After negotiating for years, Uganda's Ministry of Energy has signed a memorandum of understanding with three multinational oil companies to provide for the development of the nation's oil reserves. The three companies involved in the deal announced on February 6 are Tullow Oil PLC (UK), Total SA (France), and CNOOC Ltd. (China). Plans call both for crude oil production and the construction (by another company yet to be selected) of a refinery with a capacity of 60,000 barrels a day. In all, total investment in Uganda's oil sector is expected to reach $15 billion.
Uganda's oil reserves, estimated at 3.5 billion barrels, are fourth largest among states in sub-Saharan Africa (after South Sudan, Angola, and Nigeria). Graham Martin, executive director of Tullow Oil, has said that he expects Ugandan production to reach 220,000 barrels per day based on 1.7 billion barrels of recoverable reserves. The total value of the oil to Uganda could reach $50 billion, a figure equivalent to the country's present annual GDP. (Uganda's GDP per capita--$1,400--ranks it 205th among the 229 states and other jurisdictions listed in the CIA World Factbook.)
There are, of course, significant costs associated with petroleum production, especially on such a scale. Oil reserves are located in an environmentally sensitive area that can't help but call to mind the ecological disasters in the Niger Delta of Nigeria and the Amazon Basin of Ecuador. The government of Uganda has already begun relocating people from the rich farmland near Lake Albert where the refinery is to be built. Then there's the resource curse. A non-democracy like Uganda (where Yoweri Museveni has ruled since 1986) has little chance of liberalization--or, perversely, of significant economic development--while oil is being produced. Uganda's GDP per capita will rise, but there's no guarantee this will improve the lives of anyone in Uganda other than those in the ruling elite.
Meanwhile, in a move widely interpreted as siding with the forces of corruption in his country, Nigeria's president, Goodluck Jonathan, has fired Lamido Sanusi, the governor of Nigeria's central bank. Sanusi proved himself to be unfit for a responsible government position in Nigeria by attempting to draw attention to the fact that billions of dollars from oil revenues are missing from the state treasury.
Some are about to become fabulously wealthy in Uganda. It's a safe bet to say that ordinary Ugandans will not be among them.