The following reference materials discuss various aspects of Uganda’s oil exploration and production. Suggestions for additions are welcome, and should be emailed to editor[at sign]oilinuganda.org
Reuben J. Kashambuzi
A Matter of Faith: the Story of Petroleum Exploration in Uganda 1984—2008
Impro Publications Ltd., Kampala, 2010 (Available @ 50,000/- from Aristoc Bookshop, Garden City, Kampala)
This memoir by Uganda’s former Oil Commissioner recounts his and his civil servant colleagues’ long struggle, with negligible resources, to assemble enough geological and geophysical data to interest international oil companies in Uganda’s oil and gas potential. Contains much interesting detail, and much incidental opinion, on the Petroleum Exploration and Production Department’s development and its relations with international oil companies, donors, and consultants. Essential reading for all with a serious interest in Uganda’s oil exploration and production.
The Plundered Planet: How to Reconcile Prosperity with Nature
Allen Lane, London, UK, 2010
The author of the best-selling ‘The Bottom Billion’ and a sometime Special Adviser to President Museveni, Professor Collier here discusses ethical, political and economic challenges in managing natural resource use. Includes specific findings from his own recent research in economics and governance. His point of departure is that “natural assets of the bottom billion constitute a massive opportunity. They are sufficiently valuable that, properly harnessed, they could be transformative.” However, he points to a complicated chain of decisions, from initial exploration (where, he says, “basic prospecting should be undertaken as a public good, and it should be financed predominantly by donors”) to extraction and marketing. Any weak link in the chain—a bad decision at any point—could have adverse consequences for the whole. Interesting and illuminating but sometimes hard to follow, despite the author’s efforts to write for a general audience.
Crude Continent: the Struggle for Africa’s Oil Prize
Profile Books, London, 2008
This book’s great length (674 pages) owes partly to its rambling and repetitious style. Yet the Zimbabwe (then Rhodesia)-born author has ample experience of the global oil industry and offers some insights into its behaviour. Information on Uganda is limited and now outdated, but the book is useful in setting the wider context. The reader must be ready, however, for a tiresome undercurrent of contempt, as epitomized in the title’s characterization of Africa as a ‘crude’ continent.
Macartan Humphreys, Jeffrey Sachs and Joseph Stiglitz (eds.)
Escaping the Resource Curse
Columbia University Press, 2007
Terry Lynn Karl
The Paradox of Plenty: Oil Booms and Petro-States
California University Press, 1997
An early exploration of the damage that mineral booms can cause to developing economies, in terms of both economic output and governance. It looks especially at Venezuela (whose oil reserves are at least 100 times greater than Uganda’s), but also Angola, Algeria, Indonesia, Iran and Nigeria.
ARTICLES, PAPERS AND REPORTS
(2012, May) Columbia University: Oil: Uganda’s Opportunity for Prosperity (School of International & Public Affairs, Columbia University) Click here to download
Argues that Uganda has a short window of opportunity to ensure that it extracts the full value from its oil endowment. Rigorous preparation is required to avoid the ‘resource curse’. The paper makes a total of 56 policy recommendations to establish the necessary legal, governance, environmental and social foundations for a strong oil sector before full-scale production beings in 2016.
Key concerns identified include the need to upgrade petroleum-related laws, establish stronger institutions that are better-equipped to monitor the oil industry and enforce regulations, ensure the disciplined management of oil revenues, implement safeguards against the environmental impact on the Albertine Graben and ensure fairness surrounding land rights and compensation for affected communities. Whilst many of the recommendations require short-term implementation, they also stress the need for a long-term perspective: “The framework that Uganda sets up today will have repercussions past the oil age”. The paper concludes that the country is off to a good start, but that much work remains to be done.
(2012, March) Petrus de Kock and Kathryn Sturman: The Power of Oil: Charting Uganda’s Transition to a Petro-State (South African Institute of International Affairs, Johannesburg.) Click here to download.
