6 September 2012

Uganda: High Stakes in the Oil Debates

Photo: Jeff Lule/New Vision
From left to right: Director of Energry and Environment Yaw Okese, Counselor of Natural Resources and Energy Anne Tarvainen and Finland Consulate to Uganda Richard Mugera.

Kampala — Over the last month, there has been much discussion in parliament and civil society regarding Uganda's nascent oil sector. Uganda has discovered vast oil reserves and when commercial production begins in a few years, the levels of revenue from the sector could transform Uganda's economy.

This August, the international non-profit organisation Revenue Watch Institute and the Kampala-based NGO Africa Institute for Energy Governance took a select group of Ugandan MPs on retreat to train them on issues of revenue management as a way of preparing them for upcoming debates on the Revenue Management Bill.

This has led some to assume the bill, one of three oil-related laws, may enter parliament from committee sooner expected. This will be a crucial moment for Uganda. The results of the debate will shape the future of Uganda's oil sector and could determine whether the sector falls foul of the resource curse in which oil revenues do more harm than good.

Cure or curse?

It has become commonplace for debates in the Uganda's parliament to become heavily influenced by the executive, but now perhaps more than ever, it is crucial for Uganda's MPs to remain steadfast in debates regarding oil bills and maintain a nationalistic rather than partisan stance. The stakes are high.

With 2.5 billion barrels-worth of oil confirmed in western Uganda (and more thought to be present), the oil sector is expected to generate more than $2 billion each year once production begins. This is equivalent to around 70% of Uganda's current reported GDP. How Uganda's policies towards oil develop could also have a strong impact on how other sectors of the economy fare. Given how lucrative oil is likely to prove, there is the danger that disproportionately low attention is given to other sectors which could remain under-developed, an issue common to many other oil-producing nations.

Furthermore, without strong institutions, there is the possibility of corruption and misappropriation of funds. Research institutes have emphasised this point and last week, Transparency International named Uganda as the most corrupt country in East Africa. The Ugandan government has signed deals with the UK's Tullow Oil, China's CNOOC and France's Total SA, but the details of the agreements have remained cloaked in secrecy. The government claims that confidentiality clauses prohibit the release of information and a legal campaign led by journalists failed in the courts.

Museveni's legacy

At the centre of Uganda's oil policy and the future of the sector is the figure of President Yoweri Museveni. At the age of 68, and having been in power for 26 years, Museveni may be struggling to define what his legacy will be.

Since Museveni assumed power in 1986 and abandoned his nationalist-socialist philosophy, Uganda's economy has benefited considerably with reported economic growth ranging between 5.5% and 7%, but corruption has stifled much potential. Furthermore, Museveni's popularity is under question. Following his victory at the 2011 elections for example - which observers claimed were "marred by avoidable and logistical failures, which led to an unacceptable number of Ugandan citizens being disenfranchised" - there were widespread protests.

Oil development may be an opportunity for Museveni to redeem himself. The president was in power when the discovery of oil was announced in 2006, and he has often linked himself with Uganda's resources, reiterating that it was his government which found them.

Keeping control

With some predicting that oil production will begin in 2017, a year after the 2016 presidential and parliamentary elections, many wonder whether Museveni will try to ensure he stays in office to enjoy the fruits of Uganda's natural wealth. Much of the government's plans for the oil revenue reportedly centre round infrastructural development believed to be able to 'fast track' Uganda to middle-income status. Museveni is not the kind of leader who will easily let all such developments happen without him.

His ruling National Resistance Movement party (NRM) is in a succession quagmire and this may be a sign that Museveni is planning to continue entrenching himself in power. Like in oil-rich Angola, where President Eduardo dos Santos continues to cling onto power after 33 years of rule, Uganda's president may also be reluctant to stand down while the economy is expanding and oil is flowing.

But whether ordinary Ugandans benefit from Museveni's control of the sector remains to be seen. Museveni may be faced with the dilemma of how to please leaders in the oil-rich areas and the state as a whole. Unfortunately, there is no shortage of examples Museveni can examine in which leaders have used oil money for political leverage and patronage.

It also looks like Museveni is militarising the oil sector. The president has placed an elite security force, commanded by his recently promoted son Brigadier Muhoozi Kanierugaba, to 'protect' oil-rich areas. Saracen, a private security firm owned by the Museveni's younger brother General Caleb Akandwanaho (aka Salim Saleh) is also part of the security plan. The possibility of human rights violations, diminished transparency and opportunism abound.

With so much at stake, debates around the oil bills could be crucial in determining not just the future of the oil sector and economy, but the future of President Museveni and Uganda's politics. The need for transparency and a clear nationwide debate is paramount.

Tony Otoa is the Executive Director of Great Lakes Public Affairs (GLPA), a Public Affairs organisation focusing on oil and governance issues in the Great Lakes region. He holds a BSc in International Relations, Media and Communications Studies, and a Masters Degree in International Law.He has been at the forefront of civil society engagement in the oil and gas sector as the coordinator of the Civil Society Coalition on Oil in Uganda (CSCO) since early 2011.

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