Uganda’s oil may be a curse in future and this analogy is developed based on evidences from other producing countries across the globe.
I dedicate this article to my Mentor and a good friend Mr. Byaruhanga Robert for his genuine support and rare found generosity and maximum respect to him because of his factual deep analysis and wide knowledge on the oil industry.
First of all, as you are reading this article, keep memorizing this phase, “if it has happened elsewhere then it can happen here in Uganda”.
Let us start with Venezuela as one of the classic examples that we need to look at.
In the world of oil, Venezuela rose from rags to riches.
Oil revenues for forty years enabled Venezuela to evolve from one of the most impoverished nations in the world to one of the wealthiest in Latin America.
All of the country’s vital sectors improved; health care, education, employment, longevity, and Infant survival rates.
Businesses prospered and the international banks flooded the country with loans that paid for vast infrastructure and industrial projects and for the highest skyscrapers.
Then, oil prices crashed, and Venezuela could not repay its debts, the IMF imposed harsh austerity measures and pressured Caracas to support the corporatocracy in many other ways.
President Museveni is very firm about having a refinery in Uganda but some saboteurs have shamelessly indicated that it is not commercially viable to invest in the refinery.
Yet in 2009, the government of Uganda contracted Foster Wheeler Energy Limited from united Kingdom to carry out a feasibility study on the development of a refinery in Uganda and the study confirmed the economic viability of refining petroleum in the country, and the recommendations were adopted in 2011 and a 60000 barrel per day refinery was to be located at Kabale in Buseruka subcounty, in Hoima District.
The East African Crude Oil Pipeline construction budget for 1445 kilometers is 3.5 billion US dollars and the pipeline is planned to have a capacity of 216,000 barrels of crude oil per day.
Tanzania will earn $12.7 of each barrel of oil transported through it and more than 2000 expatriates are expected in the country to work in oil and gas sector.
It is a big shame that some of the planners of this country are fighting this venture.
Uganda discovered oil way back in 1925 through a government Geologist Wayland who proved that it was commercially viable in 2006.
The state should have invested heavily in these golden opportunities for its citizens, but it’s ridiculous that we changed the narrative from a refinery to the construction of a pipeline.
I’m also wondering why the agreements are confidential and are kept secret.
I heard some cases of irregularities in the compensation process where the original land owners were under-evaluated and others were forcefully evicted from their land.
There is fear that these will result into serious resentments and conflicts in future from the natives.
Allow me to cite another good example from Nigeria; Nigeria is a West African country and discovered her oil in 1956, exportation of oil began in 1958. Nigeria happens to be the tenth recognized oil exporting country in the world.
The oil and gas industry contributes 95% of export earnings and 40% of Nigeria’s total revenue. The oil economy in Nigeria is very important to the country, but the people of Nigeria still suffer from a corrupt government.
People in Niger Delta are living in absolute poverty, the environment is devastated and extremely destroyed, illegal oil refineries are run on a large scale, government projects are sabotaged, oil pipe lines are destroyed every day, many militant groups are emerging, there are oil spills in water bodies regularly.
This really makes me worried for my dear country Uganda because these incidents are highly expected to happen here.
I was shocked that some big ministers were involved in corruption scandals during the signing of agreements. Unfortunately, these multibillion oil companies care only about making profits.
On this issue also, allow me to cite another incident in Nigeria; Shell failed to clean up and court ordered it to compensate the affected people but up to now, no compensation has been done.
Conflicts arose in 1990 between foreign oil companies and a number of Niger delta ethnic groups who felt they were being exploited particularly the Ogoni and the Ijaw, and these groups started sabotaging the developments including destroying pipelines.
Eventually, shell was forced to vacate the land.
These misunderstandings between oil companies and the natives started from land troubles. The oil companies then decided to employ foreign experts, leaving more local Nigerians unemployed.
There has not been significant impact of crude oil production in improving environmental conditions for Nigerians. This implies that while oil companies have profited immensely from Nigeria’s oil wealth, in the over 45 years of exploitation, local communities in the oil rich areas still live in poverty and with daily pollution caused by non-stop gas flaring.
If Shell had invested and empowered the locals, it would not have experienced such a big sabotage, this should be an eye opener to Uganda.
I have been listening to President Museveni on the issue of oil and he has consistently encouraged citizens to focus majorly on agriculture and other sectors because he understands the severe effects of Dutch disease that may result from not paying maximum attention to oil sector.
Look at this other scenario, Texaco discovered petroleum in Ecuador’s Amazon region and a trans-Andean pipeline was built, then shortly, over a half million barrels of oil leaked into the fragile rain forest.
During this same period, the indigenous cultures began fighting back. For instance, on May 7, 2003, a group of American lawyers representing more than thirty thousand indigenous Ecuadorian people filed a $1 billion lawsuit against ChevronTexaco Corp.
The suit asserts that between 1971 and 1992, the oil giant dumped into open holes and rivers over four million gallons per day of toxic Waste water contaminated with oil, heavy metals, and carcinogens, and that the company left behind nearly 350 uncovered waste pits that continue to kill both people and animals.
Ecuador is in far worse shape today than she was before they introduced her to the miracles of modern economics, banking, and engineering.
Since 1970, during that period known euphemistically as the Oil Boom, the official poverty level grew from 50% to 70%, unemployment increased from 15 to 70%, and public debt increased from $240 million to $16 billion.
Meanwhile, the share of national resources allocated to the poorest segments of the population declined from 20% to 6%
Surprisingly Ecuador is in too much foreign debt and must devote an inordinate share of its national budget to paying this off, instead of using its capital to help the millions of its citizens and those officially classified as dangerously impoverished.
The only way Ecuador can buy down its foreign obligations is by selling its rain forests to the oil companies.
NOW, my biggest worry is on Uganda’s debt. I vehemently believe that we are already trapped, and as an analyst, allow me to make predictions on Uganda’s oil revenue allocations; approximately 75% will be taken by oil companies and the remaining 25%, three-quarters must go to paying off the Foreign debt.
Most of the remainder will covers military and other government expenses which will leave about 2.5% for health, education and less than 3% will go to the people who need the money most.
My mentor, Mr. Robert told me that opportunity goes to those who are prepared.
We must position ourselves for these opportunities. Oil and gas sector is big with numerous opportunities, let us tap into them.
Composed by Eng. Godfrey Mbagira a social activist and a political analyst, founder of GOAM Youth voice Uganda.
For God and My Country