Politics of Oil in Uganda

By Paul Ndiho, Washington DC
February 7, 2011

Uganda is believed to have the largest onshore oil reserves in sub-Saharan Africa, but there are mounting concerns that an influx of petrodollars could lead to corruption.
Energy experts say Uganda will start producing crude oil this year, reaching peak production of 150-thousand barrels a day by 2015. Some of the oil will be used for power production, but the bulk will be sold domestically and in the region. The government says revenue will be used for infrastructure development Uganda’s President Yoweri Museveni is reaching out to international investors.
“The oil industry in Uganda has potential of providing a lot of investment opportunities to oil companies and other related businesses. You are all welcome to invest in Uganda, to invest in this emerging industry, I am confident that with these interventions, Uganda will be a good destination for investment in the mining, petroleum and energy sectors.”
Within Uganda, there have been concerns that oil revenue sharing agreements between energy companies and the government have not been made public. Dr. Kizza Besigye, Uganda’s leading opposition figure, says that this lack of transparency could lead to high levels corruption and warns that some contracts may have to be renegotiated. Other critics say that Museveni, who has ruled for more than two decades and is standing for a fourth presidential term, will not tolerate a handover of power with petrodollars about to flow.
“The secret contracts that have been negotiated with the current regime will have to be reviewed because we don’t know what they are. It will have to be reviewed and a review can lead to any kind of outcomes; could lead to a re-negotiation, it could lead to cancellation; it could lead to any form of outcome depending on what we find. We don’t know. This country does not know what our leaders are negotiating on our behalf.”

Last year, a Ugandan court dismissed a case that local NGOs had filed to compel the government to disclose details of oil-sharing agreements it signed with four companies. Tom Balemesa, an oil researcher and Peace Corp Fellow, says that since the discovery of oil, expectations are high and life of ordinary people is being transformed in one of the remotest regions in western Uganda.
“With the discovery of Oil more people are coming into Hoima District and more people are expecting a lot of benefits in terms of jobs.”
Balemesa is also concerned that Uganda’s local population will not be able to get jobs in the oil industry.
“The whole idea is looking at it from a humanistic approach to the person on the lower side… Yes the road has been contracted but what are the alternatives for this person on the ground who has not been to school because most of them have not been to school, so are they going to resettle them, are they going to give them some compensation, or are they going to encourage them to go to school and get skills?”
Analysts say Uganda has the potential to produce as many as 200-thousand barrels of oil per day. This would place Uganda among the top 50 biggest producers in the world and among the top 10 in Africa.

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