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sharing in governance of extractive industries

Misplaced excitement about oil in Uganda due to lack of information

2011 will go into the annals of Uganda’s history as the year when the oil bubble burst. The last quarter of the year was characterised by much talk on oil that persistent media reports quoted the President advising Ugandans not to be so excited about the recent oil discoveries.

All this after the oil debate reached boiling point and climaxed with a special session in Parliament to discuss developments in the oil industry. At some point, the President was even quoted as having said that sometimes he has to be reminded that we even have oil in Uganda, saying he forgets. He has advised that Ugandans should forget about oil and instead focus on agriculture and tourism.

The President rightly reminds Ugandans about our comparative advantage as a country which is agriculture and tourism. Oil is a finite resource and after 30 years or so it will be extinct.

Whereas it’s important for Ugandans not to be excited over the oil discoveries, it’s also important that they be educated to appreciate this fact. The only way we can achieve this is if we explain to Ugandans about the nature of oil and gas and indeed other extractives.

Inadvertently, government’s inability to explain to the citizens what oil discovery and production means is fueling the excitement. We all know that oil in Uganda is largely found in the Albertine Graben which is home to more than eight game parks and game reserves.

We also know what oil exploration and production can do to the national parks and biodiversity in general if caution and community vigilance is not encouraged to ensure oil companies comply with minimum environmental conservation guidelines.

Experience from other oil producing countries like Nigeria, proves how oil production can potentially cripple the agricultural sector through the so called “Dutch Disease.” Therefore, if we are indeed serious about sustaining tourism and agriculture in an oil producing Uganda, then we must encourage dialogue on oil and transparency in the whole sector.

The public excitement has been caused by the relevant government authorities not coming up with a timely communication strategy to educate the citizens about this entire oil hullabaloo. We can’t pretend that oil is your ordinary resource because we know it’s not. We can’t therefore blame the ordinary Ugandans for expecting that this discovery is similar to the biblical “mana.”

The Ministry of Energy and Mineral Development has for a long time been drafting a communication strategy to sensitise Ugandans on this same oil. Only God knows what is so difficult about executing the strategy. May be that will save the situation. In the absence of a government position and guidance on what the oil discovery means for Ugandans, you cannot blame Ugandans for being excited.

A close analysis of what has been happening in Uganda’s oil sector this far reveals some intriguing observations. Exploration and production is going on without a comprehensive legal framework.

The reason given for this is because we must extract the resource anyway. Without even producing a single drop of oil, we have gone ahead to spend all the revenues collected from taxes and other non-tax oil revenues on purchase of jet fighters and construction of a hydro power dam.

The Central Bank Governor admits before the whole country how he agreed to deplete the Central Bank reserves simply because he was given verbal assurances that the reserves will be replenished once the oil companies pay the Capital Gains Tax. Never mind that this tax is still being disputed.

The few scenarios cited here are being done by Uganda’s crème de la crème. Now, if that’s not excitement, then what is it? Isn’t it unfair to blame poor Ugandans with little or no knowledge of how an oil industry works not to be excited if our very own technocrats are behaving excitedly?

We shouldn’t use the guise of containing excitement to stifle debate on oil in Uganda. If anything we need to explain what this oil means to Ugandans in terms of rights, economic, social and political wellbeing. And maybe we should start with our very own technocrats, because to me they are more excited than the ordinary citizens.

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Comment by Henry Mugisha Bazira on January 23, 2012 at 17:18

Deus,

This is a great piece. Thanks.

Henry

Comment by MUKALAZI DEUS on January 20, 2012 at 11:25

Edmund, you are right. As a country we need to subscribe to the EITI. Uganda has an Oil and Gas Policy. Its been in existence since 2008. Objective VI of the Policy explicitly commits government to subscribe to EITI. More so, in October, there was a special session in the Ugandan Parliament. The session on 11th October passed 10 resolutions. One of the resolutions was that Uganda subscribes to EITI on top of expediting the necessary legal framework. Well the powers that be are still taking their time but as Civil Society we are working together to ensure Uganda subscribes to EITI.

Comment by Edmund Rich on January 20, 2012 at 9:55

Good article Mukalazi.  An important starting point for Uganda would be to sign up to the Extractive Industries Transparency Initiative along with 35 other coutnries, including 21 African contires.  This would give citizens reliable information on the amount of money coming in to the government (ie. the citizen's money) from the oil sector.  By establishing a group of government, companies and civil society around the same table, it creates a platform for accountability in the sector. For more see www.eiti.org.

Comment by Nick Young on January 20, 2012 at 9:41

You’re absolutely right that a public knowledge and information deficit is dangerous (as I argued in a similar Monitor piece last August, which I’ve just posted to this site.)   But the technocrats in Uganda’s civil service, many of whom I believe to be hardworking people who are doing the best they can), are in a difficult position.  Who are they accountable to?  The people of Uganda or the elected politicians?   Theoretically both—but in practice to the politicians and, pre-eminently, State House.  Ultimately, it is President Museveni himself who needs to see that public information, participation and debate are an “opportunity” for policy development, not a “threat.”

Comment by Niwamanya Shallon on January 20, 2012 at 8:25

thanks again Deus

Comment by MUKALAZI DEUS on January 20, 2012 at 8:18

The Ministry of Energy Communications Team (interesting to know they have one) placed a response in yesterday's papers. It contains interesting revelations. Much as they claim alot of informationn is already in the public domain, they admit the Communication Strategy was fionalised in Jun 2011 but is yet to be tabled to cabinet. One wonders why they are rushing to sign deals with oil companies if they cant rush to finalise and roll out the communication strategy. You can read the whole response at this link: http://tinyurl.com/769ye2d

Comment by Niwamanya Shallon on January 20, 2012 at 7:28

sorry, i meant Deus

Comment by Niwamanya Shallon on January 20, 2012 at 7:28

i agree with you Denis.

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