Examines the political history of post-independence Uganda, highlighting the recurrence of armed conflict, and concludes that “The military, and the influence it still exerts on political developments in the country, should be considered a potential danger as the country heads for oil production. Recent dynamics, including militarisation of the country’s border with the Democratic Republic of Congo (DRC), new arms purchases, and a history of military adventurism in the region, are important issues to monitor as the country advances towards becoming a petro-state.” Also concludes, on the basis of interviews with communities in the Lake Albert region, that “Perceptions of economic and political marginalisation in communities directly affected by oil developments could lead to grievance politics emerging in a volatile zone.”
(2012, February 28) Global Witness: Uganda’s Petroleum Legislation: Safeguarding the Sector (Global Witness, London) Click here to download.
Analyses the “upstream” Petroleum (Exploration, Development and Production) Bill and “downstream” Petroleum (Refining, Gas Processing, Transportation and Storage) Bill tabled in parliament in February. While acknowledging some progress towards creating an adequate legal framework, the report’s overall conclusion is that “Tight ministerial control, absence of parliamentary oversight and a lack of guarantees on contract and financial transparency remain key features of both Bills”
(2012, February 12) Mika Minio-Paluello: The Ugandan Upstream oil law: A search in vain for accountability and democratic oversight. (PLATFORM, London) Click here to download.
Analyses the October 2011 draft of the Petroleum (Exploration, Development and Production) Bill, arguing that it lacks parliamentary oversight and accountability to the Ugandan people and gives the Minister too much power. Observes that the Bill does not create necessary provisions for transparency, parliamentary oversight, consultation or involvement of affected communities, yet it includes clauses that restrict information flow and could potentially threaten public debate, as some of the clauses relating to “offences” are vague and general, thereby creating the potential for a clampdown on those attempting to “shine light and share material.”
(2102, February 10) President Yoweri Museveni: Address to Uganda’s Parliament Full text is posted on Ugandan Media Centre website, here.
Combative defence by the state President of his decision to sign up to new oil deals before a regulatory framework is in place. Gives his view of past developments in Uganda’s oil sector and lays out his vision for the future.
(2012, February) Robert Tumwesigye, Paul Twebaze, Nathan Makuregye, Ellady Muyambe: Key Issues in Uganda’s Energy Sector (Pro-Biodiversity Conservationists in Uganda / International Institute for Environment and Development, London) Click here to download.
This 50+ page report discusses Uganda’s energy demand and resources as a whole. Ten pages are devoted to a concise summary of post-2000 exploration history and production options.
(2012, January) Ernest N. T. Rubondo: Uganda’s Petroleum Upstream Sector: Implementation of the National Oil And Gas Policy (Petroleum Exploration and Production Department, Government of Uganda) Click here to download.
Mr. Rubondo currently serves as Commissioner of the Petroleum Exploration and Production Department. This presentation is his progress report on oil exploration to date.
(2011, July) Julius Kiiza, Lawrence Bategeka, & Sarah Ssewanyana: Righting Resource-Curse Wrongs in Uganda: the Case of Oil Discovery and the Management of Popular Expectations (Economic Policy Research Centre, Kampala) Click here to download.
Summarises the history of oil exploration in Uganda, explains and discusses the ‘resource curse’ and explores ways that Norway and Botswana avoided it.
(2011, July) Sam Hickey: Beyond the Poverty Agenda? Insights from the New Politics of Development in Uganda (Chronic Poverty Research Centre, University of Manchester, UK; Working Paper No. 221) Click here to download.
Analyses Uganda’s current (2010/11–2014/15) National Development Plan and argues that “The arrival of oil wealth over the next few years may help to resource the ambitious investments proposed within the NDP, but may also undermine more labour-intensive sectors of the economy and deepen existing governance problems. As things stand, Uganda lacks the type of developmental state required to realise the NDP agenda, suggesting that it may be some time yet before the laudable ambitions of the NDP gain traction beyond the inner circles of policy-making.”
(2011, July) Alan Gelb and Stephanie Majerowicz: Oil for Uganda – or Ugandans? Can Cash Transfers Prevent the Resource Curse? (Centre for Global Development, Washington DC, Working Paper 261) Click here to download.
