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Will Uganda’s ‘Pearl Sweet’ oil wealth fill pockets or just pass through?
Uganda’s oil dream stands at a crossroads between national prosperity and another resource-curse tragedy.
Will Uganda’s ‘Pearl Sweet’ oil wealth fill pockets or just pass through?
By: Admin ., Journalist @New Vision
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OPINION
By Patrick Edema
The government recently unveiled a new name for the country’s blended crude oil grade: “Pearl Sweet.” This marks a significant step forward in the lead-up to the planned start of commercial oil production by the end of 2026. Uganda discovered commercial crude reserves two decades ago in fields along the Albertine Rift Basin near its border with the Democratic Republic of Congo.
However, commercial production has faced repeated delays, primarily due to inadequate infrastructure and disagreements between the government and international oil companies regarding development plans. At the naming ceremony, President Yoweri Museveni explained that “Sweet” refers to the crude’s low sulphur content, while “Pearl” draws inspiration from Uganda’s nickname as the “Pearl of Africa,” a phrase popularised by former British Prime Minister Winston Churchill.
Indeed, Sweet crude is characterised by a sulphur content of less than 0.5%, whereas sour crude contains higher sulphur levels above 0.5%. These differences influence refining processes and transportation methods. Notably, Uganda’s Pearl Sweet crude will be exported via the $5 billion East African Crude Oil Pipeline, a 1,443-kilometre link from Uganda’s oilfields to the Tanzanian port of Tanga on the Indian Ocean. This pipeline is billed as the world’s longest electrically heated crude oil pipeline.
Uganda is not the first country to brand its oil. In 2010, Ghana named its crude “Jubilee,” aligning with international practices where producing nations assign distinctive names to their oil to attract premium prices. Other notable brands include Arab Light (Saudi Arabia), Minas (Indonesia), Saharan Blend (Algeria), Tijuana Light (Venezuela), Fateh (Dubai), and Boney Light (Nigeria). Additionally, the Brent Blend family, including Brent Crude, Brent Sweet Light Crude, Oseberg, and Forties, are all drilled from the North Sea, alongside Western Europe.
While the naming marks a milestone, many Ugandans remain concerned about whether the country will truly benefit from its oil wealth. Over the years, analysts from organisations like the Institute for Energy Economics and Financial Analysis (IEEFA) have warned that Uganda’s projected oil revenues may fall short due to rising costs and a global shift away from fossil fuels. The International Energy Agency (IEA) also predicts that global oil demand could peak as early as 2027. This suggests Uganda may be entering a saturated market, which could depress oil prices and threaten the profitability of the entire venture.
President Museveni urged caution, emphasising that oil is an exhaustible resource that should fund key sectors such as agriculture and infrastructure rather than immediate consumption. While this advice is prudent, it raises a fundamental question: how can communities that have endured poverty and land evictions accept a narrative of future investment when they see little immediate benefit?
Moreover, even if oil begins to flow, the revenue collection system may have critical flaws. Although Uganda has established ring-fencing rules to prevent loss transfers, the absence of a windfall tax potentially set with a trigger price and an extraction tax means the government might not effectively capture the full value of its resources at the source.
Transparency remains an ongoing challenge. While Uganda joined the Extractive Industries Transparency Initiative (EITI) in 2020, concerns persist regarding the full disclosure of project costs, contracts, and legal frameworks to ensure accurate reporting by companies. Without robust oversight, Uganda risks following other resource-rich nations where wealth is siphoned off before reaching public coffers.
Uganda is not the first country to brand its oil. In 2010, Ghana named its crude “Jubilee,” aligning with international practices where producing nations assign distinctive names to their oil to attract premium prices. Other notable brands include Arab Light (Saudi Arabia), Minas (Indonesia), Saharan Blend (Algeria), Tijuana Light (Venezuela), Fateh (Dubai), and Boney Light (Nigeria). Additionally, the Brent Blend family, including Brent Crude, Brent Sweet Light Crude, Oseberg, and Forties, are all drilled from the North Sea, alongside Western Europe.
While the naming marks a milestone, many Ugandans remain concerned about whether the country will truly benefit from its oil wealth. Over the years, analysts from organisations like the Institute for Energy Economics and Financial Analysis (IEEFA) have warned that Uganda’s projected oil revenues may fall short due to rising costs and a global shift away from fossil fuels. The International Energy Agency (IEA) also predicts that global oil demand could peak as early as 2027. This suggests Uganda may be entering a saturated market, which could depress oil prices and threaten the profitability of the entire venture.
