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Irked that Uganda is losing billions in exorbitant Tullow oil expenses, MPs want oil deals halted

Posted by Administrator on March 26, 2012

Members of Parliament want government’s oil deals halted after it emerged that Tullow Oil, a company at the helm of the country’s potential 6bn barrels is making extravagant expenses that the  government has to meet before it starts reaping from the oil.

Agreements reached with the oil companies indicate that before the government takes its share of the oil, the oil companies have to first recoup their expenses incurred during the oil exploration process.

Rwemiyaga MP Theodere Sekikubo who tabled the motion calling for halting of all oil deals told parliament on Oct.10 that Tullow officials were paying themselves exorbitant salaries at the expense of Ugandans who are set to meet all these costs when production of oil starts and before the government starts getting its share.

On Sekikubo’s list is a caterpillar driver with a certificate in catering who bags Shs.54 million, another worker with a certificate in catering gets 36 million and a security boss who also gets 44 million per month.

The MPs also heard that Tullow oil allegedly spent $ 39 million on one oil well Ngassa and spent another $ 5 to fix it.  Sekikubo also told MPs that the government will have to meet a whopping $120,000 per day for rigs which were brought by the oil companies and left to lay idle. “Companies will have to recoup all these costs before the government can start getting its share of revenues,” Sekikubo told parliamentarians.

According to the documents all the workers were spending $92 – 95 ( about Shs.250,000) on accommodation per night and $ 100 ( about Shs.280,000) on every meal. Going by the current dollar rate the government of Uganda would have to pay about 2.7bn for every worker’s accommodation and over 3 bn for their meals per annum. This translates into Shs 5.7bn on every workers meals and accommodation per annum.

Sekikubo added that 70 percent of these employees were foreigners and that local Ugandans are not benefiting at all since all the goods and services the oil companies bought in Kampala and imported. Most of the money from contracts of services to oil companies goes to powerful politicians and their relatives, Sekikubo told parliament.

For instance a parking yard used by the oil companies and located in Kampala instead of western Uganda where the oil is located is owned by the Prime Minister Amama Mbabazi’s daughter Nina Mbabazi and her husband Mathew Rukikaire.

Sekikubo noted that while Uganda had up to 3bn barrels in oil with a potential of over 6 billion barrels going by the exorbitant expenses of the oil companies, Uganda was likely to lose a lot in recovering these expense yet the oil has immense potential to transform the country.  With just a billion barrels, Sekikubo said, Uganda would make $ one trillion enough to fund the country’s Shs 8 trillion budget for a number of years.


To avert this situation, Sekikubo’s motion, seconded by FDC’s Abdul Katuntu (FDC), MP Gerald Karuhanga and Wilfred Niwagaba is calling for immediate halting of oil deals and all contracts until parliament passes an effective the National Oil and Gas Policy. But the government has to first disclose all the revenues received from oil deals, the MPs demand.

The motion also demands that that the government tables all the relevant Bills within 30 days and reviews the Production Sharing Agreements and sets up a commission of inquiry to investigate ministers that allegedly received bribes from oil companies especially Tullow oil.

Tullow oil is set to farm down its stake in the Albertine region oil fields to Total and China’s CNOOC on Oct.15, but the MPs are demanding that this too be halted and that the government explains how it procured foreign lawyers in the Heritage Oil case.

Nyombi fails to stop the debate

Attorney General Peter Nyombi had moved under rule 60 of the Rules of Procedure of Parliament, to object Sekikubo’s motion saying that while government was willing and ready to discuss the issues raised in the motion, its grounds presented subjuce issues.

But the speaker of parliament Rebecca Kadaga powered cold water on Nyombi’s claims saying that Sekikubo had been so careful not to touch matters in court. Shadow Attorney General, Abdu Katuntu was one of the five MPs that seconded sekikubo’s motion.

Katuntu faulted Nyombi of absconding from duty saying that had he done his duty they would not be there and urged him to stave off legal engineering in national matters. He also likened government officials that had taken kickbacks from oil companies to fore-fathers who he said “sold this country because they were given small things like hunting spears, but some people studied history to pass exams”.

Source: http://www.independent.co.ug/ugandatalks/2011/10/uganda-losing-billions-in-exorbitant-oil-company-expenses/?Itemid=410


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