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Source: Reuters

Ugandan president to approve all oil, gas deals

Published: 19 Aug 2010 04:13:34 PST

KAMPALA, Aug 19 - Uganda's President Yoweri Museveni wants the final say on all oil and gas deals as the country prepares to launch oil production, a letter seen by Reuters shows.

In the letter dated July 19 but given to Reuters on Thursday, Museveni ordered his energy minister Hilary Onek not to sign any oil or gas deals without his prior, written consent.

Museveni said he was changing the normal practice of a minister signing deals on behalf of the government after advice from the attorney general, in order to safeguard against mistakes.

Museveni said the discovery of oil in Uganda had created a lot of "excitement and stampede" among some people who were scrambling for easy money from the commodity.

"We should therefore not allow ourselves to be part of this stampede," he wrote in a letter copied to other senior government officials, including the vice president and attorney general.

"In the case of petroleum and gas, I direct that no agreement should ever be signed without my express written approval of that arrangement."

Commercial hydrocarbon deposits were discovered in Uganda's Lake Albert Rift basin along the border with the Democratic Republic of Congo in 2006 and reserves are estimated at 2 billion barrels.

Tullow Oil, Heritage Oil, Neptune Petroleum and Dominion Limited are some of the firms involved in the sector, which is expected to begin commercial production in the last quarter of 2011.

The opposition said Museveni's directive was aimed at giving him greater control of funds from the sector.

"He wants to amass wealth as much as possible which obviously explains his interest in personally controlling the oil bonanza that is coming," said Semujju Ibrahim Nganda, spokesperson for the Inter-Party Cooperation, a coalition of opposition parties.

Uganda wants to introduce tough new income tax rules so that oil companies pay tax on revenues once production starts and from the sale of oil block stakes.

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