Monday, November 22, 2010


Uganda has discovered oil, but the country still does not have a clear and concise strategy on how it will harvest the resource without conflicts as has been envisaged and occurred in other countries.
Indeed, there is already a squabble with the government not disclosing the truth about the concessions, and the companies hitherto given clearance to drill refusing to pay tax, and even leaving the country without fulfilling their tax obligations. To-date, a civil society-initiated public interest lawsuit to get to know exactly how much the government is being paid and how many explorers are being given the license has hit a wall.
Oil reserves in western Uganda of at least 800 million barrels have been confirmed, with potential reserves of up to 2 billion barrels. Although price volatility makes it difficult to predict the revenue stream, public revenues are projected to double in about 6-10 years time. Peak production is projected to be 150,000 barrels per day, a rate that could be sustained for 10-20 years.
Based on the current fiscal system and an oil price of $75 per barrel, government revenue at peak production is estimated at over $2 billion per year. Large investments will be needed to produce, transport, export and refine the oil so there remains uncertainty regarding the time to reach peak oil production and income.
Oil, however, may be a blessing as shown above or a curse with deepening of a range of political, economic and social challenges including a higher likelihood of civil war and social instability. This prospect raises the possibility of development opportunities together with significant challenges in a number of other areas.

Uganda has had enough of internal conflict. How this resource and the hope for Uganda to transition to an industrialised country are handled is therefore very crucial. Under the Democratic Party regime, adequate preparations will be made to accommodate and manage the expected revenues from this natural resource.
DP Pledges to implement an oil policy which will benefit everyone. DP will: Invest in building a refinery and oil pipelines for effective harnessing and management of the newly discovered oil; Promote a stability and savings fund for the oil revenues to be integrated within the State’s overall fiscal management with only the normal rate of return injected into the annual national budget; Establish in Parliament a ‘Cross Party Working Group’ with support from civil society, international development partners, the National Resource Committee (NRC) and the Public Accounts Committee (PAC) members to oversee the development of the oil and gas sector; Promote the adoption of conflict sensitive approaches by politicians and traditional institutions so as to avoid exploiting the citizens for personal gain.
DP recognises that whereas natural resources like oil are a national wealth, they are a God given opportunity/asset for the people where the resource is located. DP will, therefore, work out a percentage of the oil as royalties to develop the areas where the oil is located. The royalties will also be used to mitigate the negative environmental impact in those areas where extraction will occur.
This is an extract from the policy manifesto of Democratic Party president general, Norbert Mao, on the management of Uganda’s oil.

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