Kagina, Energy minister give differing oil figures

By Josephine Maseruka

UGANDA Revenue Authority and the Ministry of Energy have presented differing information regarding the number of oil companies operating in Uganda.

The Minister of Energy Irene Muloni on Tuesday said that there are nine oil companies operating in the country; however the URA Commissioner General Allen Kagina yesterday   presented a list of seven companies.

The lists were presented before the seven-member Ad-hoc committee on oil, chaired by Michael Werikhe. The committee was instituted by Parliament last month to investigate allegations of bribery.

Prime minister Amama Mbabazi, ministers Sam Kuteesa of foreign affairs and Hillary Onek  of foreign affairs ; who was former  for energy have been accused of receiving bribes from oil companies, an allegation they deny.

Kagina in a seven-page document, presented to the committee on its second day of seating, said that the seven operating oil companies had contributed sh 1.25 trillion as` taxes of which sh 845,970,410 was from penalties.

The companies known to URA are Heritage Oil and Gas Ltd , Tullow Uganda Operations PTY Ltd , Dominion Uganda Limited ,  Neptune Petroleum , Tullow Uganda Ltd, Total  E&P B.V and CNOOC Ltd.

However Muloni ‘s  list  presented the previous day included  Fina Exploration BV , Uganda General  Works and Engineering, Herdman Resource Ltd  and Energy Africa on top of those on URA list.

Committee member Hussein Kyanjo wondered why the two had presented different lists. “ Is it possible that there is a lot of tax revenue that URA has not collected from  oil companies?”

Kagina explained that sh1.25 trillion in tax revenue was collected from 2001 to October 31 st, 2011.

“Obviously we have presented actively operating oil companies. Some oil companies like Fina existed in the 1990s and have since left. We shall reconcile the list with the Ministry of Energy.”

However committee members insisted on being availed the information on the other oil companies which were on URA list.

Kagina was tasked by committee members Cecilia Ogwal and Kyanjo to explain when the sh.1.25 trillion was deposited on Bank of Uganda dollar account since parliament had a different version from what URA had stated.

“On July 7 th the sh 1.25 trillion was moved from URA dollar account to Bank of Uganda dollar account on the same day. However on July 21 st it moved from bank of Uganda dollar account to the Consolidated Fund account in local currency.”

Ogwal sought to know if according to Kagina the delay in converting it to local currency with a stagalling exchange rate then might not have benefitted a few people and caused a financial loss to the government.

Kagina said the question was best answered by bank of Uganda which can explain the process of money movement.

Committee members also want URA to explain why there was no capital gains tax when Heritage oil and Energy Africa sold its shares to Tullow.

Kagina also regretted that they had lost many of their staff to the private sector due to better incentives there. “ If nothing is done immediately we shall have problems.”

Cornelia Sabiiti, the executive director of the Public Procurement and disposal of public Assets Authority (PPDA) said that the ministry of energy had been licensing oil companies for petroleum exploration using a policy based on the submission of applications of a license by interested International oil companies.

“This licensing process has not been competitive due to the need to await the results of promotional efforts by the Ministry to attract investors in the petroleum industry of the county.”

She said that following the exit of heritage Oil and gas Ltd in early 2010, tyhere are three companies that are currently licensed to undertake petroleum operations in the country.

They are Tullow Uganda Ltd, Dominion Petroleum Ltd and Neptune petroleum (Uganda) Ltd.

Sabiiti added, “The oil and gas industry is highly specialized and requires a fairly high level of technical negotiations before contracts signature.

The form of contracts and agreements entered into are not the standard contracts issued by PPDA but are the Production Sharing Agreements (PSAs).

She called for the revision of the licensing procedure to promote competition and transparency in order to get the most competent companies. She said pre-qualification should be applied during the competitive licensing process.