Log in
Free: The Observer Mobile App - Exclusive Content and Services

Leave Ngaji block out of oil licensing

During the East African petroleum and exhibition conference held on May 8, 2019 in Mombasa, the minister of Energy and Mineral Development, Irene Muloni, announced the second licensing open bidding of five oil blocks to further Uganda’s commercial interests in oil production.

This also included two oil blocks of Ngagi and Turaco that had hitherto been left out in 2015 owing to national and international concerns for environmental conservation and tourism promotion.

Relatedly, President Museveni was quoted in the media saying, “nothing will stop government from drilling oil in Ngaji block.’’ Yet, this is one of the biodiversity hotspots that promote tourism, a key foreign exchange earner for the country.

This particular block is important in that it covers Lake Edward and vast areas of Queen Elizabeth national park, one of the highly-visited areas by tourists in Uganda, according to data from the Uganda Bureau of Statistics. It is estimated that QENP attracted 70,000 foreign tourists in 2013 alone. It is also part of the greater Virunga landscape which forms part of DR Congo’s Virunga national park and a unique world heritage site recognised by UNESCO.

The above region that has been earmarked for oil exploration has different flora of immense intrinsic value to conservation efforts. Once this is lost due to oil exploration activities, it will be a herculean task to restore the dominant vegetation and trees. It is these various ecosystem areas of fauna and flora that partly earned the country $1.4 billion in year 2017, about 10 per cent of the country’s GDP.

If you compare the government earnings of Shs 7 billion projected from the first round of licensing that was given to Amour energy and Oranto petroleum, this amount cannot be equated to the annual contribution of the tourism sector in terms of foreign exchange earnings and employment opportunities.

Tourism’s impressive contribution is in spite of the sector being allocated only Shs 16.4 billion in 2016. By prioritizing the oil and gas sector, it is projected that the country will earn $2 billion annually for the next 20 years in oil revenues. Yet through tourism, $1.4 billion was realized just in 2018 and with tourist numbers expected to grow from 1.4 million in 2018 to four million tourists by 2021, these earnings will be much higher than oil revenues.

Since oil is a non-renewable resource and is expected to be depleted in the next 25 to 30 years, sectors that have everlasting benefits if well conserved should be prioritized for future generations. The tourism sector should be given the necessary support and funding to exponentially increase the country’s foreign exchange earnings than borrowing from international banks to put in place oil-related infrastructure.

We, as a country, also need to learn from history and borrow experiences from areas such as Niger Delta in West Africa where oil exploration and production activities led to oil spills that ravaged the vegetation.

Although the government is relying on using advanced technologies to drill oil in these sensitive areas, there is no guarantee this will stop serious environmental damages from occurring. The Petroleum Authority of Uganda plans to call for public hearings for environmental and social impact assessment for the Kingfisher development oil projects.

Yet many issues that were raised by local communities and other stakeholders in earlier public hearings have not been addressed to help conserve the environment and have a transparent inclusive process.

Going forward, the government should rescind her decision and stop licensing the Ngaji block and concentrate on exploiting oil in areas that pose the least environmental impacts.

The author is the Resource Economist at Africa Institute for Energy Governance

Comments are now closed for this entry

betPawa