MinBane

Helt ute av sporet (Okumala ekigwo okulyaku kya okuziga)

Archive for the tag “Mvule”

Opinion: President Museveni praises Equatorial Guinea for it’s rampant Oil-Corruption; wants to learn his tricks!

In these days the President Yoweri Kaguta Museveni of the Republic of Uganda are on a state visit in Malabo, visiting and learning tricks from the Equatorial Guinean President Teodoro Nguema Obiang, who has used the oil to enrich himself and his loyal subjects. Not build a welfare state, but make sure the family of Obiang get wealthy. Certainly, Uganda is preparing for their own oil production in the Lake Albertine basin, as the pipeline building from the production to the Port Tanga in Tanzania.

This is why President Museveni are visiting Equatorial Guinea to learn the tricks of the trade, as the state of Uganda are still in the dark of the oil-deals between the international companies and the state. We can wonder how the funds will be spoiled and how Museveni plans to use the oil funds for personal gains. If so, he wouldn’t praise President Obiang, who has his whole career to spend the oil profits from his republic. This is what Museveni wants to learn, since his career has been tricking out all sorts of play from Ugandan republic. The petroleum profits can be misspent and hidden just like in the republic of Obiang. Take a look!

President Museveni’s praise:

We are therefore in Equatorial Guinea for two things: looking at how to support prosperity of one another and how to push for our strategic security. I also congratulate Equatorial Guinea for using it’s oil and gas very well. When I was last here for the AU Summit, I noticed gaps between the airport and the city centre. Today, all these gaps were gone. In their place are new, well-planned buildings. And I see the city is refurbished. Some people say oil is a curse but in Equatorial Guinea it is a blessing” (Yoweri Kaguta Museveni, 26.08.2017)

Business in Equatorial Guinea:

Since the discovery of the offshore oil deposits, many investors have shown great interest in the country. Foreign direct investment inflows into the country had thus been consistently high for the past years. Nevertheless, in 2016 the FDI inflow amounted to USD 54 million, a sharp decrease from USD 233 million recorded the previous year (and the historical peak of USD 2.73 billion in 2010) . The total stock of FDI in the country is currently at USD 13.4 billion” (…) “Corruption in particular is problematic. In addition, the business climate of the country remains rather unfavourable for investment. Cumbersome procedures and high compliance costs slow licensing and make starting a business more difficult. Weak regulatory and judicial systems may discourage foreign investment as well, along with high credit costs and limited access to financing. The government controls long-term lending through the state-owned development bank. Equatorial Guinea ranked 178th out of 190 countries in the 2017 Doing Business report published by the World Bank, losing three spots compared to the previous year” (Santander Trade, 2017).

Son of the President on trial:

The corruption trial of Teodoro Nguema Obiang Mangue, the son of the president of Equatorial Guinea, ended in Paris on 6 July with the prosecution calling for a three-year jail term, a €30 million (US$34 million) fine and the confiscation of assets. The Tribunal will return a verdict on 27 October. The 48-year-old vice-president of Equatorial Guinea was not in court to hear the prosecution’s claim that he used money stolen from his country’s treasury and laundered through a shell company to fund a lavish lifestyle in France” (Transparency International, 2017).

This was what that is well-known of the Equatorial Guinea corruption and the son of President has also had challenging cases in the United States. Now the son is also having alleged fraud and criminal charges in France. Clearly, the Ugandan President has already known for corruption behavior. Therefore, even a state agency of PPDA has some words, that the government needs strict regulations before procurement and infrastructure development. This will be clearly important when it comes to petroleum industry. Take a look!

PPDA strict regulation on public procurement:

Public procurement is a key pillar of the public financial management system. The country’s budget and plans are translated into actual services to our people through the public procurement system. It is also the link between the public sector and the private sector as it is the medium through which the private sector does business with Government. Public procurement therefore involves large sums of money and as our budget grows with the priorities of Government remaining infrastructure development, the proportion of the budget earmarked for public procurement remains significant and therefore calls for strict regulation” (PPDA, 2017).

Audits and investigations by the Public Procurement and Disposal of Assets indicate that corruption in the procurement process manifests more in the evaluation of bids, reported to be at 58%. PPDA’s Manager Capacity Building Ronald Tumuhairwe says such corrupt practices lead to awarding of contracts to incompetent individuals hence shoddy works in several government projects” (…) “He adds that the second process where corruption manifests is awarding of contracts at 12.5%, followed by receipt and opening of bids, reviewing evaluation of bids, advertising and signing of contracts” (Sebunya, 2017).

President Museveni clearly has own agencies saying it is important with strict regulations on procurement and infrastructure developments like the ones needed for oil industry in the republic. The regulation of oil industry is lax, to make sure the state isn’t transparent with its profits and taxation of the industry. This is what Museveni wants, that the state and the public doesn’t know the contracts or the agreements between the parties involved. That is something President Obiang surely have the capacity to teach Museveni. And how to make sure his family is earning from the state resource, instead of the public and the state itself. Peace.

Reference:

Transparency International – ‘ON TRIAL FOR CORRUPTION: FRENCH PROSECUTORS DEMAND JAIL TERM AND €30 MILLION FINE FOR OBIANG’ (11.07.2017) link: https://www.transparency.org/news/feature/on_trial_for_corruption_french_prosecutors_demand_jail_term_and_30_million

Santander Trade – ‘EQUATORIAL GUINEA: FOREIGN INVESTMENT’ (August 2017) link: https://en.portal.santandertrade.com/establish-overseas/equatorial-guinea/investing-3

Sebunya, Wycliffe – ‘Corruption manifests most in the procurement process – IG’ (25.08.2017) link:http://radioonefm90.com/corruption-manifests-most-in-the-procurement-process-ig/

PPDA – ‘EVALUATING INNOVATIVE ANTI CORRUPTION POLICIES IN PUBLIC PROCUREMENT IN UGANDA’ (02.08.2017) link: https://www.ppda.go.ug/evaluating-innovative-anti-corruption-policies-in-public-procurement-in-uganda/

Advertisements

OAG Muwanga explains in two reports problems and errors within the Petroleum Industry!

