Uganda National Oil Company (proposed)

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The Ugandan petroleum bill, which Parliament passed in December 2012,[1] provides for the establishment of two institutions: the Petroleum Authority of Uganda (PAU) and the National Oil Company (NATOIL).[2] This forms part of the institutional framework the government seeks to use to efficiently exploit its natural resources.

Role

The objective for the Ugandan government is to have its own company actively engaged in exploration and production rather than simply collecting royalties and taxes from international players.[3] Rather than have a monopoly over petroleum rights, it would hold state participating interests in production sharing agreements (PSAs) and would market the government's share of oil and gas received in kind.[4]

The National Oil Company would have the right to acquire a 15 percent stake in the oil fields operated by Tullow Oil, Total and CNOOC, according to Tullow's country manager. He commented that all three international companies were ready to build the capacity of a National Oil Company.[3] According to a petroleum scientist speaking to New Vision newspaper, the company would be "like any other company", able to take up acreage for exploration or production in Uganda or abroad.[4]

Concerns

According to Oil in Uganda, Ugandan civil society organisations have voiced concerns that that plans for the National Oil Company’s governance, investment structure and parliamentary oversight are inadequately defined in the Upstream Petroleum Bill People, fearing a lack of transparency and risks of corruption.[3]

A 2012 report by Global Witness "Uganda’s petroleum legislation: Safeguarding the sector" sees the lack of detail provided in the new petroleum bills on the establishment of NATOIL as particularly troubling, noting that the new legislation does not provide for appropriate parliamentary oversight of the institutions created and raising doubts about the independence of the new institution. The bill does not state exactly what functions the company is to perform, how it will be funded or whether it will have power to borrow on international markets against its interests in the petroleum sector. Nor does it clarify where funds and profits will be held, how it will be managed, what the payments it will receive and whether it will disclose the receipt of payments of details of its financial management. According to Global Witness it is "debatable whether the creation of an NOC (National Oil Company) is advisable for Uganda.", arguing that it is a costly venture, eating up funds which could otherwise be used for much-needed investments in infrastructure, education or healthcare. The authors highlight the need for a broad-based consensus that Ugana's petroleum reserves would give the NOC a strong basis so it would not be a drain on state resources.[5]

References

  1. Uganda: How the Oil Bill Was PassedAll Africa, 10 December 2012.
  2. Uganda: It Is Not Only the Minister Who Will Make Oil Licensing DecisionsAll Africa, 10 December 2012.
  3. 3.0 3.1 3.2 Tullow: National Oil Company may share in production, but government must make up its mind over basin developmentOil in Uganda, 14 May 2012.
  4. 4.0 4.1 Does Uganda need an oil company?New Vision, 21 April 2012.
  5. Uganda’s petroleum legislation: Safeguarding the sectorGlobal Witness, 28 February 2012.