Discusses use of oil revenues and argues that, because of “deteriorating governance and mounting corruption” the revenues should be distributed in cash payments to all Ugandan citizens (about USD 60 per person per year).”
(2011, June) Lawrence Bategeka and John Mary Matovu Oil Wealth and Potential Dutch Disease Effects in Uganda (Economic Policy Research Centre, Kampala) Click here to download.
Finds, as per Dutch Disease theory, that increased oil resources will lead to significant appreciation of the Ugandan currency in all scenarios, but argues that the loss of (export) competitiveness can be compensated by investing in agriculture to create productivity gains. Productivity could also be boosted, the authors say, by using oil revenues to boost spending on education and health. Investment in infrastructure, they conclude, could reinforce the Dutch disease, but his would be offset by the positive externalitiesof better public goods.
(2011, June) Joel Barkan: Uganda: Assessing Risks to Stability (Center for Strategic & International Studies, Washington DC.) Click here to download.
Following much international commentary in describing Uganda’s governance as resting on a system of personal patronage, this report points to a recent reduction in international aid to Uganda and claims that “The regime is hoping that oil exports will provide the revenue to sustain its network of support; but if production does not begin soon, the political coalition on which the regime is based may begin to fracture.”
(2011, May) Manfred Wiebelt, Karl Pauw, John Mary Matovu, Evarist Twimukye, Todd Benson: Managing Future Oil Revenues in Uganda for Agricultural Development and Poverty Reduction: A CGE Analysis of Challenges and Options (Kiel Institute for the World Economy, Kiel, Germany, Working Paper No. 1696) Click here to download.
This specialist, technical paper, considers various options for spending, saving and investing oil revenues. A major concern is to avoid ‘Dutch Disease’ (whereby non-oil sectors of the economy, notably agriculture, become relatively less competitive and healthy.) Using a “recursive-dynamic computable general equilibrium model” it plots several scenarios and cautiously recommends a policy of public investment spending that is “biased in favor of agriculture and food processing.” It also endorses the idea of saving some of the revenues (to spread government spending over time, and thereby reduce the impact of Dutch Disease. The combination of these measures, the paper concludes, are likely to ensure that “poorer rural households will benefit the most, but without sacrificing urban poverty reduction.”
(2011, May) Frank Tumusiime and Jessica Banfield: Oil and Gas Laws in Uganda: A Legislators’ Guide (International Alert, London, UK) Click here to download.
Reviews existing Uganda laws and a draft of the the Petroleum (Exploration, Development,Production and Value Addition) Bill. Finds that “not all values espoused in the [National Oil & Gas] policy are, in fact, reflected in the [draft] Bill.” Calls for greater transparency, clearer division of institutional responsibilities and more checks and balances, including parliamentary oversight, on the powers of the Minister of Energy. On revenue management, finds that the Bill “does not provide for any sort of progressive revenue collection whereby the state’s share of benefits increases as project profitability rises,” calls for clarification of “the formula of 85 percent revenue to central government and 15 percent to local government,” and argues that a proposed Petroleum Fund “should be established via an amendment to the Constitution or by legislation that cannot easily be revised by the normal operations of politics.” Also calls for tougher environmental protection methods.
(2011, January) Peter G. Veit, Carole Excell, Alisa Zomer: Avoiding the Resource Curse: Spotlight on Oil in Uganda (World Resources Institute, Washington DC, USA) Click here to download
This thoughtful paper is devoted to the likely impact of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was passed into US law in June 2010. Section 1504 of the Act requires resource extraction companies that trade on US stock exchanges to report all payments to foreign governments. Will this mean that payments by oil companies operating in Uganda will have to be made public in the United States? That will depend, say the authors, on detailed regulations to accompany the Act that had not been drawn up at the time of writing.
