Uganda - Misplaced excitement about oil 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 wananchi.

Mr Mukalazi is the coordinator, Publish What You Pay-Uganda (A coalition of NGOs promoting transparency and accountability in the extractive sector).

Daily Monitor