age 1 of 19

Curse or 8|ess|ng? now Ugandans can 8enef|t from the C|| and Gas Sector
by
I. A. Mwaka||
1

A keynote paper presented at the Med|a Awards Ga|a (13
th
December 2011) organ|sed by
Afr|can Centre for Med|a Lxce||ence

1.0 IN1kCDUC1ICN
lnLense oll and gas exploraLlon work LhaL has been Laklng place slnce early 2006 has verlfled
uganda's slgnlflcanL oll and gas poLenLlal. 1he AlberLlne Craben (see map below) ln parLlcular has
proven Lo be very promlslng, wlLh hydrocarbons dlscovered ln almosL every well LhaL has been
drllled. 1he oll reserves have been esLlmaLed upwards of 2.3 bllllon barrels. lL ls now apparenL LhaL
peLroleum wlll be commerclally produced ln Lhe counLry. lans are consldered wlLh regard Lo a new
oll reflnery and plpellnes Lo ensure evacuaLlon for Lhe oll Lo Lhe markeL.

1he prospecL of uganda [olnlng Lhe
club of oll produclng economles of Lhe
world has aroused mlxed feellngs
among noL [usL ugandans buL also Lhe
lnLernaLlonal communlLy - feellngs of
exclLemenL and apprehenslon all aL
Lhe same Llme. PlsLorlcally, Lhe
peLroleum resource has resulLed lnLo
boLh wealLhy and lmpoverlshed
socleLles ln almosL equal measure.
1hls dllemma ls varlously referred Lo
as Lhe paradox of plenLy", or uuLch
dlsease" or resource curse". 1haL ls
Lo say, Pow can you possess so much
of a good Lhlng (speclflcally Lhe non-
renewable exLracLlves - mlnerals and
fuels) and yeL be worse off Lhan lf you
dld noL have lL? lL should be qulckly
sLaLed LhaL lL ls noL Lhe resources per

1
rofessor of SLrucLural Lnglneerlng and 8ulldlng ConsLrucLlon, Makerere unlverslLy (Lhe flrsL ever professor of
englneerlng Lo be produced by Makerere unlverslLy), Chalrman, uganda Lnglneers 8eglsLraLlon 8oard,
Chalrman, 8u[agall Pydropower ro[ecL MonlLorlng CommlLLee, Chalrman, 1echnlcal CommlLLee on Clvll and
8ulldlng Lnglneerlng, uganda naLlonal 8ureau of SLandards, Member, naLlonal lndusLrlal arks lannlng
CommlLLee, uganda lnvesLmenL AuLhorlLy, Managlng ulrecLor, 1rlo ConsulLanLs LLd., lormer Pead,
ueparLmenL of Clvll Lnglneerlng, Makerere unlverslLy, lormer Chalrman, 8agungu CommunlLy AssoclaLlon.
1be slte of tbe pettoleom floJs lo uqooJo
age 2 of 19

se LhaL cause Lhe curse. 1hls ls belleved Lo happen for many dlfferenL reasons, lncludlng a decllne ln
Lhe compeLlLlveness of oLher economlc secLors (caused by appreclaLlon of Lhe real exchange raLe as
resource revenues enLer an economy), volaLlllLy of revenues from Lhe naLural resource secLor due Lo
exposure Lo global commodlLy markeL swlngs, governmenL mlsmanagemenL of resources, or weak,
lneffecLual, unsLable or corrupL lnsLlLuLlons (posslbly due Lo Lhe easlly dlverLed acLual or anLlclpaLed
revenue sLream from exLracLlve acLlvlLles)
2
. AL Lhe Llme of wrlLlng Lhls (uecember 2011), lL ls
probably Lhe aspecLs of mlsmanagemenL and corrupLlon LhaL are of Lhe greaLesL concern ln uganda's
nascenL oll and gas lndusLry. lor ugandans, Lhe blg quesLlon, Lherefore, ls how Lo Lurn Lhe newly
dlscovered oll lnLo a blesslng raLher Lhan a curse.

