While the exact terms of the Production and Oil Sharing Agreements between the government of Uganda and the oil companies remain unclear, it has emerged that the oil companies are set to take a lion’s share of the oil revenues.

The Permanent Secretary in the Ministry of Energy and Minerals, Kabagambe Kalisa says that according to the current PSAs, Uganda will take 36.5% while the oil companies will take 63.5%.

Oil drilling in western Uganda

President Museveni has defended this sharing reasoning that this share arrangement is for the first year because the companies spends a lot of money to dig the well and needs to recover as much of their costs as possible.

Museveni says when the companies finalize recovering their money, the share arrangement will change with Uganda getting 73% of the oil proceeds.

Tullow Oil Plc has been joined by CNOOC of China and Total of France in the oil prospecting taking place in mid western Uganda where commercially viable oil reserved were long conformed. Oil production is expected to start in 2012 and plan of constructing an oil refinery are underway.

This revelation of oil sharing arrangement while disturbing to many Ugandans will be more annoying to the Bunyoro Kingdom which has been demanding to be given a share on the oil reserves. The Kingdom headed by King Gafabusa Iguru I says local people need to be given a share of the oil proceeds. The Kingdom also claims that most of the oil wells are located in land formerly owned by the kingdom that was turned into national game reserves and parks.

Ultimate Media