We are finally out of the oil blocks but we shouldn’t repeat this fiasco

Thursday April 15 2021
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Author: Daniel K Kalinaki. PHOTO/FILE.

By Daniel K. Kalinaki

Last week was great for Uganda with the different agreements signed with Tanzania and French oil company Total paving way for the development of our oil and gas sector.

The numbers are unprecedented. Billions of dollars are expected to flow in to pay for the infrastructure and services needed to get the oil out of the ground. Thousands of oil workers are expected to boost effective demand for housing, food, services and all manner of enjoyments. Whatever happens to the cash that we shall be paid for the oil itself remains to be seen, but many boats will rise from the injection of liquidity.

Yet it somehow feels a bit of a pyrrhic victory. We discovered commercial deposits of oil in 2006 but it has taken us a decade and half to get to the business end of using it. Ghana, by comparison, discovered its crude in 2007 and started shipping it out three years later.

Ghana’s deposits are mostly offshore and being a coastal country means much quicker access to the world oil markets. However, while that might explain their three-year turnaround, it doesn’t explain our decade of indecision.

In many ways the road to inertia was paved with good intentions. Key government officials wanted a small refinery in Uganda to process the crude oil. This was a good idea and one your columnist also supported enthusiastically.

A refinery would transform us from importers to exporters of finished petroleum products, provide a foundation for a domestic industrial base to manufacture pharmaceuticals, plastics, fertiliser while also reducing the cost of building roads or fuelling our planes.

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Sadly, the refinery plans collapsed into the quicksand of rent-seeking and the short-sightedness of being pennywise but pound-foolish. Some of the companies brought forward to compete for the refinery had the tell-tale signs of briefcase outfits, with one operating out of a shared office paid for by the hour.

Another one, which appears to have been more serious, eventually walked away from the deal because our people kept on changing goalposts even after the game had ended.

Rather than caucus and agree on what was best for Uganda then negotiate properly, a parallel team of advisers kept whispering into highly-placed ears, locking the process in a vicious cycle of suspicion and eventually death by a thousand edits, cuts and reviews.

The damage is clear. First, we are now proceeding without the very thing – the refinery – that we claimed we were fighting for. We are like a haughty shopper in the market who disparages a trader’s goods and walks away only to return, tail between the legs, to negotiate for the same goods.

Secondly, those goods are now significantly damaged. According to one study, the value of our oil deposits was more than 60 billion dollars just over a decade ago.

But the world has changed a lot in that time, with climate change forcing a rethink about energy. The price of solar energy falls every day. Electric cars have become more reliable and capable of going for farther.

Major car makers are now turning their attention away from the internal combustion engine and some countries say they will not allow petrol- or diesel-powered cars to be sold in as few as 10 years.

Not surprisingly, the price of crude oil has fallen on the world market and the value of our deposits is now estimated at under 20 billion dollars. We have effectively lost four billion dollars for each of the last 10 years we sat around sniffing into bottles, sitting on our hands and fighting over pocket change.

Now that we are finally underway, we should make haste. We should also make a few small but important changes in how we do what we do, for instance by doing less better and faster.

Instead of trying to do 100 things every year let’s pick 10 and throw our time, money and brains at them to try and bring them in on time and on budget. If we can’t chew gum while walking, we should decide whether we want to chew, or walk – then do it, dammit!

Mr Kalinaki is a journalist and poor man’s freedom fighter.

write2kalinaki@gmail.com; @Kalinaki

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