April 2011
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Day April 15, 2011

”Police Have No Right to Stop Besigye or people from Demonstrating”, Nina Mbabazi


Dear Ugandans,
It is most unfortunate when police teargas into a school not once, but twice. I think you will not get a defence out of me. At this stage it would seem someone is smoking something.This amounted to unnecessary use of force and gross violation of the rights of the children. I watched NTV with my sons yesterday and we saw new born babies being evacuated from a health faculty that had been tear gassed. My sons have kept asking me since, what is going on? I am ashamed even to discuss it. Was this Kayihura’s doing? No and yes. No he could not be so stupid to want crimes against humanity charge levied on himself.

Yes, it is his responsibility to train police before giving them dangerous tools. I haven’t gotten over what I saw last night. I am positively feeling shame. Shame especially when Hon. Odongo Otto and Ekanya walked to parliament without any people walking with them and unlike the others, they were wearing branded T-shirts. Almost saying, here I am, yet nobody walked with them. It is more likely that people’s reaction and the huge crowds we saw on NTV last night walking with Dr Besigye were doing so because police was out of order not because they believed in him.

An NRM law that allows you to have processions, demonstrations as long as you inform the police. You do not need to seek permission? They have no right over your right to demonstrate, you just have to inform them. Why don’t you want to take the moral high ground? I see IGP saying you need to discuss routes with him but the understanding I have of the law, you simply present your routing and he safeguards your routing. Muwanga Kivumbi Vs Attorney General judgment in Constitutional court is clear. Police have NO RIGHT to deny a procession or demonstration. Police can advice under Police act Section 32(1) of alternate routes and how to have a procession that is safe but its right to deny Section 32(2) was quashed by court. So Police denying any procession is a gross violation of the law.

The issues being raised by the ‘walk to work ‘are very legitimate issues, let nobody tell you a lie. They are very legitimate. Food prices and fuel prices are high and they don’t require rocket science to fix them.

I wrote here and a foolish person tried to turn it into a Mbabazi vs the system topic in the Red pepper. I wrote and continue to write that escalating food prices is dangerous. In Wednesdays Monitor, there was a warning that because of China’s drought, World food prices are going to continue to rise by 30% by end of year. Reading the Farming diary, I realized, that we can solve the food and fuel problems.
Just to refresh your memory, people don’t buy matooke in bunches anymore. I went to the market on Monday and found that the business community in the market have adapted to hardship. They sell fingers of Matooke. Each finger is 500/=. Without this consideration on business side, we would have already had a problem with Matooke. I figured that it is divine intervention that has saved us so far. I am very proud of the human spirit of the Ugandans that I found in the market. Very thoughtful and considerate people even when they are doing business. It shows you that Ugandans are capable of corporate social responsibility in a big way.

China has already announced reforms because as soon as they realized their people were mobilizing for food demonstrations, they realized that if they don’t nip it in the bud, China Communist Party was going to face the worst threat to its existence since the maniac Chairman Mao Zedong’s Gang Of Four. As such, they announced immediately at the convening of their delegates conference that they were going to carry out reforms. Now everyone is quiet. They are hungry yes, but they have hope that help is on the way.

This by the way is the content of my Sunday thoughts. Our citizens want to live in dignity. They don’t want to hurt anybody, but they can’t live off one meal a day. They become angry and resentful and obviously, the growth of this Walk to work in a few days shows that the problem has no political borders.

I will not join the people who laugh at this or try to use this for politics. I think it is despicable that anyone would want to take advantage of vulnerable people. Their honesty about their situation as we saw on TV yesterday, (Yes some of them managed to describe their hardships) showed me that Uganda is most vulnerable now to wrong manipulations and that is a bad thing. Yes, we need a peaceful solution to this problem and we need to feel that there is hope at the end of the tunnel.

