Uganda opposition coalition picks 2011 flag bearer

* Third time for Besigye to seek to unseat Museveni

* Electoral Commission due to announce nomination dates

By Elias Biryabarema

KAMPALA, Aug 31 (Reuters) - A coalition of Ugandan opposition parties on Tuesday elected a twice-defeated retired colonel, Kizza Besigye, as its flag bearer to run against President Yoweri Museveni in next year's election.

Five opposition parties formed the Inter-Party Cooperation (IPC) in July 2008 and agreed to field a joint presidential candidate against Museveni who has held power in Uganda, East Africa's third-largest economy, since 1986.

One of the parties, the Uganda People's Congress (UPC), pulled out of the coalition on Monday in a disagreement over a demand to replace the Electoral Commission. [ID:nLDE67T177]

Besigye leads Uganda's biggest opposition party, Forum for Democratic Change (FDC), and will bank on the wider and stronger opposition platform in his quest to unseat Museveni.

"In spite of the very challenging conditions under which all elections we've participated in were held, our share of the vote has been rising while that of Museveni and his NRM has been dwindling fast," Besigye said after his nomination.

"Museveni got 75 percent in 1996, 69 percent in 2001 and 58 percent in 2006 in spite of the increasing rigging," he said.

Museveni announced on Saturday he was seeking re-election [ID:nLDE67S084]. His National Resistance Movement party is expected to officially pick him as its candidate in mid September.

His two last wins -- in 2001 and 2006 -- were marred by accusations of violence and vote rigging.

Uganda's Electoral Commission (EC) is due to announce on Wednesday nomination dates for candidates who intend to contest presidential and parliamentary seats.

Besigye said some leaders had expressed scepticism about his candidacy, saying he had lost twice and that the state could arrest him again as it did in 2005.

"We have a country today where you have a tiny clique living in opulence while the rest of the country is living in humiliating poverty, without decent housing, medical care, water and sanitation and all the other forms of deprivation that our people are living with," Besigye said.

Uganda discovered commercial petroleum deposits in the Lake Albert Rift basin along the border with the Democratic Republic of Congo in 2006 and reserves are estimated at 2 billion barrels.

British explorer Tullow Oil (TLW.L) is expected to start commercial production in the final quarter of next year. It aims to produce 200,000 barrels per day by 2015. (Editing by George Obulutsa and Peter Graff)