2.0 MIkLD LkLkILNCL AkCUND 1nL WCkLD
Whereas uganda's naLlonal Cll and Cas ollcy's sLaLed noble ob[ecLlve ls 1o ose tbe cooottys oll
ooJ qos tesootces to coottlbote to eotly ocblevemeot of povetty etoJlcotloo ooJ cteote lostloq voloe
to soclety
3
, perhaps Lhe maln lesson Lo learn from counLrles LhaL have dlscovered rlch naLural
resources, such as oll and gas, ls LhaL such endowmenLs are no guaranLee LhaL Lhe counLry wlll
prosper. 1hls reallLy, however, never seems Lo denL people's expecLaLlons of lnsLanL wealLh from Lhe
abundanL naLural resources.
CounLrles wlLh an abundance of naLural resources on average seem Lo experlence less economlc
growLh and worse developmenL of ouLcomes Lhan counLrles wlLh fewer naLural resources. When
comparlng counLrles aL Lhe same lncome level, counLrles LhaL are hlghly dependenL on revenues
from naLural resources, generally score lower on Lhe un Puman uevelopmenL lndex and on
economlc growLh, exhlblL greaLer corrupLlon, have a greaLer probablllLy of lnLernal vlolenL confllcLs,
and have a larger share of Lhe populaLlon ln poverLy Lhan counLrles wlLh dlverse sources of wealLh
4
.
A comparlson of Cu performance from 1960 Lo 1999 of some oll-produclng counLrles 8razll,
lndonesla, Malaysla, Mexlco and nlgerla ls very lnsLrucLlve, as ln Lhe flgure below. Whereas 8razll,
Malaysla and Mexlco have en[oyed relaLlve hlgh Cu growLh, nlgerla's economy on Lhe oLher hand
has sLagnaLed whlle lndonesla only reglsLered weak growLh
3, 6
.


2
hLLp://en.wlklpedla.org/wlkl/8esource_curse. Accessed on 11/12/2011
3
MlnlsLry of Lnergy and Mlneral uevelopmenL, MLMu (2008), Notloool Oll ooJ Cos lollcy fot uqooJo,
kampala.
4
See, for example, Sachs, !.u. and A.M. Warner (2001), 1he curse of naLural resources", otopeoo cooomlc
kevlew, vol. 43 (4-6) pp. 827-838.
3
nords, P. kyvlk, L. vaLne and . Peum (2003), 1be opstteom pettoleom loJostty ooJ locol loJosttlol
Jevelopmeot. A compototlve stoJy, 8ergen: 1he lnsLlLuLe for 8esearch ln Lconomlcs and 8uslness
AdmlnlsLraLlon, Snl-8eporL 08/03.
6
Mwakall, !ackson A., Peum, er, Lkern, Cle lredrlk, 8yaruhanga, !ackson n.M., koo[o, Charles A. and
8lglrwenkya, naphLall k. (2011), Lnhanclng naLlonal arLlclpaLlon ln Lhe Cll and Cas lndusLry ln uganda, llnal
reporL on 1he naLlonal ConLenL SLudy ln Lhe Cll and Cas SecLor ln uganda. MlnlsLry of Lnergy and Mlneral
uevelopmenL, kampala.
age 3 of 19


Cu per caplLal, 1960-1999
7
.

robably Lhe mosL successful oll sLory ls norway where Cu growLh has been good on average over
slnce oll dlscovery clrca 1970
8
. As a resulL norway has bullL lndusLrlal capaclLy of lLs flrms Lo Lhe
exLenL LhaL Lhey now serve Lhe oll and gas lndusLry all around Lhe world. Some researchers Lhlnk Lhe
norweglan experlence ls almosL lmposslble Lo repllcaLe
9
. When oll and gas were dlscovered, norway
was an lndusLrlallzed economy wlLh a hlghly educaLed populaLlon, and wlLh funcLlonlng democraLlc
lnsLlLuLlons. lndusLrlal capaclLy was already broadly developed ln areas whlch raLher easlly could be
Lransformed and exLended lnLo Lhe oll and gas lndusLry.
Cn Lhe oLher exLreme, nlgerla's Cu per caplLa dld noL lncrease for Lhe lasL four decades of Lhe 20
Lh

cenLury. Lven Lhough oll and gas acLlvlLles ln nlgerla sLarLed Len years before Lhey sLarLed ln norway,
flrms ln nlgerla only Lo a llmlLed exLenL parLlclpaLe ln Lhe oll lndusLry on a compeLlLlve basls. 1he
governmenL has noL lacked amblLlons for naLlonal parLlclpaLlon. 1hese expecLaLlons have, however,
been accompanled by lack of Lransparency, a ma[or facLor behlnd corrupLlon and proflLeerlng by a
few. 1hls has conLrlbuLed negaLlvely Lo Lhe developmenL of Lhe nlgerlan economy because

7
World Lconomlc lorum (2010), 1he Clobal CompeLlLlveness 8eporL 2010-2011", Ceneva
8
Cu per caplLa ln norway ln 1999 accordlng Lo World uevelopmenL lndlcaLors (2001) was uSu 32,341.
9
Peum, . (2008), Local ConLenL uevelopmenL - experlences from oll and gas acLlvlLles ln norway", 8ergen:
1he lnsLlLuLe for 8esearch ln Lconomlcs and 8uslness AdmlnlsLraLlon, Snl Worklng aper 02/08.

