Day 9 #90aysofOil #Ugandaoil
Notwithstanding detractors in Uganda’s oil and gas project, government has affirmed that the project is on course to deliver much needed socio-economic transformation as it addresses energy poverty, unemployment and potential boost to other sectors of the economy.
“As a country we are pursuing socio-economic transformation and not just growth. We want to use this opportunity of oil and gas to accelerate transformation of our economy from the subsistence economy,” said Secretary to the treasury Mr. Ramadhan Ggoobi during the recent PAU oil and gas National Content Conference in Kampala.
With preparations for commercial production of oil underway government plans to diversify the economy using the revenues from oil. It is estimated that the country shall bag $2billion annually from taxes, royalties, license fee, profit oil and its legally guaranteed shares of up to 15% in the upstream oil projects.
Locally, the country expects to reduce it import bills for petrol and petroleum related production amounting to over $1billion annually, by refining 60,000 barrel of oil per day. This will in addition, be exported to the region, hence an increase in revenues.
The revenues generated shall be re-invested in other sectors of the economy like agriculture, tourism, manufacturing. For example, the refinery has been planned to revitalize the establishment of fertilizer industry which provides a direct link to the agriculture sector- the final users of the fertilizer product.
While Uganda does not import so much fertilizers, largely because of the subsistence nature of the farmers, the production of the product in country presents an opportunity to increase exports. It will also facilitate advancement of commercial farming which has been identified as one of the key drivers to attaining and maintaining middle-income status as a country. United Nations COMTRADE data shows that the country imported fertilizers worth $32. 47million, in 2020. Kenya on the other hand, imported fertilizers worth $355.45million last year. This demonstrates potential for markets within the region for Uganda’s products.
“We need to use our oil and gas to spur industrialization,” said Ms. Proscovia Nabanja, CEO Uganda National Oil Company (UNOC) during a tweeter space discourse early this week.
Uganda’s assertion comes at a time environmentalists are pushing for an energy transition from fossil fuels to renewable energies. The move to meet these standards has seen refineries make attempts to configure their systems, hence halting temporal production that has resulted into shortages in petroleum product supplies worldwide. The Russian /Ukraine war only catalyzed this problem. Russia is one of the major oil and gas exporters, but the country is under economic sanctions, leading to less supply from its crude to the world markets, with the West in a serious energy crisis.
The East African Crude Oil Pipeline (EACOP), is an alternative to develop East African energy capacity with an access to overseas markets. And yet, in spite of the good intent, the project is meeting immense criticism from outside forces.
In the tweeter space discourse Ms. Nabbanja retaliated that Energy transitions are not a flip switch, emphasizing that there is need to use a pragmatic approach with understanding of the transition.
“Any new form of energy should be available, accessible and sustainable otherwise we risk having the problem of reverse adaptability” she added.
Uganda and Africa as a whole still grapples with issues of energy poverty among other forms of poverty.
Many homes in Uganda are not connected to the national grid with many families using wood fuel to cook. Women bear the bigger burden of smoke while in the kitchens and walking risky distances to collect firewood. The production of sufficient and affordable Liquified Petroleum Gas for cooking will therefore save the women health burden arising from air pollution. It also controls rate of deforestation. Thus direct link to the health and environment sectors and serving the social needs of the people is not in any way doubtful.
Regulators of the oil and gas sector are also keen to ensure that the country gets maximum benefits from its resources by emphasizing the national content which includes technology and skills transfer, jobs for Ugandans and Ugandan companies. For example, 16 categories of goods and services have been legally ring-fenced for Ugandans and Ugandan Companies
The Uganda Chamber of Mines & Petroleum is confident that there is indeed a greater good in oil and gas and it can transform Uganda’s economy.