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Uganda Parliament Passes Second Oil Bill

02/22/2013 | 06:26am US/Eastern
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By Nicholas Bariyo

Special to

KAMPALA, Uganda--The Ugandan parliament has passed the second oil bill, moving the East African nation closer to completing a new regulatory framework for its nascent oil sector, ahead of the planned development of oil fields along its western border.

The passing of the bill brings the country closer to reopening a new licensing round for the remaining acreage in the oil-rich Lake Albertine Rift basin.

The ruling National Resistance Movement party-dominated parliament voted late Thursday to pass the midstream bill, known as the Petroleum Refining, Conversion, Transmission and Midstream Storage Bill 2012, nearly three months after the upstream oil bill was passed, as the country continues to fast-track the enactment of new oil laws, following the discovery of around 3.5 billion barrels of crude reserves.

Parliamentary spokeswoman, Helen Kawesa, told Dow Jones Newswires Friday that the house will now consider the third and final oil revenue management bill to complete the new law chain.

"There's only one final bill pending, which will also be passed in the coming weeks," Ms. Kawesa said.

The midstream bill will regulate midstream operations, which include refining, transportation and storage of oil products, once the country starts production.

Unlike the previous upstream law, whose passing was delayed for several months as parliament bickered with the executive over the powers of the minister to license and revoke licenses, the midstream law quickly sailed through the house just after a few weeks of debate.

Ruling party lawmaker Stephen Birahwa said ruling party law makers endorsed the bill before its presentation to the plenary, speeding up its passage. Activists criticized the bill, however, saying once again it gives sweeping powers to the minister, which is a threat to good governance.

"It is going to be hard for Uganda to avoid the oil curse given the manner in which these bills have been passed," Winfred Ngabirwe, head of the pressure group Publish What You Want, told Dow Jones Newswires.

The bill grants the minister sole powers to award, suspend and initiate the development and implementation of policies concerning midstream operations among others.

Political observers say that Uganda's long-serving leader, Yoweri Museveni, is attempting to tighten his grip on the oil sector to fend off a growing challenge from an increasingly assertive parliament.

As the parliament continues to pass the laws, the government remains embroiled in a spat with Tullow Oil PLC (>> Tullow Oil plc), France's Total SA (>> TOTAL S.A.) and China's Cnooc Ltd (>> CNOOC Limited) over the development plans and refining options for the country's crude.

The three companies are expected to invest up to $10 billion to develop the country's oil fields. While the companies are pushing for the building of a crude export pipeline, the government wants a larger refinery to refine the crude locally.

Write to Nicholas Bariyo at Nicholas.bariyo@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

Stocks mentioned in the article : Tullow Oil plc, TOTAL S.A., CNOOC Limited
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