Somalia
Somalia: President approves oil deal as PM rift continues
By
Aug 19, 2008 - 9:38:58 AM

KUWAIT CITY, Kuwait Aug 19 (Garowe Online) - Somalia's interim president, Abdullahi Yusuf, has signed an agreement with two foreign firms paving the way for the establishment of a joint-venture company that would explore the Horn of Africa country's natural resources, government officials said.

Oil Minister Mohamud Ali Salah, who resigned in July, officially inked the deal on behalf of the government, which formally establishes a company named Somali Petroleum Company (SPC) to manage the country's resources.

Under the deal, which President Yusuf approved as the Petroleum Law of Somalia on August 7, the Somali government owns a 51% share of SPC while Kuwait Energy Company and Indonesia's PT Medco Energy International each own a 24.5% stake in the SPC, according to Kuwait-based daily Al Watan.

Speaking at the signing ceremony, Mr.Salah said that SPC will provide a "transparent basis for developing the oil and gas industry," while underscoring that successful oil exploration will help eradicate "the prevailing poverty and eliminating the prevailing instability" in Somalia.

Senior officials working with Kuwait Energy and Medco welcomed the deal, arguing that the agreement will "generate income for Somalia" and also help in "reducing unemployment in the years to come," according to the Al Watan report.

Dispute

Currently, President Yusuf and his Prime Minister, Nur "Adde" Hassan Hussein, are both in the Ethiopian capital Addis Ababa where Ethiopian and African Union officials are helping mediate a constitutional dispute between them.

The dispute erupted in late July after Prime Minister Nur Adde fired Mogadishu Mayor Mohamed Dheere, a close ally of President Yusuf. In protest, ten members of the Prime Minister's 15-seat Cabinet resigned, with reliable sources telling Garowe Online that the ministers who resigned are allies of the President.

It is not clear how Oil Minister Salah, who resigned last month from Prime Minister Nur Adde's Cabinet, can sign legal deals. [ READ: 10 Cabinet ministers resign in Somalia as govt row deepens]

Some of the Cabinet ministers who resigned have suggested that they have not done so formally by submitting resignation letters to the Prime Minister's office, adding that Prime Minister Nur Adde only replaced four members of the Cabinet who submitted formal letters.

Government sources in the capital Mogadishu say President Yusuf's decision to sign an oil agreement with Kuwait Energy and Medco was "unilateral" and did not pass through the country's federal parliament, which is based in the inland town of Baidoa.

Further, ex-Prime Minister Ali Mohamed Gedi -- Nur Adde's predecessor -- resigned  in October 2007 after lawmakers opposed the Petroleum Law he proposed.

Many Somali lawmakers said Kuwait Energy and Medco -- the two firms President Yusuf signed the new deal with -- had prepared the Petroleum Law, which gave the companies an "unfair advantage," according to parliament sources.

The new oil deal will have ramifications on agreements signed between the Government of Puntland and Australia-based Range Resources, Ltd., as well as Range's joint-venture partner, Canada's Africa Oil Corp.

Source: Garowe Online