By Jackline Nabirye
Communications Officer - ICPAU
Mr Onesmus Mugyenyi, an Associate Director at the Advocates Coalition for Development and Environment has emphasised the need for Uganda’s oil resources to be developed sustainably in order to ensure value for Ugandans.
“There should be sustainable development of the oil and gas sector through limiting negative environmental impacts on people and environment, investing oil revenues in renewable energy, and investing oil revenues in productive sectors with a multiplier effect,” Mr Mugyenyi said.
He further noted that sustainable development requires investment in human capital.
“Human capital now defines the wealth of a country, therefore, if we cannot invest in human capital, then in terms of sustainably we shall be doing poorly because oil is a resource that is exhausted and once it is no more, what do we remain with?” he pondered.
Uganda currently faces a challenge where the impact of resources to the communities is not consistent with the increase in the value of the resources. For example, the contribution to Gross Domestic Product of tourism is not translated in the communities in which the national parks exist.
Mr Mugyenyi urged the government to ensure that oil does not create a similar scenario where a lot of poverty exists amidst plenty of revenues in the sector.
He noted the risks of the industry, such as capital intensity and price volatility, and emphasised the need to ensure that loans are used productively and prudently, and project planning is improved.
He also cautioned against corruption and noted need to ensure transparency and good governance in the oil industry.
According to the report of the Inspector General of Government, Uganda loses 20 trillion annually in corruption.
Mr Mugyenyi also underscored the significance of the maximisation of revenue collection and management through increasing oversight over the cost oil, prudent spending of revenues, mitigating illicit financial flows risks in the oil and gas sector, and reviewing and minimising tax exemptions.
The Petroleum Authority of Uganda is responsible for the exploration, appraising the amount of oil and assessing how best the oil can be drilled, processed, transportation, storage, refining and gas processing, plus putting in place the required infrastructure and metering facilities. It is also responsible for distribution, sales and marketing.
Dr Joseph Kobusheshe the Director, Environment, Health and Safety at the Petroleum Authority of Uganda in his presentation at the Forum noted that the government is working towards refining and commercialising crude oil production. In 2002/3, three (3) deep wells were drilled in semiliki but during testing they encountered carbon-dioxide. However, twenty of discoveries were made between 2006 and 2010. Appraisal of the discovered oil fields to establish methods for optimally producing oil and gas were done between 2007 -2016. The country’s resource base grew from 300 million to 6.5 billion barrels of oil.
Uganda’s institutional framework separates the different roles of institutions in line with international guidelines. The key three institutions are the Ministry Of Energy And Mineral Development which is responsible for licencing, policy formulation, laws and regulation. The Petroleum Authority of Uganda is responsible for monitoring and regulation of petroleum activities and ensuring that these are undertaken with compliance to the rules plus the Uganda National Oil Company is responsible for the State’s commercial interest and creating joint ventures across the petroleum value chain.
“The Authority is working with other sectors of the economy to facilitate petroleum development, and also enable these sectors to take advantage of the opportunities the oil and gas sector is bringing to the country,” said Dr Kobusheshe.
These sectors include education, health, land use planning, agriculture, tourism, transport and financial services, among others.
Dr Kobusheshe noted that production of oil and gas will create employment for Ugandan citizens. It will create approximately 160,000 jobs, 14,000 direct employment and 42,700 will be indirect whereas 105,000 jobs will be induced. “As of March 2023, 10,651 persons are already employed of which 94% are Ugandans,” he said.
Oil and gas production promotes capacity building; 200 government officials receive specialised training. 12,367 Ugandans were trained in various oil and gas disciplines. He noted that several Ugandan institutions are now offering training in oil and gas at various levels. Oil production will steer enterprise development which will influence promotion of small and medium enterprises. It will also promote usage of locally produced goods and services. He added that the target is 40% (US 6-7 Billion) of the expected US 15 billion to be domiciled in Uganda. 4.6 billion contracts between 2017 and 2022 of which 1.8 billion (39%) was to Ugandan companies.
The speakers were delivering presentations on Value Chain for Public Value in Uganda’s Oil and Gas sector, at the 11th CPA Economic Forum of Institute of Certified Public Accountants of Uganda (ICPAU). The CPA Economic Forum was held from 19 to 21 July 2023 at the Imperial Resort Beach Hotel. The theme was “National Priorities for Socio-Economic Development”.
