Govt must strive to build sustainable oil & gas sector

The fight to reach net zero emissions by 2050 is on! To that end, climate change activists and development partners have renewed calls to do away with a carbon-driven economy and instead work towards building “ a greener economy.”  

In the case of Uganda, demands have been made to altogether forego oil exploration activities for the sake of environmental conservation. Such a tradeoff could cost Uganda anywhere from $1.5 to $3 billion (more than half of Uganda’s current tax revenue collections) in what would have been annual oil revenue.

Such a pricey dilemma begs the question if the trade-off is necessary at all. The answer is an unequivocal no! The oil and gas sector does indeed pose real risks to the environment and surrounding communities around Lake Albert. These could have catastrophic effects if left unmitigated. But there is a lot government can do to ensure that the project’s benefits outweigh its negatives. 

For this to happen, the government must come together with oil companies, development partners, environmental and sustainability experts, along with local communities to formulate tailor-made plans to ensure that the oil project meets strict environmental conservation regulations and standards drawn from international best practices.

These should address how pollution will be minimized and waste disposed of efficiently. These two issues are some of the most pertinent issues raised by environmental activists. If addressed could significantly reduce the project’s carbon footprint.

Furthermore, the government should clearly state the obligations of the oil companies in the oil agreements and implement them to the latter. The same is especially important in addressing the compensation of people affected by the project’s activities. Shell’s sheer negligence in Nigeria and failure to address the oil leakages have effectively transformed much of the Niger Delta region into a giant wasteland unfit for human life. Yet the Nigerian government continues to spectate as though all is well. If Uganda hopes to avoid a similar fate, it has to be ready to hold Total and other stakeholders accountable. 

Lastly and most importantly are institutions. Without transparent independent, strong institutions, Uganda’s oil and gas sector is doomed to fail. Nigeria again offers us a free lesson here. Everything from illegal pipelines to illegal refineries has robbed the country of the opportunity fully develop its oil and gas sector.

According to BBC, Nigeria lost over $3 billion to oil theft in 2021 alone. This is even though the country’s top security forces have been tasked with guarding the country’s oil reserves. The persistence of the theft signals an apparent unholy alliance between the security apparatus and the oil thieves.

As if this is not enough, a 2016 government audit revealed that an eye-watering $16 billion of oil revenue was missing from government coffers. These are just a few examples of what Africa’s largest oil producer goes through, yet the same country has the majority of its population wallowing in abject poverty. Given Uganda’s unimpressive track record with corruption, fears of the same materializing here are not far-fetched. 

The negative press attached to the oil and gas industry, especially in Africa, has discouraged investors from funding Uganda’s oil pipeline and future projects. But if the government manages to allay their concerns, it could hit two birds with one stone; move Uganda several steps closer to achieving its development agenda sustainably while also attracting more foreign investments, especially from environmentally conscious investors whom the concerns raised by activists initially put off. 

The article was authored by Brian Lutaaya & Eric Wamala, a business entrepreneurship and public policy academic