Food crisis

This food crisis has been going on for a long time and Kabakumba said that government is not responsible. How come nobody in Parliament has brought it up other than yesterday when Hon Lumumba intimated to the press that government MUST not sit back but come in to help the situation? Maybe it is not that people are not listening to ministers: One and Bumba, but their method of selling the message is not effective at reaching the people.
The issue now is that opposition has moved to a different level of thinking. They no longer wish to play in this playing field that some in the NRM describe as the “right fora”. Their “right fora” is not provided for by the constitution and they are “claiming” that they respect it more than others as we saw in Dr Besigye’s interview on NTV last night.

If we fail to understand this new shift, we will fail to find sensible solutions. It is okay for them to do what they are doing. The law provides for it. Those unsophisticated rather barbaric acts of law enforcers yesterday have left us hanging our heads in shame. Just to remind you what the constitution that you helped write says;

38. Civic rights and activities.
(1) Every Uganda citizen has the right to participate in the affairs of government, individually or through his or her representatives in accordance with law.

See this article gives our citizens many options and we should embrace all of them.

Adam Mugume

I saw Adam Mugume on TV last night too. He was talking a whole lot of rubbish. His economic principles of increasing interest rates will simply make it more difficult for Uganda businesses to prosper. See Bank of Uganda is taking advice from IMF and I guarantee you, they are only going to deepen this problem. Now let us go over what he said on TV last night;

Excess supply of Money
He said that there was excess supply of money causing inflation and that in order to correct this, banks were moving on increasing interest rates. This will mean you and me have to borrow at more than 25%. Now will this mop up excess liquidity? NO. Why? Because 75% of Ugandans do not bank in the formal sector. Go to the Bank of Uganda website and see. They wrote an article about it. Adam Mugume therefore is not being sincere.

There are many ways to mop up excess liquidity, that is getting people to form informal investment circles like ‘’nyiginya’’ and they start to invest their money (government intervention). They could invest it in agriculture or import for retail and this would mean that money gets mopped up mainly by buying dollars, investing in seed, investing in farming implements and driving the sale of such. These are just two examples. But the problem with thinking like Mugume is that this is the neoclassical approach which says the market self corrects. See I found Mr Mugume’s interview very interesting. See the IMF has believed for long in Keynesian Economics, and their policy have followed Keynesian school of thought. The problem with this is IMF knew that our economy would get to this stage and neoclassical principles can’t fix Keynesian principles. It only makes the situation worse. This stage in Keynesian economics is called Stagflation.

Stagflation is where Economic development is lower than inflation as we are experiencing. All economists who work in serious institutions in countries that have experienced this all warn of one thing. That when you correct inflation which is what Mugume was talking about, you cause a recession because even the slow growth that you have will become slower and turn to negative growth. I find it baffling that BOU has taken the approach to widen the problem.

Food Prices set to self correct since rains have come

He also stated that food prices will self correct since the rains have come. First of all this shows that government has no plan for food security. It shows government has no plan to even attempt to understand the depth of food insecurity which is an insecurity of its own. The truth is, food prices are not going to self correct. Government has neglected indigenous farmers. Let us not even discuss NAADS failings now. Those with 10-50 acres who were planting maize for example. They have left them to the forces of demand and supply and some of them for example said, the investment they made in maize compared to what they earned did not make it profitable. They chose instead to plant trees some of them. Others chose to leave their land empty. Food prices only self correct with a targetted program. Government should come out and tell us what their program is going to be. If you think it is impossible, you need only look at India under Nehru to see how successful he was at bringing down food prices.Bring back Produce Marketing board. If you must look for Larbi Siaw who started URA and put him in charge.

Income from Abroad
Ugandans never stopped sending money. They always sent it and it is what has kept the real estate industry very buoyant. however, they are sending less because they are earning less. They have their problems to take care of and those Economies like Britain are hovering over recession and US are just getting out of it. It is unlikely that the incomes will grow. If Mr. Mugume is wishing then he can continue to wish.

