Uganda-Iran oil deal angered US - leaked cables

 

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Posted Tuesday, March 15 2011 at 03:00

President Museveni rubbed Washington the wrong way by visiting Tehran and cutting a deal with his counterpart, Mahmoud Ahmadinejad, to have Iran build Uganda’s oil refinery, a leaked US diplomatic cable shows.

After the three-day call in May 2009, Mr Museveni flew black with yet-to-materialise Iranian promises to fund construction of oil-processing facilities here and train our oil scholars at its University of Petroleum Studies and other institutions.

“We remain concerned about the implications of Iran's promised investment in the oil sector and for Uganda's foreign policy decision-making,” Ms Kathleen FitzGibbon, the former Political/Economic chief at the US Mission in Kampala, wrote.

The Iranian offers appeared healthy, or even irresistible for Uganda, which has struck oil wells teeming with an estimated 2 billion barrels but is struggling to extract the gas amid suffocating technological and resource hamstrings.

It would appear Uganda’s officially concealed oil jinx do not start or end there, at least according to accounts former Ambassador Steven Browning offered in the memo he wired to Washington.

Upon return after the 2009 visit, the diplomat notes that businessman Habib Kagimu, who represents interests of Libyan firm, Tamoil, allegedly promptly sought and obtained assurances from President Museveni that Tehran’s bidding would not dampen Tripoli’s stake here.

The Libyan oil company has at hand a contract to build, at $300 million (Shs630b), an oil pipeline from Eldoret in Kenya via Jinja, where Uganda’s perennially unfilled national fuel reservoirs are situated, to the capital Kampala.

“Kagimu stated that (Foreign Affairs Minister Sam) Kutesa and First Lady Janet Museveni, who are the financiers of Aggreko, an oil services company, and Kenloyd, a fuel importing/exporting company owned by Kutesa’s son, want to corner the market on the production and distribution of Uganda’s future oil products,” Ms FitzGibbon recounts of her May 25, 2009 conversation with Mr Kagimu.

She adds: “Kutesa allegedly believes that Iranian funding will allow their companies to circumvent normal procurement procedures.”

Minister Kutesa, who flew back to Uganda on Sunday evening, was not available for comment as he could not receive our repeated telephone call to his known mobile phone number.

This newspaper was unable to directly contact the First Lady but State House said last night that individuals dragging Ms Janet into oil business wrangles should substantiate their allegations.

“Oil is a national resource that will be guided and guarded by our institutions, not any individuals,” Spokesman Mirundi Tamale said. “President Museveni believes development of Uganda’s human resource is more important than oil because there are countries with a lot of minerals that are not as developed like Japan, which does not possess natural endowments.”

The diplomatic cable, in what it describes as accounts offered by Mr Kagimu, says “Kutesa persuaded Museveni to seek Iranian support to undermine Libya’s investment in the pipeline, a contract that Kutesa’s company sought, but lost to Tamoil”.

Kagimu admits meeting
In two separate telephone conversations with Daily Monitor last evening, Mr Kagimu admitted meeting Ms FitzGibbon at various times and places, including at matches of Pro-Line Soccer Club, which he co-owns, but said he never uttered anything implicating the President, his wife or minister Kutesa.

“I never met nor sought assurances of any kind from the President on Tamoil’s interests after he returned from Iran and, therefore, never received such assurance as alleged,” he said.

Mr Kagimu, in his recollections, said he told Ms FitzGibbon that Iran would be involved in exploration and development of oil fields, including building a refinery, when she asked whether Tehran’s drafting would not adversely affect Tamoil’s prospects.
He added: “The First Lady is not involved in any business that I know of. The owner of Aggreko Company is Rupert Soms and their local agents are known. I could not be so amateurish or reckless to say the First Lady and Minister Kutesa own the energy firm.”

Ms FitzGibbon, who authored the dossier, and Ambassador Browning who signed it off to Washington, have both left at the end of their tour of duty here.
Ms Joann Lockard, the public affairs officer at the US Mission in Kampala, previously told Daily Monitor they have decided not to comment on anything churned out by whistle-blower website, Wikileaks.

On another front, the Iranians are reported to be skeptical about investing in Uganda’s fledgling oil industry because they worry it may not be commercially viable to export given its “waxy consistency”.

Junior International Affairs Minister Oryem-Okello, who accompanied Mr Museveni to Iran, is quoted in the cable as saying the Ugandan leader explained that the refinery would produce diesel to run thermo-generators for electricity and other local uses besides exportation to regional neighbours.

UK concern
The US apprehension, which the cable says the UK envoy separately echoed to Uganda government at the time, was partly informed by President Ahmadinejad’s defiant stance towards the international community over his country’s nuclear programme.

The West suspects Tehran is edging closer to manufacturing nuclear weapons, but Iran says its programme is for peaceful purpose, and Mr Ahmadinejad, during a visit to Uganda last year, derided alarms raised by Washington and London as “bullying by the West”.

Although Uganda, which was a non-permanent member of the UN Security Council, last year, voted in favour of US-pushed sanctions against Tehran, the memo showed President Museveni did not wring concessions from Mr Ahmadinejad on the contested nuclear programme.

This, according to the dossier, was because “Museveni discussed the issue in a typically ‘African’ way, which was non-confrontational”. Mr Museveni raised the issue of Iran’s nuclear programme, arguing that the trouble it was causing Iran internationally was doing more harm than good, the cable notes, quoting Mr Oryem-Okello.

The minister last night said it is true he met US officials, including a delegation from the Department of State on June 1, 2009, but not to “debrief” them as alleged.
“It is incorrect and misleading to say that I debriefed US officials --- that’s sham.”

He, however, said: “But it is true in the official meeting at my office, which other ministry officials attended, I told the delegation that our President raised the international concerns of Iran’s nuclear programme with President Ahmadinejad.”