International Alert started working with local organisations in Uganda’s oil regions in 2008, to promote greater awareness and understanding about the oil sector.
Improved information flow between local communities, the government and oil companies is crucial in promoting transparency in the sector, minimising the harmful potential for escalating rumours and fears.
In support of its wider objective to harness the potential of oil to contribute to peace and development in Uganda, Alert has therefore jointly signed the following statement:
A closed-door London arbitration tribunal between Heritage Oil and the government of Uganda denies Ugandans the right to information about the management of the country's critical oil wealth, claim campaign groups and civil society leaders. On the day of the opening of the tribunal, the groups are calling for the proceedings and the case’s outcome to be open to the public.
The tribunal will decide whether UK-listed Heritage Oil should pay US$435 million in capital gains tax to the government of Uganda – an amount equivalent to 10% of this year’s Ugandan government expenditure. Under tribunal rules, the proceedings will take place “in camera”, meaning that there is no public access and that all documents, proceedings and outcomes will be confidential.
‘Oil could be a blessing or a curse for Uganda. But the sector has been marred by secrecy, close executive control and corruption allegations from the start’, said Mr Henry Bazira, the chairperson of the Civil Society Coalition on Oil. ‘This closed-door arbitration compounds things by robbing Ugandans of access to vital information about how their resources are being managed. Greater transparency now is vital to restoring confidence in the government’s handling of the sector’.
The tax dispute dates back to Heritage Oil’s sale of rights to two oil blocks in Uganda’s Lake Albert region to the UK-listed Tullow Oil in July 2010. The Ugandan Revenue Authority claims Heritage Oil owes US$435 million in capital gains tax from the US$1.45 billion sale. Heritage Oil disputes this assessment. The case has already been heard by the Uganda Tax Appeals tribunal, which ruled in favour of the government.
‘Ugandans do not understand why their government is being forced to spend millions of pounds on a tax dispute thousands of miles away in London when it has already been decided by Uganda’s courts’, Said Dickens Kanugisha, chair of the Oil Watch coalition of NGOs. ‘They understand even less why the dispute is taking place behind closed doors and this secrecy is making them deeply mistrustful’.
Uganda is in the process of passing crucial new oil laws, and will soon begin allocating the remaining rights to its oil fields. Civil society organisations are now calling for changes in the proposed laws to ensure that all future deals stipulate arbitration takes place in public view, and that oil contracts and associated documents are made public.
‘If Heritage Oil win this case and avoid paying tax, there will be a deep sense of injustice in Uganda for many years to come’, said George Boden, a campaigner at Global Witness. ‘Last year the UK provided £84 million in aid to Uganda. As one of the country’s biggest donors, we need to question the hypocrisy of a London arbitration process which deprives Ugandan civil society of the ability to hold their own government to account on vast public assets’.
Signatories to statement: Advocates Coalition for Development and Environment (Acode), Civil Society Coalition on Oil, Global Witness, Greenwatch Uganda, International Alert, National Association of Professional Environmentalists, Oil Watch Network Uganda and Publish What You Pay Uganda.
Notes to editors:
1. The groups wrote to both the government of Uganda and Heritage Oil on 10th August 2012 to request access to the tribunal proceedings and the outcome. At the time of publication, no response had been received by either party. A copy of those letters can be found here: http://bit.ly/PIysdJ [6] and here: http://bit.ly/SqJXr7 [7]
2. There is also a concurrent case in London’s commercial court between Tullow Oil and Heritage Oil, regarding a related dispute. For further details, please visit: http://www.carbonweb.org/documents/uganda/2011_Royal_Courts-Tullow-v-Her... [8]
Download the joint press release here below.
For further information about Alert’s work in Uganda, read our “Oil for peace in Uganda” story here [9] or visit our Uganda webpage here [10].