With regards to repatriation of forex, now two things are happening. April is the month for dividend pay-off in all the multinational companies here. I can see Bank of Uganda has done a fantastic job at stabilizing the dollar, but right now companies will buy dollars to repatriate to their countries. As a liberalized economy, people are free to send as much as they wish and we don’t stop it. So this will hurt us but we shall start to feel the effects end May-June.

With regard to investors who are gittery about the elections and sent their money abroad, it is true, they did but this election was a lot more peaceful than the last and considering that he left the issue in abstract, makes me suspect that he knows the movement of money outside Uganda was not significant compared to 2006 election. Also UIA is showing that I am probably more right because they registered higher investor interest in Uganda than they were expecting, so for all intents and purposes, I doubt this election scared investors much.

The Middle East

The Middle East is very interesting. First of all, Libya produces only 1.8M barrels a day which is only 2% of the world oil production. It therefore has very little impact on World oil prices. What you are seeing now is hoarding and speculation of oil especially with Saudi Arabia crazy neighbours and people afraid that Saudi might become the new Bahrain. Saudi Arabia is the Second largest producer of oil in the world after Russia and followed by US. They are producing 9.8M barrels a day. They were producing 10.8M barrels in 2004 but because of the world recession and need to protect their economy from collapse, they dropped production so that they could ask for more money per barrel. This week, New York light I think is trading at $111 and Brent crude hit $125. In January it was at $80.

Oil prices are set to keep increasing because of China and US economic recovery and this is the spring/summer season where these countries spend more money in fuel. In UK for example, government suggested to increase fuel prices by 1 pence recently and the country almost went into riots because for petrol they are already paying 1.6 pounds a litre which is 5,100 per litre. So if we (Uganda) do not cushion ourselves against fuel price increases (they are expected to increase by 26% this summer), the gains we have of the rain will be eroded by the fuel price.

So what should government do about fuel? Many things, soooo many things that they can do. They can ground all government fleet of cars. They can privatize all cars like they have done in Rwanda. Let all Ministers buy their cars and maintain them themselves. The Ministers and civil service should be given fuel on mileage (As Uhuru Kenyatta did), and not just any mileage because this thing of getting mileage for sending your government car to your farm, that is out of order. We private people handle our own costs. If Ministers started to handle their own costs they would not be so selfish and would feel the pain. I have been told that Richard Byaruhanga new MD NSSF has already done it because the costs of maintenance of the fleet was too much.

We can cancel all government travel abroad, all workshops, seminars, etc. We can move towards running an austere government budget. These are the things that shall show Ugandans goodwill.

Also we can tell Ugandans, do not turn away from your responsibility because you are having fun (some have resorted to drinking and not taking care of their families because of stress, etc). If you were drinking 4 beers, drink 2 now. We do not want to destroy our tax revenue at the brewery and we want people to live within their means and be happy. We teach them that it is only temporary; things will get better. And we plan to make sure things get better.

Quite frankly, I don’t understand why people are so thick they can’t see this? Are they thick or they are being proud for nothing? Some people talk about government strategic intervention. Of course it is allowed. Look at Americans, they are asking Obama to touch their strategic oil reserves. Is that not intervention? If the US economy was as open as Uganda and laissez faire as IMF has turned you into, how comes they built strategic fuel reserves and you have nothing? They tell you to private your government fuel reserves and we do it like a bunch of fools. Now if we had strategic fuel reserves we would not have had such a high price.

Don’t forget that part of our fuel rise is caused by delays in delivery of fuel from Mombasa and Dar es Salaam. For me Kenya really peeves me. I want us to break their monopoly and we take back our wagons, we route fuel through Tanzania etc.

And while government is sitting thinking about what to do. I suggest you get yourselves thinking and start screaming solutions on rooftops because at this rate, we are going to need trumpets to get through to some part time thinkers. So use all trumpets. Show people that it is their right to ask government for help. It is their right to demand solutions; it is their right to participate in providing the solutions.

Whatever you do, just do it. Do not allow this problem to be turned into a political problem for nothing. You know we should not be guilty of doing “too little, too late” As for corruption, I will need a whole other day to talk about it because it has become so prevalent that now I term the worst disease as grassroots corruption. The corruption on LC1 level, we really need a serious overhaul of the system, including overhauling this nonsense of duplication, undermining of departments, etc. It has caused the worst corruption imaginable.

Besigye

There was no need for Besigye to inform the police if he was walking alone but he(Besigye ) is as popular as a rock star as you no doubt saw on TV especially in the urban area. Yesterday I saw Beatrice Anywar walking alone, Odongo Otto and Ekanya walking alone. Those are NOT demonstrations or processions. I saw Besigye walking with about 10 people at first. This amounts to a procession and a public figure like Besigye would of course pull crowds so my opinion is, he should understand that he is a very popular person and as such is a crowd puller and his popularity should humble him and he says, what the heck, let me send these useless guys a mere letter (NOT NOTICE) stating that I intend to walk so that they can prepare for my rock star status.

Did you see NTV? Did you see how well his walk was after it resumed? Did you see how Police was doing the right thing and walking by the sides to keep the peace until those vagabond Military police came along and all hell broke loose? See a mere letter to inform would have given Besigye the moral high ground. Civil disobedience is the script he is following. It says that people must refuse to follow unlawful orders or what they perceive as unlawful laws. This means that Kayihura saying don’t walk is unlawful and he MUST walk if he wants, But Section 32(1) says as law abiding citizens we should just allow police to do their job and this is not an unreasonable request is it? I saw Ekanya on TV saying police let them walk freely and some police told him that they are also suffering from the fuel and food prices.

See yesterday made me go back to read the constitution and this is what I found;

(2) Every Ugandan shall have the right—
(a) to move freely throughout Uganda and to reside and settle in any part of Uganda;
(b) to enter, leave and return to, Uganda; and
(c) to a passport or other travel document.
38. Civic rights and activities.
(1) Every Uganda citizen has the right to participate in the affairs of government, individually or through his or her representatives in accordance with law.
(2) Every Ugandan has a right to participate in peaceful activities to influence the policies of government through civic organisations.

Besigye is already empowered by the Constitution of Uganda. He says he wants to return Uganda to the rule of law. Why does he not stand above it then and just send Kale an information note. The constitution does not specify how to inform but it says we should inform the Police otherwise we would turn into lumpens.

Nina Mbabazi Rukikaire

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BRIEF ON PETROLEUM SUPPLY ISSUES – HON ONEK’S STATEMENT


I was asking for this out of curiosity to understand the problem. Thought I would post it here too so that you can understand what the Minister said;

PETROLEUM SUPPLY DEPT / MINISTRY OF ENERGY AND MINERAL DEVT
BRIEF ON CURRENT PETROLEUM SUPPLY ISSUES

A: BACKGROUND

The Ugandan market consumes on average 110,000 cubic metres per month of products with an annual growth rate of 7% and it could be higher if there were no supply interruptions. Last year, the interruptions became rampant in September when we had inadequate Petrol for 3 weeks and the public was persistently seeking explanations from Government. These supply interruptions in addition to stifling business, become an opportunity for some unscrupulous individuals to cheat the desperate customers through overcharging them, which is not a good practice in a liberalized market whose core objective is to promote fair competition and security of supply.

The majority oil marketing companies operating in Uganda import their products through Mombasa and would ideally truck the product from Western Kenya whose pumping capacity is too low to satisfy the demand. This situation will remain so until the expansion of line 4 terminating at both Eldoret and Kisumu is complete most likely towards the end of this year. OMC’s are now forced to alternatively load from Mombasa and Nairobi.

Mombasa port has remained too busy to serve the region and some delays in discharge are always experienced, the reason why private unscheduled imports were discouraged.

