Uganda Procures 8 Fighter Jets Worth $744 Million

KAMPALA, Uganda -(Dow Jones)- The Ugandan government has procured at least eight fighter jets and other military hardware worth $744 million from Russia as it prepares to start oil production in the Lake Albertine rift basin, along its western border with mineral-rich but restive eastern Congo, government officials have said. The jets and military hardware will enable the country to deal with any "eventuality" relating to rising security threats, Kabakumba Matsiko, Uganda's information minister said Thursday. "Every country needs to be well equipped to defend its strategic interests," she said. The initial payment was made around December last year, and according to intelligence sources at least $446 million has so far been paid. Intelligence officials say Uganda is facing rising threats from the impending secession of Southern Sudan from Northern Sudan in July. Southern Sudan has already accused its northern neighbor of arming militias in the oil-rich disputed Abyei region. Uganda has traditionally been an ally of the South. Uganda is also fearing possible incursions from the lawless eastern Congo, which borders its oil region, where U.K.-based Tullow Oil PLC (TLW.LN), France's Total SA (TOT) and China's CNOOC Ltd.(CEO) are preparing to start on a $10 billion investment project to develop the country's oil fields this year. The Ugandan army is already constructing a new army base, in Hoima near the shores of lake Albert. Last week, the Ugandan president asked ruling party law makers to approve the cost of the fighter jets retrospectively as a supplementary budget, when it is presented in the house. But opposition law makers have described the procurement as illegal, accusing the government of draining the reserves at the central bank without parliamentary approval, according to Nandala Mafabi, the head of the public accounts committee in parliament. People familiar with the situation say that the reserves are expected to be replaced by proceeds from taxes on recent oil transactions, involving Tullow, CNOOC, and Total. Last week, Tullow announced that it would pay at least $469 million to the Ugandan government as tax-related payments, as a result of its takeover of Heritage Oil PLC (HOI.LN) stakes in the country, as well as the sale of a third of its interests to CNOOC and Total. -By Nicholas Bariyo, contributing to Dow Jones Newswires; 256-75-2624615; bariyonic@yahoo.co.uk