Monday February 6 2012

New oil deals lift uncertainty among private sector players

By Ismail Musa Ladu

The signing of the two Production Sharing Agreements between Tullow and the government has lifted the uncertainty among the private sector, who for long have positioned themselves to take advantage of the opportunities that will come with the production of oil.

The back-and-forth discussion between government and Tullow had dragged on to a point that the private sector was beginning to doubt whether the exploration and eventual production of the country’s best resource - oil, would ever happen.

“These negotiations were not moving, causing a lot of uncertainty among the private sector who would want to tap opportunities in the oil and gas industry,” Ms Ruth Musoke Biyinzika, the director for membership at the Private Sector Foundation Uganda told Daily Monitor on Saturday.

She, however, warned that for private sector to fully participate, transparency must be of paramount importance, for investors hate investing in ventures surrounded with “dubious” secrecy.

Mr Godfrey Ssali, a policy analyst with Uganda Manufacturers Association, said in a phone interview, the deal between the two will mean nothing if eventually the cost of fuel does not drop.

“When production begins, we expect the prices for fuel to drop by 50 per cent otherwise this deal will be meaningless,” said the policy analyst.

“Manufactures are waiting to see whether they will reduce the cost they incur on fuel.”
Observers say the deal between the government and Tullow should be able to spur the growth of the private sector who are particularly waiting to see whether the proceeds and opportunities abound in the sector will spread over to them.