The Auditor General has two reports on the Petroleum Industry and the issues of Petroleum Data and the Petroleum Fund. The errors of the state, the PAYE of the tax to URA. Proves that the monies earmarked for the Petroleum Fund, ends up in the Consolidation Fund. This is proof of the problematic use of the added taxes before the oil adventure really takes off and the drilling of the explored blocks in the Lake Albertine Basin. Where already different international companies have come to drill and the state is making a petroleum pipeline to Port Tanga in Tanzania. Therefore, these vast resources and possible taxes created by the industry and within the Republic. Still, the default problems that the Auditor General address can be fixed. It is just a matter of morals and actually following guidelines. Some are even set in the Public Finance and Management Act of 2015, so if for instance URA follows it, the problems of transactions into wrong fund can create payment arrears and also future problem of spending by the state. Since the misuse of funds and taxes can be allocated to other than what they was expected, as the Consolidation Fund has other uses than the Petroleum Fund. Just take a look!

Petroleum Fund:

For the six months ending December 31, 2016, the Fund received non tax revenue worth UGX 922,348,854 (USD270,900) as surface rental fees from Tullow Uganda Operations Pty and Total E & P Uganda” (OAG, P: 7, 2017).

It was however noted that monies collected by Uganda Revenue Authority (URA) under the income tax on income derived from petroleum operations such as PAYE, VAT and WHT is not being remitted to the Uganda Petroleum Fund. This contravenes the Public Finance and Management Act 2015” (…) “In their opinion PAYE is not tax charged on income derived from petroleum operations but paid by the employees and as such it had been excluded from the definitions of petroleum revenues. Arising out of the above it was established that UGX.l1,390,530,053 collected through the commercial banks and remitted to the consolidated fund should have instead been transferred to the Petroleum Fund. Management has promised to remit it to the Petroleum Fund before closure of the financial year 2016/17” (OAG, P: 10, 2017).

During the period under review, the fund received USD 270,900 (Two hundred seventy thousand, nine hundred dollars) in respect of surface area rentals consisting of USD 113,400 (One hundred thirteen thousand, four hundred dollars) paid by Total E& P Uganda for the development areas of Ngiri, Jobi-Rii and Gunya and USD 157,500 was paid by Tullow Uganda Operations Pty Ltd for development areas of soga, gege, Kasemene, Wahrindi, Nzizi-Mputa & Waraga, and Kigogole- Ngara Unrealised foreign exchange gains worth UGX 15,093,435,449 have been recognised in the Statement of Changes in Equity. These arose from translating the USD opening balances and revenue collected during the period into UGX at the closing rate for reporting purposes” (OAG, P: 14, 2017).

Petroleum Data:

The oil companies did not fully comply with submission of reports relating to their drilling, exploration activities and operations as required. Delays and non-submission of reports results in an incomplete database which may reduce the effective use of the database in petroleum resource management” (OAG, P: vi, 2016). “The shortcomings in the management of petroleum data by the Ministry of Energy and Mineral Development may affect the completeness of the data on the existing petroleum potential, extent of reserves, and amount recoverable thus reducing Uganda’s ability to maximally exploit and benefit from its oil and gas resource potential. A thorough understanding of the resource base and its geographical distribution informs key decisions on the rate of exploitation and potential future revenues” (OAG, P: viii, 2016).

This should all be worrying that the State and the Industry isn’t sufficiently ready for the activity, as the URA cannot even allocate funds correctly. This is even before the Petroleum Data is taken care of and made sure that the exploitation and drilling happens where the best well is within the block. Secondly, the real value of the reports and the licenses that the state would offer to the companies. That because the flow of data and the status of it wouldn’t be where it could be. This is losses created by maladministration and lacking will of institutionalize the knowledge. Instead, the Petroleum Industry is controlled and has just a few handshakes away from the State House. That is why the URA might have delivered the funds to the Consolidation Fund instead of the Petroleum Fund. All of the potential might be wasted in the lack of protocol and care of resources management that is needed in the Ministry of Energy and Mineral Development (MoEMD).

The recommendations and the looks into the issues should be taken serious by the Petroleum Industry and the MoEMD. So the state could both earn more on the industry and also create more positive growth through the provisions that is already made in Public Finance Management Act (PFMA) 2015. So time will tell if they will be more reckless, if they will listen to the OAG or if the Presidential Handshakes will steal it all for keeping the NRM cronyism at bay. Peace.

Reference:

Office of the Auditor General Uganda – ‘REPORT OF THE AUDITOR GENERAL ON THE FINANCIAL STATEMENTS OF THE PETROLEUM FUND FOR THE SIX MONTH PERIOD ENDED 31sT DECEMBER 2016’ (07.06.2017) – John F.S. Muwanga

Office of the Auditor General Uganda – ‘Management of Petroleum Data by the Ministry of Energy and Mineral Development’ (December 2016) – John F.S. Muwanga

Press Statement from MEMD: Government of Uganda receive seven bids for the First Licensing Round (01.03.2016)

Oil  Press Statement 01.03. P1Oil  Press Statement 01.03. P2

Press release: Uganda announces first Petroleum Exporation Liscensing Round (24.02.2015)

UgandaOilUgandaOil2

Post Navigation

%d bloggers like this: