What you need to know:
- Contrast. The President’s remarks at the summit were a marked departure from the usual position of pegging Uganda’s future prosperity on oil.
- The President’s remarks at the summit, attended by among others potential investors, international oil companies, local players and officials of the various oil bodies, were a marked departure from the usual position of pegging Uganda’s future prosperity on oil.
Kampala. President Museveni yesterday said he is among the people “not excited” about the current 6.5 billion barrels of stock tank of oil because it is just a small portion of Uganda’s larger economic transformation.
“For example, I strongly believe that petroleum cannot be more important than agriculture,” Mr Museveni said, adding: “Agriculture will be there for a very long time until when may be the environment changes.”
Speaking at the International Oil and Gas Summit yesterday which closes today at the Kampala Serena Hotel, the President described oil as a “catalyst” and “an enabler” to get “quick cash” for investment into priority sectors that will propel Uganda to prosperity.
“We shall get this money and use it to build a durable economy,” he said.
The President’s remarks at the summit, attended by among others potential investors, international oil companies, local players and officials of the various oil bodies, were a marked departure from the usual position of pegging Uganda’s future prosperity on oil.
Previously, Mr Museveni accused the Opposition of being after “my oil” and wanting him to quit leadership at time when the country is about to start oil production and earn revenues; which he said he won’t leave in the hands of his opponents.
President Museveni listed priority sectors to which future oil revenues will be ploughed into as infrastructure development, human capital development, agriculture, science and technology and only a small component apportioned to education.
Last year, the President assented to the Public Finance Management Act (PFMA) that dictates spending [oil] revenues on priority areas in the Budget and established a single Petroleum Fund in Bank of Uganda (BoU) where all oil revenue collections are deposited. The Fund has two objectives; financing the budget and saving/investment for the future generations.
How the monies will be spent
According to the PFMA, monies in the fund will be invested in accordance with the petroleum revenue investment policy issued by the Finance minister after consultation with Secretary to the Treasury, and on the advice of the Investment Advisory Committee. The members of the Investment Advisory Committee shall be appointed by the Minister and approved by Parliament.
Dr Josephine Wapakabulo, the new chief executive officer of Uganda National Oil Company (Unoc), that oversees the country’s commercial interests, told Daily Monitor in an interview that runs tomorrow that earlier projected oil revenues are in the ranges of Shs5 trillion ($1.5b) annually; based on the assumption that oil prices will have picked up when Uganda starts commercial production between 2020 and 2022.
The President also alerted the investors to other opportunities in the mining sector, infrastructure and agriculture. He also made a case for diversification of the economy to cut back on the high expectations that places overreliance on oil.
The ministry of Energy, in August, awarded eight production licences with five going to Tullow and three to Total; bringing to end the delays that had held back production. The companies are now conducting Environmental Impact
Assessments, which will lead to Front End Engineering Designs (FEED) to determine which equipment to be used, then Final Investment Decisions (FID) to determine how much to be invested by early 2018 to pave way to Engineering Procurement and Construction (EPC) in the lead up to production by earliest 2020.
“This looks easy on paper but lots of efforts are required and a lot will go into these processes leading to production,” said Total E&P’s head of upstream Moses Kirumira.
But required before production starts is the $4.5b (Shs12t) Greenfield oil refinery and a $3.5b (Shs10t) crude oil export pipeline to the Tanga port on the Indian Ocean.
Energy minister Irene Muloni revealed that government is back to the drawing board to search for a lead investor to develop the refinery after the Russian-led consortium RT Global Resources, which had been tapped earlier, walked away but government “expects to announce a new developer by February.”