Home News News ‘Oil districts’ cause conflict in Uganda

An area of Hoima near oil rich Kaiso Tonya. The government has been faulted for dividing the country into areas that have oil and areas that don’t and allocating revenue based on that criteria. Picture: Morgan Mbabazi 

By GAAKI KIGAMBO, Special Correspondent

A plan by the government to address demands from districts with deposits for a share of oil revenues is placing it at odds with the rest, which feel discriminated against. This is exposing the government to contradictions within its royalties regime.

This discontent, some observers note, points to early signs of social disharmony that the much anticipated oil wealth is likely to stoke across the country. “The government seeks to look at the country in aggregates and it is using oil to reconfigure the state by creating super states,” Salaamu Musumba, the district chairperson of Kamuli, told a consultative meeting on oil and gas development, public finance management and accountability reforms last week.

The meeting, under the twin auspices of the association of Uganda’s local governments and the Advocates Coalition for Development and Environment, had drawn some 200 Resident District Commissioners, LCV chairpersons, and chief administrative officers from “oil districts,” and a select few non-oil districts that closely neighbour them.

According to the Public Finance Bill 2012 that awaits a second reading in parliament, the government has ring-fenced 25 districts and allocated them a share of seven per cent of revenue from royalties arising from petroleum production.

The same “oil districts” have been designated special planning areas in the country’s new Vision 2040 that President Yoweri Museveni launched on April 28, meaning they are likely to be top beneficiaries of the government’s plan to spend oil revenue on infrastructure development, if it follows through on such commitments.

The Bill, which has been criticised as shallow, does not explain how the “oil districts” were determined beyond their location within the petroleum exploration and production areas of Uganda. It is also silent on how the seven per cent share of royalties was determined.

“If we create oil districts, are we likely to create mountain gorilla districts, gold districts, and so on?” asked Godber Tumushabe, the executive director of Advocates Coalition for Development and Environment.

The Mining Act of 2003, the Electricity Act of 1999, and the Uganda Wildlife Act of 2000, which have provisions on royalties from natural resources, all specify different sharing arrangements.

For instance, the Mining Act allocates 17 per cent and three per cent of royalties from minerals respectively to the local governments and owners or lawful occupiers of land subject to mineral rights. The Wildlife Act has set 20 per cent of the park entry fees for the local government in which the park is located, while the Electricity Act leaves sharing to be agreed upon by the licensee and the district local government, in consultation with the regulatory authority.

(Read: Uganda’s bill in Heritage oil case could hit $30m)

The issue of uneven royalties isn’t as bothersome as the secrecy that surrounds the revenue the royalties would put in district coffers.

According to Fred Gume, the chairperson of Jinja district, which is in a standoff with electricity generating companies over royalties entitled to it, there should be an enabling law that harmonises royalties across all the country’s natural resources.

“We cannot have different levies from different local governments within the same constitution and within the country,” Mr Gume told The EastAfrican.

Yet the issue of uneven royalties across different natural resources isn’t as bothersome as the secrecy that surrounds whatever revenue these royalties would put in district coffers.