Heritage to buy its share of the fields for as much as $1.5 billion. The sale may yield as much as $400 million in capital gains tax for Uganda, Onek said last week.
The Italian energy producer has been seeking to expand reserves with fields in Africa, central Asia and the Gulf of Mexico after output cuts from disruptions in Nigeria.
About 1.5 billion barrels of oil are still to be discovered in the Lake Albert Rift Basin, according to Tullow estimates. More than 700 million barrels have already been found.
Tullow, which operates in 15 African states, plans to produce at least 5,000 barrels a day in Uganda in 2012, with output rising to 150,000 barrels a day within five years.

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