Last year, the Government of Kenya communicated to all Oil Marketing companies that 70% of the available ullage in the Kenya Pipeline Company (KPC) systems would be for domestic consumption and the remaining 30% would be available for transit customers where Uganda, which takes close to 85% of the total transit cargo, would benefit. In further communication, all private imports into Kipevu Oil Storage Facility (KOSF) were discouraged as they were found to be contributing to congestion at Mombasa port and such private importers were advised to have their imports aggregated for all transit marketers and processed through the ullage allocation committee and accordingly the Open Tender System was recommended to only companies that had import Licenses and trading in Uganda, Rwanda, Burundi and Democratic Republic of Congo. In September 2010, bids were invited for Kenya Open Tender System (OTS) but did not take off.

It is expected to start this quarter and the guidelines have already been drafted.

B: EFFORTS BY GOVERNMENT OF UGANDA TO STABILIZE SUPPLY:

Consultations:
Efforts to address supply problems have always been in place but following the September 2010 supply crisis, the Permanent Secretary led a delegation to Kenya and met with the Government of Kenya officials including the Ministry of Energy, Kenya Revenue Authority (KRA), and CEOs of Oil Marketing Companies based in Kenya and Kenya Pipelines Company (KPC). The delegation equally moved to Mombasa, Nairobi, and Western Kenya terminals on the KPC line to find out causes of supply interruptions and come out with a way forward to address them. All discussions were fruitful and demonstrated joint effort to address supply problems to Uganda.

Following the visit, Government invited all Oil Marketing Companies in Uganda for a meeting on 12th October 2010. During discussions, the PS appointed an Interim Supply Coordination Committee to jointly advise Government in addressing supply problems to Uganda.

The Interim Supply Coordination committee comprises of a representative from Ministry of Energy and Mineral Development, Uganda Revenue Authority, Uganda National Bureau of Standards and representatives of the Oil Marketing Companies comprising of the following members:

1. Mr. Ivan Kyayonka – Country Chairman Shell Uganda Ltd (Chairman)
2. Mr. Mamadou Ngom – Managing Director Total Uganda Ltd
3. Mr. Isaac Mariera – Country Manager Petro Uganda
4. Mr. Harish Asodia – Managing Director Petrocity
5. Mr. Geoffrey Rugazoora – Chief Executive Officer Mogas Uganda
6. Mr. Eric Karambasaizi – Managing Director Delta (Secretary)
7. Mr. Abdinoor Farah – Managing Director Hass Petroleum
8. Mr.Aloke Kumar – Managing Director Gapco Uganda

The terms of reference for this committee were as follows:

1. Review the southern route and advise on:
a. the appropriate incentive structure(tax rebate) and transit time
b. the impact of regulatory requirement to use the route
2. Review and recommend ullage allocation, rules for the Open Tender System with its implementation modalities and lifting of product from Western Kenya
3. Review and advise on easing the lifting of Petroleum Products from Nairobi.

The interim Petroleum Supply Coordination Committee met twice and made a brief to the Ministry with the following recommendations:

Southern Corridor Route (Dar)

i. Transit time
It was recommended that the MEMD requests the Tanzania Government for 60 days instead of the present 30 days.
ii. Incentive/ Rebate
It was observed that this rebate is a result of the difference in transport costs via the Southern Corridor from Dar as compared with the Northern Corridor through Kenya. It was recommended that the benchmark should be Dar compared with Nairobi loading by trucks. The quantum of the incentive came to $60 per cubic metre. This incentive would apply on Diesel and Petrol only since Kerosene has no major supply problems given the low consumption.

Northern Corridor Route (Mombasa).

