February 12, 2013

Uganda’s Oil Production Needs $10bn

An oil rig in western Uganda
An oil rig in western Uganda

Commercial production of oil in Uganda will continue to be a nightmare unless government finds $10bn to develop this sector.
According to a new report by foreign experts from UK’s Chatham House organisation, Uganda’s oil is difficult to access and challenging to transport and process; hence the need for this heavy investment.
As such, it will require a staggering $10bn investment by government into this sector purposely to develop its oil fields.
“It is not expected that commercial-scale production will begin until 2016; and delays to beginning development of the fields could push this still further. Full production will not be reached until the early 2020s at least. Uganda’s oil is difficult to access, transport and process. It will require significant investment estimated at %10bn,” the report titled ‘OIL IN UGANDA’ published by Chatham House’s Ben Shepherd, reads in part.

The report was launched at Serena Hotel last week.
In the report, the experts noted that much as there have been significant efforts to pass oil laws and signing of oil agreements, the actual on the ground development remains stalled.
“Uganda’s oil is also of a type that is difficult to transport and process. The region where oil is found (Albertine region) will need significant investment in facilities before oil can begin to flow. In contrast to Ghana, where light oil and off-shore facilities meant that revenues have began to flow into the country just three years after the beginning of development, Uganda will need a decade and more than $10bn of investment to reach peak production,” the experts added.

On top of those technical challenges, the experts warned that unless government allows transparency in this sector, the risk of turning it into an oil curse is inevitable.

“Uganda is relatively harmonious despite numerous latent divisions along ethnic, cultural, religious and regional lines. The biggest threat that oil poses to this harmony would come from allowing rumor and speculation to dominate; notably over how revenues are allocated. It is therefore important that transparency is observed. With accurate reliable information, Ugandans will be able to transcend their day-to-day differences and remain committed to a peaceful prosperous future” he added.

The experts warned that there is need for the present regime to put in place decisions that are vital to Uganda’s future politics and economy.
“A future generation will take over from president Museveni before the oil era comes to an end, but decisions taken now will do much to secure Uganda’s economic future as a regional and global player and will shape the legacy of the current leaders in Uganda” he added in the report.

Reported By Henry Mulindwa

 

 

 

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