January 6, 2017 / 1:22 PM / 7 months ago

Oil bonuses an early sign Uganda suffering resource "curse", say critics

KAMPALA, Jan 6 (Reuters) - Hefty bonuses paid to Ugandan officials who oversaw tax dispute settlements with international oil firms are a sign hydrocarbon discoveries are increasing corruption in the country, government opponents and transparency campaigners said.

Commercial production is due to start in 2020 and some campaign groups are warning Uganda is already suffering the resource "curse", in which a rush of petro-dollars suffocates the rest of the economy, encourages graft and stirs unrest.

Uganda first discovered oil more than a decade ago but production has been stalled by lengthy rows between government and oil companies over tax payments and infrastructure.

Local media reported some 40 senior officials in the impoverished country's tax agency, energy, finance and justice ministries received bonuses, some exceeding $100,000.

"This is nothing but the beginning of the resource curse," said Dickens Kamugisha, chief executive officer at African Institute for Energy Governance (AFIEGO).

The Uganda Revenue Authority (URA), which paid the officials, said the bonuses were legal.

A first tax row erupted in 2010 between President Yoweri Museveni's government and Heritage Oil after the firm sold its stake in two oil blocks to its then partner, Tullow Oil. The government netted $434 million after arbitration.

In a second case, Tullow disputed a Uganda tax assessment of $473 million against its asset sale to China's CNOOC and France's Total in 2012. Tullow paid $250 million in an out-of-court settlement in 2015, nearly half of what was originally claimed.

The URA said in a statement that the payouts were to "appreciate the professionalism and ... ability to resist all pressure and compromise given the magnitude of the figures involved."

About 6 billion shillings ($1.66 million) were paid out in total to officials who included the head of the URA, the Treasury's top technocrat and a former attorney general.

Ugandans have expressed anger at the payments on social media and on radio talk shows, asking why well paid civil servants had to be rewarded for doing their job.

Independent legislator Wilfred Niwagaba told Reuters he planned to introduce a parliamentary motion on Jan. 10 demanding the bonuses be returned and the recipients prosecuted.

"This is contemptuous abuse of public funds. How do you talk of bonus payments as if government is now a profit-making company. We're staring a resource curse in the face," Niwagaba said.

The motion is unlikely to gain traction in an assembly dominated by the ruling National Resistance Movement party. ($1 = 3,625.0000 Ugandan shillings) (Reporting by Elias Biryabarema; editing by Richard Lough)

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