What if oil was discovered under Besigye, Amama beds?

By Richard Todwong

Reference is made to the story that ran in one the Sunday papers of January 3, titled, Who will manage Uganda's oil better?

The writer did a good job of profiling policy positions of the various presidential candidates and political parties as far as the development and management of the oil and gas sector is concerned.

From the analysis, it is clear that the NRM government and, particularly the NRM presidential flag-bearer Yoweri Museveni, has got a solid, comprehensive policy on the oil and gas which is evidently pro-people. The other candidates and parties are scanty and feeble and would only speak in generalities when it comes to articulating their policy positions on management of oil and gas. Actually the FDC, as a party, is yet to release its policy position on the matter.

Why would I say it is only President Yoweri Museveni and the NRM government capable of managing the lucrative oil resource for accelerated economic development and socio-economic transformation of the country? The (mis)management of oil, otherwise known as ‘black gold', has been the mother of all turmoil in most of the third world oil economies, most especially in Africa.

You have to first of all solve the perennial problem of leadership and governance so as to build a firmer foundation for the exploitation and management of the oil resources through peace and stability, sound micro and macroeconomic policies and regulatory frameworks, infrastructure development, skills development, etc.

Peace and stability is a salient ingredient in the exploitation of the nation's resources. President Museveni and the NRM have long solved the problem of (mis)governance and ushered in a prolonged period of tranquility unprecedented in Uganda's history.

In countries some countries, governments there are not in effective control of natural resources including oil, thus leaving it to criminal warlords and drug cartels to exploit the resources for their own benefits.

In fact, in some cases, the warlords and cartels have proved more efficient in management of resources such as oil, diamonds, etc, that the state has had to hire them do a good job and thereafter share the benefits with the criminals! Without any clear-cut policy on the management of oil and gas and other mineral resources, our worst fear is that Besigye and Amama (that's if a miracle happened and they won elections!) would borrow from such countries by hiring criminal gangs to manage the oil resource!

The same story would play out in some African countries such as Liberia, Sierra Leon, DR Congo, The Sudan, Nigeria, Chad, etc, which have witnessed the worst conflicts accruing from natural resources. Weak states, bad governance, impotent policies and laws on the management of oil and other resources has ensured that the rich and more organised warlords benefit the most from the resources as opposed to the citizens.    

The narrative is different in Uganda under NRM. When the NRM took power in 1986, President Museveni halted all the negotiations for licensing with international oil companies and directed the then minister for energy and natural resources the late Mzee Chango Machyo w'Obanda to send some Ugandans abroad for specialised training in oil and gas.

Some of the pioneer experts sent for training include Eng Fred Kabagambe-Kaliisa, the current permanent secretary of the ministry of energy and mineral development and Hanney Malinga, among others. The President was visionary enough to first see to it that the country should develop a critical mass of skilled human resource who would be able to defend the national interests against the unfriendly terms of the foreign oil companies during negotiations for exploration and production licensing.

Right now, the government is placing emphasis on training local capacity to work in and efficiently exploit the oil and gas sector. We have a fully-fledged petroleum institute at Kigumba in Kiryandongo District and this year, the Government will be establishing another one in Nwoya District.

Recently, the Government signed a bilateral arrangement with Trinidad and Tobago to offer specialised training for the oil and gas graduates from Kigumba oil institute. Every year, scores of young Ugandans are flagged off to Trinidad and Tobago. This will ensure that in the long run, Ugandans are not out-competed by foreigners in the sector.  

The story of Uganda's oil reached a climax 10 years ago, when, in 2006, the country celebrated the discovery of commercially viable quantities of the resource. So far, 106 exploration wells have been drilled and appraised in the Albertine Graben. Projected revenues when production starts, according to official estimates, will be around sh11trilion ($3.3b) annually by 2028.

The NRM Government will build a refinery with capacity to produce 60,000 barrels per day. The investment in the refinery will lead to creation of petro chemical industries, thus resulting in jobs and supply of petroleum products to the local and regional market. The NRM government will also build an export pipeline to enable export of oil within East Africa and the region.

President Museveni has been unequivocal about expenditure of oil revenues to finance productive investment. His argument has been (and still remains) that revenues are invested in physical and human capital, the long term productivity and hence the growth rate of the economy can be raised, thereby generating permanently higher income flows for Ugandans.

The Government will save and invest a high proportion of the revenue which accrues from oil. Furthermore, the investment of these resources shall be efficient, so that it actually enhances productivity. Sound policies, both of a macroeconomic and microeconomic nature, are the key to ensuring both that a large share of oil revenues are saved and invested, rather than being consumed and that investments are efficient and provide value for money.

Other than investing the oil revenue into consumption, the NRM Government will invest oil revenues in productive assets, which enhance the capacity of Ugandans to earn income, so as to translate oil revenues, which are non renewable and thus a temporary resource flow, into permanently higher income and living standards.

President Museveni, being the undisputable champion of Uganda's oil and gas discovery, needs to be given ample time and space to fully prepare and lead Uganda into a smooth oil dispensation. Otherwise, other non-tested leaders could plunge the nation into chaos and the resultant effect of an ‘oil curse'.

The writer is deputy secretary general-NRM