Ugandan Oil

The petroleum business in Uganda received a boost earlier this week, when the presence of oil was confirmed in the Kasamene field of the county's Albertine Graben region.

"This takes us a significant step toward the first oil in Uganda," said Angus McCoss, the exploration director for Tullow Oil, one of the firms charged with unearthing black gold in the East African nation.

The findings came just after the Ugandan government granted another foreign company, Bermuda-based Dominion Petroleum, a permit to explore for more oil.

Estimates put the amount of oil in the region at more than one billion barrels, making the area very attractive to foreign investors and providing a potential godsend to a country, where more than half the population subsists below the international poverty line.

At the same time, the possibility of a Ugandan oil boom has occasioned worries that potential profits will be siphoned away by corporate greed and governmental corruption while ruining the environment.

Negative examples

Critics point to Nigeria and Angola as examples of African nations where oil production has brought conflict and environmental destruction, while doing little to alleviate rampant poverty.

And some Ugandans think the situation will be no different in their country.

"Clearly, oil is not inherently a problem in itself, but if you want to know what an oil industry can do to a corrupt country like Uganda, you must read about Nigeria," Dickens Kamugisha, the chairman of the Africa Institute for Energy Governance, wrote in an official statement. "In so many ways, Uganda today is very similar to Nigeria ….characterized by high levels of corruption, nepotism, weak institutions, etc."

Uganda is ruled by Yoweri Museveni, a former rebel leader who has been in office since 1986. Museveni has come in for international criticism after repealing a limit on terms of office that would have forced him to step down in 2005, resisting the presence of international observers in elections scheduled for next year and severely curtailing freedom of the press.

Local advocates are calling for more transparency.

"Legislation has taken much too long, and there's been only limited involvement of stakeholders," Bashir Twesigye, a research officer at the Kampala-based think-tank Advocates Coalition for Development and Environment, told Deutsche Welle. "Disclosure of information remains a major concern. Basically, the government has worked in secrecy."

Social responsibility

And what of the Western corporations doing the drilling? Some of the murkiness surrounding the development of Uganda's oil reserves may have to do with the fact that various companies are involved, and deals between them and the Ugandan government are still in the process of being struck.

A spokesperson for Tullow Oil pointed out to Deutsche Welle that legislative guidelines concerning transparency were very stringent, adding that the process was as open as anywhere in the world and that current contracts were in line with Ugandan law.

In an official statement, Tullow Business Unit Manager Uganda Brian Glover said, "We remain confident that all required due diligence has been followed and this transparent process will stand the test of time, into the future…By creating a new aligned partnership with strong international players, we will soon move into an exciting period of accelerated development and production and maximize value for the Ugandan people."

But mistrust remains, in part because one of the companies involved in early exploration, Heritage Oil, is partly owned by Tony Buckingham. Until 1999, Buckingham was involved in the private military company Executive Outcomes - for some that made him a mercenary.

And in an article for Britain's Guardian newspaper, Ugandan journalist Taimour Lay accused Buckingham and others of reaping as much as 35 percent return on their capital investments.

"That's three times what's internationally recognized as a fair profit," Lay wrote.

Others say the connections between the companies and the Ugandan government are simply too cozy for comfort.

"We're uncomfortable with the way the companies have behaved," Twesigye said. "They are not providing the services required by the community, and many people see the companies as the extended arm of the government. You only need to look at list of the directors and the shareholders to see the links."

Norwegian help

In an attempt, however seriously meant, to avoid the pitfalls of other African states, the Ugandan government has solicited the help of the Norwegian Agency for Development Cooperation (NORAD).

The organization aims to pass on Norway's experience in building up a petroleum industry to both foreign government and civic organizations so that, in their words, oil is "a blessing and not a curse."

And the director of the group's Oil for Development Program says not all is bleak in Uganda.

"I'm impressed with the quality of parts of the civil service in Uganda," Petter Nore told Deutsche Welle. "It's too early to tell whether oil will be a blessing or a curse, but there are lots of encouraging signs from the high competence level of the people we deal with, both in the government and civil society."

The fact that the Ugandan government has asked for assistance can plausibly be interpreted as a reason for cautious optimism. And even critics of the government think that oil can be part of the solution to Uganda's problems and not the cause of further ones - if the Ugandan people act wisely.

"We can turn this around," Bashir Twesigye said. "This could indeed be a blessing."

Author: Jefferson Chase
Editor: Rob Mudge