Corruption threatens Uganda oil revenue-opposition

* Uganda oil revenue threatened by corruption – opposition

* Government says oil money for infrastructure development

By Michelle Nichols

NEW YORK, Aug 13 (BestGrowthStock) – Corruption in Uganda will
swallow billions of dollars in revenue from the East African
nation’s budding oil industry that is needed to build schools,
hospitals and roads, says a Ugandan opposition leader.

Olara Otunnu, a former U.N. under secretary-general who
heads the Uganda Peoples Congress party, said there had been no
transparency on plans to develop the oil found in 2006 along
Uganda’s border with the Democratic Republic of Congo.

Otunnu, Uganda’s foreign minister from 1985-86, hopes to
topple longtime President Yoweri Museveni when the country goes
to the polls in February ahead of the start of commercial oil
production late next year.

British firms Tullow Oil (TLW.L: ) and Heritage Oil (HOIL.L: )
have found up to 2 billion barrels of oil in the Albertine Rift
Basin and experts say the reserves could be four times bigger.
Uganda stands to earn about $2 billion a year in oil revenue.

“Based on the current record all that money would be
swindled,” Otunnu told Reuters in an interview in New York.
“All this is being handled personally and exclusively at the
kitchen table of the president. we know nothing about it.”

“We don’t need to wait until oil begins to flow. We already
know … the oil revenue will become part of his personal ATM
machine,” said Otunnu, who could be arrested when he returns to
Uganda for failing to appear in court this week on sedition
charges related to radio show comments made earlier this year.

He says the charges are a bid by Museveni to silence him.

Ugandan Minister for Information Kabakumba Matsiko said it
was widely accepted that East Africa’s third largest economy
has been blighted by corruption, but the government has systems
and institutions in place to combat it.

OIL MONEY FOR INFRASTRUCTURE

“Otunnu is entitled to his opinion. Unfortunately he’s
blinded by his own hatred,” Matsiko said. “This oil has always
been there, but no previous government including the one in
which Otunnu served ever thought about starting exploration.”

“The president has stated on several occasions that the oil
money will not be used for recurrent expenditure but long-term
infrastructure development in the health, transport and other
sectors,” Matsiko said.

Museveni won power in 1986 and was credited with returning
stability and economic vitality to Uganda, ravaged by
dictatorship and civil wars in the 1970s and early 1980s. The
country’s economy is seen growing between 7-8 percent in
2010/11 from 5.6 percent in 2009/10.

But donors and global civil society groups accuse Museveni
of suppressing opposition and free speech, tightening his grip
on power and failing to rein in rampant corruption.

International donors said this week that they would trim at
least 10 percent off their $360 million contribution to
Uganda’s budget in the year to June 2011 because of concerns
over corruption.

Opposition parties have refused to work with the electoral
commission, because they say it is corrupt, but Otunnu said
that does not mean there will be a boycott of the election.

He also said negotiations continue among leading opposition
parties to form an Inter-Party Cooperation coalition to field a
single candidate against Museveni.

“Everything is turned into this corrupt enterprise,” said
Otunnu. “We must make sure … that there is change, there’s
accountability, there’s transparency — that this oil will be a
blessing for the people of Uganda,” he said.
(Additional reporting by Elias Biryabarema in Kampala; Editing
by Jerry Norton)

Corruption threatens Uganda oil revenue-opposition