(n.d. November 2011?) Ivan Amaniga Rukanga, Jacob Mayindo, Rani Parker, James Van Alstine, Margaret Barihaihi, Henry Bazira, Gloria Namande, Noreen Nampewo: Seeking Benefits and Avoiding Conflicts: A Community-Company Assessment of Uganda’s Hydrocarbon Industry (Leeds University of Leeds Faculty of Environment, Business-Community Synergies, London School of Economics, UK) Click here to download Executive Summary
Study based on interview and focus groups “to assess the relationship between Tullow Oil and communities within and in proximity to the company’s current operational area in the Albertine Graben” Main findings include: there is a need for “increasing the company’s understanding of the local context”; that it “may be desirable to exceed” local compensation standards for evicted people; that companies and government should provide better and more timely information to affected communities; that Tullow should employ grass-roots Community Liaison Officers; that companies should lease community land from communities, not individuals; that the company should conduct a baseline socio-economic survey in exploration blocks.
(2010, October) Global Witness Donor Engagement in Uganda’s Oil and Gas Sector: An Agenda for Action (London, UK) Click here to download.
Argues that Uganda’s ‘development partners’ “have a big stake in ensuring that the resource wealth about to come on tap is used for developmental purposes” but that “the donor approach has been lacking in urgency” and also in coordination. Recommends that future disbursements of joint budget support should be tied to performance against transparency and governance benchmarks. Also urges donors to “take collective action to influence the content of the Petroleum (Exploration, Development, Production, and Value Addition) Bill.”
(2010, February) Taimour Lay, Mika Minio-Paluello Contracts Curse: Uganda’s oil agreements place profit before people (Civil Society Coalition on Oil in Uganda/PLATFORM UK) Click here to download.
This influential report analysed leaked drafts of contracts (Production Sharing Agreements) between the Government of Uganda and three oil companies (Dominion, Heritage and Tullow). The authors claim these drafts were very close to or even identical with the final versions signed. They argue that the deals guarantee high, even “excessive” profits for the oil companies, but are a very bad deal for Uganda.
According to the report, up to 60% of the oil proceeds may be used to recover the oil companies “expenses” in extracting it—and those expenses are very broad, even including any legal costs incurred by the companies in any future dispute with the Government of Uganda or any other third party.
The division of proceeds from the remaining “profit oil” is influenced by two factors:–the rate at which it is produced, and the world market price at the time of production. Uganda’s sharein this profit oil will, the report calculates, vary from 46% (if oil prices fall as low as $30 per barrel) to a maximum of 76%. The oil companies are protected from the risk of low oil prices, because when the price is low their share in the total take rises. If oil prices rise very high, however, the government’s take reaches a ceiling at 76%, while the oil companies’ 24% becomes much more profitable for them.
(2010) Ivan Amaniga Ruhanga and Jacob Manyindo: Uganda’s environment and natural resources: Enhancing parliament’s oversight (Uganda Wildlife Society, Kampala) Click here to download.
This 64 page document is intended as a handbook for Ugandan MPs, “to provide a ready source of environmental information and trends for legislators.” It provides a short situation assessment of twelve thematic areas: agriculture, climate change, energy, fisheries, forests, land, oil and gas, pollution, tourism, water, wetlands and wildlife/biodiversity. Each thematic area includes a list of relevant laws and policies, contact details of key agencies and “action points for legislators.” In addition to these action points, the document points to the overarching need for “developing a reading culture” and “developing research capacity.”
(2009, September) International Alert: Harnessing Oil for Peace and Development In Uganda: Understanding National, Local and Cross-border Conflict Risks Associated with Oil Discoveries in the Albertine Rift (International Alert, London, Investing in Peace Issue No. 2) Click here to download.
(2009, April) Ivan Amaniga Ruhanga, Jacob Manyindo and Mark Jordahl: Maintaining the conservation and tourism value of protected areas in petroleum development zones of the Albertine Rift: Ensuring win-win policy approaches (Uganda Wildlife Society, Kampala) Click here to download.
Calls for gazetting of “preservation zones” free from oil activity, for land swaps as a form of compensation where land is compulsorily purchased, for the establishment of wildlife corridors and re-stocking programmes, for the development and implementation of biodiversity action plans, and for oil companies to deploy technologies such as “directional drilling” in order “to shrink the direct surface footprint of oil and gas operations.”
