Ugandan discussions

ON TUESDAY February 2, the Ugandan blogger known only as Gay Uganda, sent a Twitter message to reassure his followers that no harm had come to him. His silence had been caused by an all-too-common-in-Uganda power cut.

In Uganda, only five per cent of the population is connected to the national grid. Prohibitively expensive, electricity in resource-rich Uganda heavily relies on costly imported fuel, despite natural oil seepage, and the first oil well that was dug in 1938. World War II intervened and only in the 1990s did interest turn again to Uganda’s vast natural resources. This might have been the luckiest thing that ever happened to Uganda.

In the 1980s, research started on a phenomenon recognised as the ‘resource curse’. The theory goes that countries rich in natural resources are often unable to leverage this advantage into economic growth and counter-intuitively have lower income and development indices than countries who are net consumers of those resources. Factors that allegedly contribute to the resource curse are conflict, lack of domestic taxation, corruption, excessive government borrowing, lack of diversification in industry and revenue volatility among others. Transparency is often cited as the single most important factor in combating the resource curse.

If the resource curse can be avoided in Uganda, the future could be very bright but there are contradictions and disputes to come.

For instance, a dam is being constructed on the Nile in Southern Uganda to address the electricity shortages and reliance on imported fuels. It is also expected to reduce carbon emissions and double the electricity supply. Environmental activists stress that it buries a spiritual and cultural icon in flooding the magnificent Bujagali Falls, reduces biodiversity and will displace thousands of Ugandans, many of whom will have trouble settling elsewhere.

The oil deals have also been moving forward. Contracts were signed with Hardman Petroleum, Energy Africa and Heritage Oil in the late 1990s and early 2000s. The production sharing agreements (PSAs) were renegotiated in 2004 with Energy Africa and Hardman, who are now owned by Irish company Tullow Oil.

As it stands, the licences around Lake Albert have been consolidated and blocks 1, 2 and 3a are owned by Tullow and Heritage. Both companies also hold licences on the Congo side of Lake Albert. Yesterday, the Ugandan government approved the sale of Heritage Oil’s share of the project to Tullow Oil, a deal they previously discouraged, calling it a monopoly for Tullow Oil.

The Ugandan government claims it has an obligation to commercial confidentiality although they have made several claims as to how profitable these contracts will be for Uganda. Terms of the contracts have not even been made available to some government ministers, until yesterday. While it is understandable that Uganda wants to make itself an attractive destination for investment, the people deserve transparency on these deals. It is hard to believe that the investors would walk away from Uganda - which some experts predict could become one of the world’s largest producers of crude oil – because they made their contracts public, as some other countries do, including the very successful, resource curse-free, Norway.

On Thursday, a Kampala court dismissed the application of Charles Mwanguhya Mpagi and Angelo Izama, both journalists at the Ugandan Daily Monitor, to have the terms of the contracts made available to the public. They intend to appeal the decision. In what is possibly not totally unrelated news, Angelo Izama was also arrested yesterday for Criminal Libel and there are reports that several of his colleagues at the same paper are facing charges too.

Uganda’s government has repeatedly revealed its fear of discouraging investors – attempting to stifle the press for being critical of the government and a government minister has stated he opposes the controversial Anti-Homosexuality Bill, not because of the human rights violations contained within, because he worries foreign investors will be reluctant to invest in a country in the process of devising new human rights abuses.

Inevitably, these closely guarded agreements have been leaked and analysed. Ugandans have a right to know how production will be run, and that their government is rounding up the unrealistic best-case scenario figures when it claims the country will receive 80 per cent of profit oil from the deal with Heritage and Tullow. Uganda receiving 79.5 per cent of the profit oil is the best case scenario based on a barrel price of USD $122 throughout production. The price as I write this is $77/barrel.

NPR’s East Africa Correspondent, Gwen Thomkins reports from Uganda and paints a picture of a people who are ‘cautiously optimistic’ but also reveals how things are already starting to go horribly wrong. While the government says it wants Uganda to avoid becoming another resource cursed Nigera, where very few have benefited from the oil, Ms Thompkins met a man who is a community leader with a virtually guaranteed job through ‘ring fencing’, and who also owns the company that will be supplying beef and fish to Tullow’s local camp.

Uganda needs to embrace transparency as the force that will drive their country forward, financially and socially. The Ugandan government ministers make claims – that the international gay community is funding the recruiting of Ugandan children, or that these oil deals will net them 80 per cent of the profit oil – that are lies and outside of Uganda, it’s plain as day. But inside Uganda – a country where 95 per cent of the populace don’t have access to electricity, let alone the internet, virtually all people have is the what the government tells them and the words their journalists manage to publish before they are charged and incarcerated.

It’s not a democracy if you can’t prove it.