So Tullow Oil and their patient would-be partners, Total and the China National Offshore Oil Corporation, finally have Lake Albert oil production in their sights. In its 50th year of independence, Uganda is entering a new phase in its history.

 

How oil is extracted and refined in the west of the country will do much to determine the political-economy of the country for decades to come. Decisions taken in 2012, over the contracts and the supporting legislative framework, will leave a long legacy. 

 

Serious times, then, and many concerns remain. The excitement of Ugandans is justifiably tempered. But amid the anxieties, there is perhaps some small cause for hope. State House and the wider political class asserted themselves over the companies and won some ground, at least when it comes to the question of revenue.

 

It has taken a year of private negotiations and public relations battles, played out before an audience of nervy markets and companies hurting at the delay. President Museveni took them to the edge, stared them down and waited for them to blink. While the full contracts are secret, the contours of that compromise deal are emerging. 

 

They suggest two things. First, Museveni fought for, and got, the space to levy a windfall tax on the companies at times of high oil price. Tullow conceded a similar arrangement in its lucrative Productions Sharing Agreement in Ghana.

 

Much of the abstruse talk of the 'stabilisation clause', which proved such a sticking point until the announcement of a final deal last Friday, boiled down to this issue of tax. Over the 25-year life of the contract, Uganda needed the right to increase its revenue, particularly as the profit-sharing arrangement was already weighted in Tullow's favour. 

 

Secondly, the amended clause creates, potentially, a space for improved regulatory standards, the cost of which would fall on the companies rather than the country. This, though, remains ambiguously worded and open to legal interpretation.

 

These are encouraging signs and the Ugandan government has no doubt drawn a lesson from the last year. At a time of high oil prices and diminishing reserves, companies are desperate to be at Lake Albert. Their talk of walking away if conditions were too 'tough' has been exposed as bluff. This is a partial renegotiation of the PSAs in all but name.

 

State House still has the strongest hand to play. It is vital that the opportunity to get the best possible terms is followed through.

 

The past 12 months has also shown that transparency is no risk to Uganda. The more people know about the oil contracts and the companies, the more searching the critiques are, the stronger is the government's position to pressure the oil majors.

 

When the original PSAs were leaked in 2010, there were angry denials and condemnations from the Government ministers. But the increased awareness helped to shift mindsets and begin a process whereby Ugandans took control of their own destiny. The current contracts are still secret.

 

They should be published immediately. Only the companies gain by keeping details behind closed doors at State House.

 

Moreover, these contracts, whatever their final form, are only part of the picture. They can only be evaluated in light of the new legislative framework. Early oil bill drafts lacked teeth on issues of spills, pollution, gas flaring and impact assessments.

 

The latest ones move a couple of steps in the right direction but they still barely flash fangs at the companies. The proposed fines, millions of dollars in an industry that can causes billions in damage, are far too low and oversight remains minimal. Too much is left to chance and the supposed goodwill of profit-oriented businesses.

 

The danger is that the pressure begins to ease on the government. Last week's 'progress' is the start, not the end, of the fight to ensure oil production does the least harm possible, let alone proves a benefit, to the country.