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Uganda Court Rules Oil Contracts Should Stay Secret

Source: WSJ 2/3/2010, Location: Africa

A Ugandan court ruled that oil production-sharing agreements between the government and foreign oil companies should remain confidential to safeguard the interests of companies and the government.

Deo Ssejemba, the chief magistrate in Kampala, made the ruling in a suit filed in 2008 by activists and two Ugandan journalists seeking to compel the government to reveal details of the agreements to ensure transparency as Uganda moves closer toward commercial oil production.

"The applicants failed to prove that access to the oil production agreements would be in the interest of the Ugandan public," he told the hearing in Nakawa Magistrate's Court in Kampala.

Ssejemba sided with the Attorney General saying that revealing the deals would breach the confidence of the contracts as provided by the confidentiality clauses.

The applicants had said that by refusing to reveal the deals, the government was putting the confidence of the oil companies and a handful of its shareholders above the interests of over 30 million Ugandans. However, according to Ssejembe, the impact of revealing the contracts could outweigh public interest.

"The applicants failed to strike a balance between the interests of the public and company shareholders. The country would stand to lose if companies withdrew as a result of the revelation of the contracts," he added.

Charles Mwanguya Mpagi, political editor of Uganda's privately-owned newspaper the Daily Monitor and one of the applicants in the suit, said they planned to appeal.

"We shall appeal, but we want to first study the details of the ruling," he told reporters after the ruling.

According to Mpagi, the oil belongs to Ugandans and the media has to be allowed access to the deals.

The Attorney General said she was satisfied with the ruling and added that few countries make such contracts public. She added that under the terms of the contracts, the government can only reveal details at the consent of the oil companies.

In December, the Ugandan parliament asked the minister of energy and minerals development to table the deals to parliament; however, he declined, saying that he needed clearance from the attorney general.

Oil companies with production-sharing agreements with the Ugandan government include U.K.-based Tullow Oil PLC (TLW.LN), Heritage Oil PLC (HOIL.LN), Tower Resources PLC (TRP.LN) and Dominium Ltd.

Interest in the country's oil sector is on the rise following a string of exploration success since 2006 by Heritage and Tullow.

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