CSOs call for end of secrecy in oil deals in a petition to parliament
A group of Civil Society Organisations (CSOs) working in the areas of Oil Governance and Transparency have implored government to end to secrecy in the oil sub sector. In a joint petition to the Parliamentary Committee on Commission Statutory Authorities and State Enterprises (COSASE) that is investigating the controversial Shs 6bn oil cash payouts to 42 government officials, the CSOs argue that the increased secrecy in the petroleum sub-sector is likely to trigger an ‘oil curse’.
The 6 page petition dated 14, February, 2017 addressed to COSASE chairman, is signed by 15 CSOs under their umbrella body – Oil Governance and Transparency Alliance (OGOTA). The CSOs are; Action Aid Uganda (AAU), Federation of Uganda Women Lawyers (FIDA), Global Rights Alert (GRA), Great Lakes Institute for Strategic Studies (GLISS), Transparency International Uganda (TIU), Anti Corruption Coalition Uganda (ACCU), Oxfam International Uganda and Uganda National NGO Forum among others.
“We [CSOs] believe that in spite of the continuous assurances by government of Uganda officials that oil will not become a curse, the level of secrecy with which government is transacting businesses with regard to oil and gas resources is the very definition of an oil curse,” the petition reads in parts. The CSOs presented their petition before the Committee on Monday, 27 February, 2017.
The Committee chaired by Abdul Katuntu (Bugweri MP) is investigating a presidential reward to 42 government officials of Shs 6billin for their role in winning legal tax disputes against oil companies. The award has raised dust from a large section of the Ugandan populace who have gone up in arms over the misuse of public resources to benefit a few individuals.
Commenting on the submission that was made by the Consortium, the Committee Chair, Hon. Abdu Katuntu noted that fresh leads and important questions had been raised and that the Committee was going to issue fresh summons to government officials and heads of agencies who had already appeared so as to shed more light on the matters raised,” revealed Mr Andrew Karamagi, a project manager at ActionAid Uganda who was part of the Consortium.
$ 157 MILLION DOLLARS LOST
In their petition, the CSOs claim that government lost $157 million(Ugx154billion shillings) in Capital Gains Tax due to compromises and negligence of the rewarded government officials. The case arose out of a $ 2.9billion dollars()Ugx10.4trillion shillings) farm-down by Tullow to Total E&P Uganda BV and CNOOC Limited, a sale that attracted a capital gains tax in 2010. However, Tullow objected to the tax assessment before the Tax Appeals Tribunal (TAT) but lost. The tribunal ordered Tullow to pay government $407 million(Ugx1.4trillion shillings) in Capital Gains Tax.
Dissatisfied with the ruling, Tullow filed an appeal in the High Court of Uganda, but before the appeal could be determined, on June, 19th, 2015, URA entered into a consent agreement with Tullow in which it agreed to a payment of $250 million as capital gains tax instead of $407 million awarded by the TAT in its ruling. In a concurrent twist of events, Tullow also applied to the International Center for Settlement of Investment Disputes (ICSID) whose proceedings were terminated after the consent agreement. According to CSOs, the consent agreement meant that the country lost $157 million dollars in tax.
In their petition, the CSOs question why on March 15, 2011 Government of Uganda, URA, Tullow Oil Uganda and Tullow Uganda Operations Pty Limited entered into a Memorandum of Understanding, which they marked “Private and confidential”. They argue that it is inconceivable that public sector agencies can enter into a contracts considered private.
“We believe that the oil and gas sub sector will not benefit the majority Ugandans unless it is managed in the most transparent manner where public sector officials look at themselves as servants of Ugandan citizens and trustees of the offices they occupy and the authority they hold,” the petition reads in part.
Section 151 of the Petroleum (Exploration and Development and Production) Act, 2013 provides that the public must get information on the petroleum activities.
“It is therefore incumbent on public sector officials; in particular a minister to ensure that they are not parties to instruments that deny Ugandans access to relevant information regarding petroleum activities, provided that such information is not exempted, by business confidentiality. We don’t see how disclosure of tax related information could prejudice the business of any company,” they argue.
CSO want the committee to reprimand the officials who signed ‘a private and confidential MoU’. There are Minister Hilary Onek (former Minister of Energy) Kabagambe Kaliisa (former PS in Energy Ministry), Doris Akol (Former secretary board affairs at URA), Allen Kagina (former Commissioner General, URA) and Harriet Lwabi, former acting Solicitor General.
In the petition, CSOs also want the committee to establish whether the URA board, the Minister of Finance and the President authorized URA to enter to a consent judgment or the Commissioner General did it in her own discretion, which would amount to abuse of discretionary administrative power.