Lawyer sues oil firms for allegedly flouting local procurement rules

Andrew Oluka, a Kampala advocate has sued the Petroleum Authority of Uganda (PAU), Total E&P and China National Offshore Oil Corporation (CNOOC) over disregarding the local procurement laws in regard to the East Africa Crude Oil Pipeline (EACOP), Tilenga Upstream Project and the Kingfisher Development Area Projects.

Through his lawyers, Muwema and Co. Advocates, Oluka accused the companies of giving preference or priority to foreign companies/entities over Ugandans or Ugandan owned companies in contravention of the law.

He stated that notices are also being issued in contravention of the East Africa Crude Oil Pipeline Project execution plan which specifically provides that execution of the project should comply with national content regulations in Uganda and local content regulations in Tanzania.

For instance, he stated that McDermott and Sinopec which are both foreign companies entered into a joint venture pursuant to which they signed a contract with Total E&P Uganda for Engineering, Procurement and Construction (EPC) of a central processing facility at Buliisa without any legal restraint or exception provided by the law.

He contends all that is being done in contravention of the law which only provides for formation of a joint venture with a Ugandan company where Ugandans or Ugandan companies do not have capacity to provide the said goods and services.

In his affidavit that was filed on June 24, 2021 at the High Court (commercial section), Oluka wants court to declare that previous and ongoing procurement process illegal and are being done in contravention of articles 2, 26, 40 and 244 of the constitution and all enabling laws providing for national content in the petroleum sector.

The lawyer wants the implementation of the aforementioned procurements done in accordance with the Constitution and the national content provisions of the relevant petroleum sector laws.

"An order directing the respondents to conduct a legal audit of all the petroleum procurement activities in the (1) above to ensure compliance with the national content provisions of the law. An order of injunction restraining the respondents from continuing to conduct any further procurements in the petroleum sector which do not comply with the national content provisions of the law," reads part of the affidavit.

He also wants a declaration that all business income derived from procurement under the projects in (1) above is taxable in Uganda.

He noted the matter is of an urgent nature because the impugned procurement processes complained of are illegal and yet they continue to go on and are undermining the economic rights of Ugandans.

"The impugned procurements, if allowed to continue, shall cause loss of public revenue and property unless restrained. The application raises matters of broad public concern that affect all citizens of Uganda and it is a legal matter that requires addressing pro bono publico," he sates in his affidavit.

Article 244(2) of the Constitution gave the Parliament of Uganda the mandate to make laws regulating the exploration of mineral and petroleum resources in the country and the August House gave effect to the said Article 244 by enacting the Petroleum (Exploration, Development and Production) Act 2013 whose purpose is to regulate petroleum exploration, development and production.

The Court has set September 1, 2021 as the hearing date for the case.