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May Uganda be saved from the oil curse

President Yoweri Museveni signing the oil agreements

President Yoweri Museveni signing the oil agreements

April 11 is a historic date for both business and politics in Uganda and Tanzania. It was on April 11, 1979 that exile forces in Tanzania, the Uganda National Liberation Army (UNLA) bolstered by the Tanzania People’s Defence Forces ( TPDF) overthrew the then government of President Idi Amin Dada.

The toppling of Amin meant ushering in a fundamental change but unfortunately chaos, war and bloodshed followed though not in succession until 1986 when the guerrilla outfit, the National Resistance Army (NRA) led by General Yoweri Museveni captured state power.

By strange coincidence, April 11, 2021 was the day Tanzania and Uganda chose to finalise the agreement between them and two international oil firms, France’s Total and China’s CNOOC. These agreements will kick-start the construction of a $3.5 billion crude oil pipeline between Hoima and Tanga in Tanzania.

Indeed President Museveni who participated in the 1979 war said that apart from the economic factors, Tanzania had to be rewarded with the passage of the pipeline because of its contribution to Uganda’s liberation struggles.

Uganda can never adequately compensate for the sacrifices Tanzania made during those wars, Museveni said. Tanzania’s President Samia Suluhu Hassan, just like Museveni, witnessed the signing of the three agreements. The other two were: a tariff and transportation agreement and a shareholding agreement.

These agreements propel Uganda’s efforts of being an oil giant, which started with the discovery of crude reserves in the Albertine rift basin in Hoima district in 2006.

The planned East African Crude Oil Pipeline (EACOP) is 1,445 kilometres and oil production is expected to commence in 2025. It is only hoped that the jinx of April 11 will not trigger the usual oil curse that is associated with oil-producing countries. And the curse comes in many forms; corruption and over-reliance on the resource.

There is also the environmental degradation which in most cases is subsumed in the profits that the country earns. About 263 non-governmental organisations (NGOs) in the world are advising banks not to fund this project.

They claim the project, would pose immense threats to local communities, water supplies, and biodiversity in the countries where the pipeline is routed. These concerns should not be ignored but adequate responses should be found.

In countries where such concerns were ignored, violence frustrated the projects. Then there are the inevitable cartels that usually hijack such projects at the expense of the welfare of the citizens.

Oil is a communal resource, all Ugandans are supposed to benefit. It is expected that when the oil begins to follow, our domestic and foreign debts will be reduced, the quality of life of Ugandans will be better. And there are numerous examples to learn from such as Norway and the Emirates where oil reserves have been more of a blessing than a curse.

Comments

0 #1 Olum S. 2021-04-14 03:48
Honestly, any government in this era that decides to pump its resources into the fossil fuel sector, of which oil is a part, is simply throwing away whatever little money it has.

Nations worldwide should be aware right now that the pressure to divest from the fossil fuel industry is increasing daily.

I agree with Editorial about the 2 challenges Uganda will definitely face now the M7 regime has decided to go this route: 1. Rampant corruption which is now out of control, and 2. The serious environmental damage that will ensue.

One issue that was not mentioned in the article is about climate change, of which fossil fuels (oil, coal and natural gas) play a major role.
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0 #2 Olum S. 2021-04-14 03:49
Burning fossil fuels release CO2, which is a heat retaining gas, into the atmosphere. This is what’s leading to the rapid warming of the planet.

Nations are all aware of this, so they will have no choice but to urgently divest from fossil fuels, whether they like it or not, as the destructive, dangerous effects of climate change continue to increase.

This therefore means that fossil fuel investments such as this one in Uganda, are high risk.

They are very likely to end up as an investment whose value will depreciate, as demand for oil declines. In the end, Uganda is potentially left with an asset that is stuck in limbo, an asset no one wants, and all this is after throwing all that money into it.
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0 #3 Opio Dennis Keruweka 2021-04-15 13:02
Agreed my Bro Olum - we have just entered one of those deep holes with a lot of excitement! Hope it does not end in tears.

Many powerful nations around the globe are slowly but surely moving to more smarter technologies like use of Electric cars. And I think by 2030 they will have nearly stopped the use of fossil fuel in cars, buses, trucks etc and this will save the environment massively.

God should help us - I see Uganda stuck with it's oil for 30 - 50 years from now! Dooommmmm is beckoning!
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