Ø Proposal to share ullage.
It was pointed out that the main limiting factor in Kenya is the capacity of the Kenya Pipeline Company to evacuate product from the import terminal at Kipevu (KOSF).
Under this item, members were looking for a basis for sharing the import ullage in Mombasa.
The following criteria were proposed for companies to share the Uganda ullage:
1. The participant must be a company in Uganda with retail facilities
2. The company or their Group must be a regular importer into Mombasa with product destined to Uganda and warehoused in their name.
3. The sharing of ullage should be linked to market share.
§ It was proposed that until reliable inland market share data becomes available, import share as compiled by URA / Customs be used as a basis.
§ The Oil Companies that buy from other companies (trading volume) would however have opportunity to propose adjustment of share by mutual agreement of the concerned parties.
§ It was further agreed that for the start the import figures should be for the period January to August 2010 and subsequently monthly basing on 3 months moving average.
§ URA was requested and it provided the import data per company.

Ø Loading out of Western Kenya

a) The Uganda Government was requested to negotiate with the Kenya Government to scrap the VAT charged on services when Ugandan companies load in Nairobi. All Ugandan Oil companies requested to be freed to load in Nairobi and Mombasa in view of the continuing low capacity in Western Kenya.
b) The companies with facilities in Nairobi / Mombasa agreed to extending loading facilities to the small companies (offer hospitality).
c) Companies with rail facilities were encouraged to assist those without by offering temporary hospitality to offload the wagons or accept wagons in exchange of trucks to those who do not have rail siding.
After considering the above, it was proposed that loadings out of Western Kenya also be based on import figures as compiled by Uganda Revenue Authority. The sharing will be on a 3 months moving average.
Open Tender System (OTS) –

§ Try OTS on all products starting with November 2010 tender for the December 2010 import.
§ Uganda OTS to be run together with Kenya and using Kenya rules and terms. In this respect, Kenya Companies would include their sister Uganda company requirement in their bid but basing on the Uganda published share of ullage as advised by Ministry of Energy and Mineral Development.

C: RESPONSE BY GOVERNMENT:

On 5th November 2010, the Government of Uganda wrote to Government of Kenya requesting that:
a. Beginning with December 2010 delivery, the Ugandan Oil Marketing Companies be facilitated to use the Open Tender System through their sister companies in Kenya using the Kenya terms and conditions.
b. The monthly dedicated ullage to Uganda of 32,800 cubic metres of PMS, 10,000 cubic metres of JET A1, 7,000cubic metres of BIK and 60,000 cubic metres of AGO be confirmed and communicated
c. All Uganda Oil Marketing Companies be freed to load from Mombasa and Nairobi in view of the continuing low capacity in Western Kenya.
d. Loading in Western Kenya for transit petroleum products to Uganda be done according to the inland market share figures that will be provided by the Ministry based on each company’s performance in Uganda.

Due to urgency of the matter, the Government of Uganda sent another reminder to Government of Kenya on 31st December 2010 which was replied in affirmative in February 2011 that:
i. The Open Tender System (OTS) Committee has already drafted transit tender terms and conditions which are expected to apply to Uganda and other transit markets when they are finalized.
ii. Allocated dedicated ullage to Uganda out of western Kenya for AGO, PMS and DPK in respective quantities of 41,500; 30,000; 20,500 cubic metres excluding Uganda’s IPP which has automatic ullage allocation. The balance of the volumes can still be trucked from Mombasa and Nairobi till line 4 is complete.
iii. All Ugandan Oil Marketing Companies will apply to Kenya Revenue authority (KRA) to load from Mombasa and Nairobi pending completion of line 4 pipeline construction.

Supply to Uganda since then has been stable because of continuous effort by Ministry staff and individual Oil Marketing Companies where we have engaged Kenya on daily basis to allow discharge of transit vessels.

Promotion of the Central Corridor has been taken to full discussions by the concerned Government departments and will soon yield results.

D: CONCLUSION:
We shall continue to work together to stabilize supply to Uganda and we call upon Oil Marketing Companies to freely share information with Government so that we can ably provide the necessary support.

We do commend the collaboration that was exhibited during the election time when supply remained uninterrupted and we do recognize the zeal exhibited by everybody in the sub sector.

Nina Mbabazi Rukikaire

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