Ernest Rubondo, the executive director of the Petroleum Authority of U Ernest Rubondo, the executive director of the Petroleum Authority of Uganda (UPA) has explained why the country is taking long to sign the Final Investment Decision (FID) that will see the release of money for actual oil production.
Speaking at the sidelines of the public hearing on the Environment and Social Impact Assessment Report (ESIA) of the East African Crude Oil Pipeline (EACOP), Rubondo said there is no way they can sign an FID for the two projects of Tilenga and Kingfisher oilfields without concluding on the pipeline and the refinery because they affect each other.
“You cannot build the pipeline when you’re not sure of the oilfields,” Rubondo said.
He explained that because the projects are also supposed to run for a minimum of 25 years, the relationship that the government is trying to get into with the oil companies must be built on firm grounds to ensure that both sides are comfortable that the venture they have entered into will last without getting challenges along the way.
“The companies that invest in these projects expect a return on their investments which can be big, medium or small so they will work very hard to ensure that there is a high return on their investment yet at the same time the government has an interest in these projects benefitting the country. You can see that those two interests have to be aligned which takes time. These three reasons explain why the FID is taking longer time than expected,” Rubondo said.
More than a month ago, Total E&P announced that it had suspended all oil-related projects in Uganda after its deal with Cnooc to buy 21.5 per cent stakes of Tullow oil failed.
Government demanded $185m in taxes and another $167m in capital gains tax which the oil companies objected to. The minister of state for Minerals, Peter Lokeris said their discussions with the oil companies about the stalemate will soon bear fruits.
“We have told them what is supposed to be done in regarding taxes and they are saying they have invested a lot of money in the project. But the discussion is still on and in one month we shall have agreed,” Lokeris said.
Delayed land compensation
Meanwhile, project affected persons (PAP) in the ten districts where the pipeline is going to pass have complained about delay in compensation for their land and […]