President Museveni urged caution, emphasising that oil is an exhaustible resource that should fund key sectors such as agriculture and infrastructure rather than immediate consumption. While this advice is prudent, it raises a fundamental question: how can communities that have endured poverty and land evictions accept a narrative of future investment when they see little immediate benefit?
Moreover, even if oil begins to flow, the revenue collection system may have critical flaws. Although Uganda has established ring-fencing rules to prevent loss transfers, the absence of a windfall tax potentially set with a trigger price and an extraction tax means the government might not effectively capture the full value of its resources at the source.
Transparency remains an ongoing challenge. While Uganda joined the Extractive Industries Transparency Initiative (EITI) in 2020, concerns persist regarding the full disclosure of project costs, contracts, and legal frameworks to ensure accurate reporting by companies. Without robust oversight, Uganda risks following other resource-rich nations where wealth is siphoned off before reaching public coffers.
For instance, since the enactment of the Public Finance Management Act (PFMA) in 2015, aimed at ensuring transparent management of oil revenues, violations have persisted with impunity. In the FY2018/2019, the executive withdrew sh200 billion from oil revenues to finance budget deficits without parliamentary approval, contrary to sections 58 and 59 of the PFMA, which strictly outline how such funds are to be spent. Similarly, the Auditor General’s report for FY2017/2018 flagged an irregular withdrawal of sh125 billion from the Petroleum Fund, further underscoring systemic breaches of the law.
Beyond these fiscal infractions, the notorious sh6 billion "presidential handshake", disbursed to selected officials without due process, remains a sore point for many Ugandans. Although the Katuntu’s Parliamentary Commission report recommended that the recipients refund the money, the government has yet to act on that directive. These repeated lapses highlight an urgent need for stronger oversight and genuine accountability if Uganda's oil wealth is to benefit its citizens rather than slip through poorly guarded coffers.
Further, the ownership structure of the East African Crude Oil Pipeline (EACOP) further complicates the picture. TotalEnergies holds a 62% stake, while Uganda’s National Oil Company (UNOC) controls only 15%. This means a significant portion of profits will flow abroad. The key question is whether the government can enforce local content policies and use its share of the revenues to genuinely bolster the national economy, rather than merely servicing foreign investors.
Uganda’s oil dream is not yet a nightmare, but it is at a crossroads. The resource curse is not an inevitability; it is a consequence of governance failures. The connection of a billion-dollar pipeline with communities struggling to eat is shaking. To ensure the oil is reflected in the pockets of Ugandans, the government must enforce stringent accountability, ensure fair compensation for displaced persons, and resist the urge to spend reveacnues on short-term satisfaction rather than sustainable infrastructure.
If the treasury is opaque and communities are left behind, the only thing that will flow through the pipeline will be Uganda's natural wealth heading straight for foreign shores, leaving only dust and disappointment behind.
The writer is an energy specialist, community climate and energy shield initiative
Beyond these fiscal infractions, the notorious sh6 billion "presidential handshake", disbursed to selected officials without due process, remains a sore point for many Ugandans. Although the Katuntu’s Parliamentary Commission report recommended that the recipients refund the money, the government has yet to act on that directive. These repeated lapses highlight an urgent need for stronger oversight and genuine accountability if Uganda's oil wealth is to benefit its citizens rather than slip through poorly guarded coffers.
Further, the ownership structure of the East African Crude Oil Pipeline (EACOP) further complicates the picture. TotalEnergies holds a 62% stake, while Uganda’s National Oil Company (UNOC) controls only 15%. This means a significant portion of profits will flow abroad. The key question is whether the government can enforce local content policies and use its share of the revenues to genuinely bolster the national economy, rather than merely servicing foreign investors.
Uganda’s oil dream is not yet a nightmare, but it is at a crossroads. The resource curse is not an inevitability; it is a consequence of governance failures. The connection of a billion-dollar pipeline with communities struggling to eat is shaking. To ensure the oil is reflected in the pockets of Ugandans, the government must enforce stringent accountability, ensure fair compensation for displaced persons, and resist the urge to spend reveacnues on short-term satisfaction rather than sustainable infrastructure.
If the treasury is opaque and communities are left behind, the only thing that will flow through the pipeline will be Uganda's natural wealth heading straight for foreign shores, leaving only dust and disappointment behind.
The writer is an energy specialist, community climate and energy shield initiative