By Joyce Namutebi
and Catherine Bekunda

THE Government will take up to 80% of the oil revenue if the production levels are high, according to details of the petroleum production sharing agreements released to Parliament yesterday.

After almost two years of persistent demands by the legislators, energy and mineral development minster Hillary Onek finally tabled the agreements, but kept the details confidential.

On average, Onek said the country will take 70% of the proceeds. The contracts, called the Production Sharing Agreements, have been signed with various companies.

Onek stressed that the agreements compare well with those of oil and gas producing countries, which normally have good agreements due to reduced geological risks.

“The total take for the country is on average 70% and yet these agreements were negotiated at a time when Uganda was not among countries known to have oil resources,” he said.

Platform, a UK company, last year reviewed confidential oil contracts and audit reports for British companies Tullow Oil and Heritage Oil’s operations in Uganda and raised serious concerns about how oil will be extracted.

Platform, in a report, said the deals guaranteed huge profits for the companies, while placing risks and responsibilities on the Government. It said there was lack of transparency over bonus payments to the Government and complete absence of penalties for environmental damage caused by the companies.

Explaining the matter yesterday, Onek said the Government had signed agreements with seven companies: Fina Exploration, Heritage, Hardman Resources, Heritage Oil and Gas and Energy, Neptune Petroleum and Dominion Uganda.

He said the terms and conditions of the agreements have improved over time in favour of the Government. “Compared with the earlier agreements (1997 and 2001) terms in later agreements (2004 to 2007 have notable improvements.”

He cited the introduction of signature and production bonuses. The bonus system is common in oil-producing countries, that is, a payment made upfront to the host country for the right to develop a block before work begins.

Onek also said there would be a rise in trainee fee to $150,000 from $50,000 during exploration and to $300,000 from $150,000 during production.

He explained that the state participation had also gone up to 20%. Onek, however, only read part of his statement after deputy speaker Rebecca Kadaga advised him not to give details of the agreements.

Onek called for protection of the rights of the parties and confidentiality, citing intellectual property and heavy risk capital investment.

After his address, the MPs were not allowed to debate the issue, prompting them to wonder why Onek made the statement in the first place. They also questioned why he said the documents were not public yet he had laid them on the table. They wondered how they, as the representatives of the people, would keep quiet about the matter.

Kadaga sent the agreements to the committee on natural resources and promised to issue guidelines on how to proceed today.