(2009, March) African Development Bank Managing Oil Revenue in Uganda, A Policy Note (African Development Bank OREA Knowledge Series: No. 1, ) Click here to download.
(2009) Extractive Industries Value Chain: A Comprehensive Integrated Approach to Developing Extractive Industries (Africa Region Working Paper Series No. 125, World Bank, Washington DC.) Click here to download. (Link has been broken recently)
(2008, December) Christoph Schwarte: Public Participation and Oil Exploitation in Uganda (International Institute for Environment and Development, London, ‘Gatekeeper Series’ No. 138) Click here to download.
Finds that “public participation is subject to several financial, technical and political constraints. The culture of secrecy within government bodies, weak civil society structures as well as the politics of patronage remain substantive challenges for the fair and equitable management of natural resources in Uganda.” Recommendations include “developing subsidiary legislation that makes openness a core value and strengthens the independence of civil servants; channeling donor funding for improving environmental governance through credible non-partisan Ugandan NGOs and other civil society organisations; building the technical capacity within government institutions to operate a website and make information available electronically.”
(2008, October) Telly Eugene Muramira and Jacob Manyindo: Sharing oil and gas revenues in Uganda (Uganda Wildlife Society, Kampala) Click here to download.
Describes and evaluates oil and gas revenue management models practiced in various countries. Recommends that government “should study and actively participate in determining oil extraction levels;” that a National Oil Company should be established to work in partnership with private companies; that the royalties and taxes should be set at “concessionary levels” for the purpose of “attracting and retaining investments in domestic oil production;” that “government should strive to accumulate [rather than spend] substantial financial assets over the period of oil production;” that government “should ensure that communities in oil producing areas receive designated funds” and should “initiate targeted capacity building programs and assist local communities and local governments to establish and manage their share of oil derivation funds.”
(2006, December) Yakobo Moyini, Jacob Manyindo and Irene Makumbi: Sharing natural resources revenue: towards derivation funds for Uganda (Uganda Wildlife Society, Kampala) Click here to download.
Discusses the division of natural resources revenues between central and local governments, local communities and the private sector, analyzing different experiences in Uganda (the Uganda Wildlife Authority and National Forestry Authority) and numerous other countries. Argues that communities in resource extraction areas should be helped to establish “derivation funds”—funds derived from royalties on resource extraction.
(2006) Arthur Bainomugisha, Hope Kivengyere, Benson Tusasirwe: Escaping The Oil Curse and Making Poverty History: A Review of the Oil and Gas Policy and Legal Framework for Uganda (ACODE, Kampala, Policy Research Series No. 20; 43 pages) Click here to download
(2003) Ian Gary, Terry Lynn Karl: Bottom of the Barrel: Africa’s Oil Boom and the Poor (Catholic Relief Services, Baltimore, USA) Click here to download.
Written before Uganda’s oil potential was publicly known, this report discusses various earlier exporters, notably in the Gulf of Guinea, Chad and Cameroon, and concludes that “Without improving their democratic institutions and administrative capacity, it is unlikely that African oil exporters will be able to use petrodollars to fuel poverty reduction; instead, oil monies are more likely to make matters worse for the poor.” Greater transparency is recommended as “the first step” in righting matters.
(2001) Jeffrey Sachs and Andrew Warner: The Curse of Natural Resources (European Economic Review, Volume 45, pages 827-838, May 2001)
(2000) Fred Guweddeko: Uganda’s Search for Oil and Bush War Delayed Obote Drilling Oil (Series of two articles in The Monitor, Kampala, November 1 and 2, 2000)
These two feature articles give historical depth to Uganda’s oil hopes and fears—starting from Emin Pasha who “was excited by the seeping oil as early as 1877” and Captain Frederick Lugard of the British Imperial East African Company, who went to inspect the seeps in 1890. The first article deals with the colonial period, the second with the post-independence era, and the efforts of presidents Milton Obote and Idi Amin to mobilise the resource. Fascinating background.