Prime
Uganda’s oil journey: Striking the balance
Elison Karuhanga
What you need to know:
- Oil and gas can provide a valuable bridge towards the development of renewable energy sources
President Museveni’s recent announcement that he has tested positive for Covid-19 deserves our well wishes. Personally, I wish him a speedy recovery. Prior to this news, the President delivered his State-of-the-Nation address, emphasising government’s priority to expedite the development of infrastructure for oil and gas production in the upcoming financial year.
In his address, the President stated: “With our oil money, we shall be able to complete our targets of a government primary school per parish and a government secondary school per sub-county. The railway, electricity, technical and science education, as well as some national roads, will be the elements our oil money will deal with.”
The President also stated that he intends to meet with the Petroleum Authority of Uganda and oil companies to ensure that the target of first oil production by 2025 is not missed. It is commendable that he is determined to achieve this goal.
Uganda’s oil and gas sector offers immense potential for economic growth and development. Revenue generated from oil production can be utilised to improve infrastructure, education, and healthcare systems, lifting communities out of poverty and improving living standards. The development of this sector can stimulate technological advancements and knowledge transfer, leading to the development of local expertise and capabilities, enhancing Uganda’s overall human capital.
The skills and technologies acquired during the oil and gas development process can also be leveraged for the growth of other sectors, promoting diversification and long-term economic resilience. Moreover, the development of the oil and gas industry in Uganda can attract foreign direct investment and enhance regional cooperation.
Uganda’s commitment to producing oil, building a pipeline, and establishing a refinery comes at a time when there is a global campaign to divest from African oil and gas projects. Despite Africa having the largest renewable energy capacity from sources like solar, hydro, and wind, less than 3 percent of global finance is directed towards its projects.
However, Africa presents an exceptional investment opportunity in the energy sector. Despite this, there is still a significant campaign to disinvest from the African energy space, even though Africa is estimated to have at least 140 billion barrels of oil equivalent, with only a fraction of these resources being developed. Africa’s resources are crucial to meeting the increased global demand for oil and gas.
Critics may argue that the proposed refinery could increase emissions. However, it is essential to consider the current scenario: Uganda imports refined petroleum products, requiring crude oil to be refined elsewhere and transported to East Africa by ship, then delivered to Uganda by road. This process involves highly polluting fuel tanks and poses risks to road users. Is the status quo genuinely better than a Ugandan refinery?
The benefits of our country being on course to produce oil and gas are innumerable! We have so far seen the commencement of work at the oil fields code-named Tilenga and Kingfisher. We have also seen work start on the construction of the Eacop pipeline. Additionally, the upcoming refinery construction is eagerly anticipated.
Admittedly, we face both an opportunity and a challenge. On one hand, we should prioritise low-carbon-emitting projects, and on the other, we should seize the incredible energy opportunity before us. Obviously, disregarding our commitment to a clean environment and a self-sustaining economy is not an option. We must strike a balance by being environmentally friendly while fostering economic growth.
Furthermore, oil and gas can provide a valuable bridge towards the development of renewable energy sources, allowing for a gradual transition. It is crucial to recognise that transitioning to renewable energy sources takes time, and in the interim, oil and gas remain essential energy sources.
While transitioning to renewable energy sources is important, it is essential to acknowledge the current energy needs and economic realities of Uganda; completely disregarding the economic benefits of Uganda’s oil and gas resources would be short-sighted. These resources can provide immediate revenue and opportunities for economic growth, which can be used to invest in future energy infrastructure. It is crucial that we make wise choices now, considering both the present and future generations.
The writer is an advocate and partner at Kampala Associated Advocates