0
500
1000
1500
2000
2500
3000
3500
4000
4500
5000
Brazil Indonesia Malaysia Mexico Nigeria
1960
1974
1980
1990
1999
age 4 of 19

LradlLlonal lndusLrles have been crowded ouL whlle a slgnlflcanL share of Lhe earnlngs has been
Lransferred Lo savlngs and consumpLlon abroad
10, 11
.
lndonesla has, as nlgerla, been sub[ecL Lo raLher exLenslve corrupLlon ln connecLlon wlLh Lhe oll and
gas acLlvlLles. unllke nlgerla, however, Lhese revenues have Lo a much larger exLenL been relnvesLed
ln Lhe domesLlc economy, conLrlbuLlng Lo lndusLrlal developmenL, boLh ln connecLlon wlLh oll and
gas and ln oLher areas. 1hls developmenL has Laken place whlle lndonesla has been raLher open Lo
forelgn lnvesLors. CrowLh has, however, only been moderaLe from low levels
12
.
Malaysla has been able Lo lncrease local conLenL and Lo achleve slgnlflcanL Cu growLh whlle oll and
gas acLlvlLles have Laken place. 1he naLlonal oll company, eLronas, has played a key role, and Lhe
domesLlc acLlvlLles have lncreaslngly been exposed Lo forelgn compeLlLlon. 1he success ls parLly
aLLrlbuLed Lo a pollcy of conslsLenL and balanced economlc dlverslflcaLlon
13
.
Mexlco and 8razll boLh have sLrong naLlonal oll companles, emex and eLrobras, respecLlvely. Local
conLenL has been qulLe hlgh ln boLh counLrles, and has Lo a large exLenL been achleved by shuLLlng
ouL forelgn lnvesLors. unLll Lhe early 2000s, however, nelLher really succeeded ln bulldlng lndusLrlal
capaclLy LhaL proved compeLlLlve by lnLernaLlonal sLandards, and probably consumed lnsLead of
generaLlng wealLh. Cu growLh was also raLher low from 1980 Lo 1999. Slnce Lhen, 8razll has
worked qulLe sysLemaLlcally Lo sLrengLhen lndusLrlal capaclLy among local flrms, whlle allowlng
forelgn compeLlLlon ln Lhe domesLlc markeL. 1hls seems Lo be very promlslng, whlle Mexlco sLlll ls
lagglng behlnd
14
.
A compeLlLlve, creaLlve and expandlng lndusLrlal base ls a musL for a counLry Lo prosper and an
economy Lo generaLe susLalnable naLlonal wealLh. lL ls also clearly lndlcaLed when conslderlng Lhe
flgure below showlng Lhe Cu-share of manufacLurlng ln Lhe flve oll and gas produclng counLrles
dlscussed above. ManufacLurlng ls more or less bound Lo play a key role ln prlvaLe secLor
developmenL. 1hus, lL ls lnLeresLlng Lo noLlce Lhe dlfferences ln manufacLurlng developmenL
beLween nlgerla, 8razll, Mexlco, lndonesla and Malaysla. nlgerla, whlch experlenced no real Cu-
growLh from 1960-1999, was noL able Lo expand lndusLrlal acLlvlLles ln manufacLurlng over Lhe
perlod aL all. 1he counLrles LhaL performed beLLer, elLher have had a slgnlflcanL manufacLurlng secLor
over Lhe whole perlod, or have been able Lo expand lL
13
.


10
nords, P. kyvlk, L. vaLne and . Peum (2003), 1be opstteom pettoleom loJostty ooJ locol loJosttlol
Jevelopmeot. A compototlve stoJy, 8ergen: 1he lnsLlLuLe for 8esearch ln Lconomlcs and 8uslness
AdmlnlsLraLlon, Snl-8eporL 08/03.
11
A more ln-depLh dlscusslon of Lhe nlgerlan experlence ls covered ln: Mwakall, !.A. (2009), Pow Can We
8eneflL from Cll ulscovery as Lhe CommunlLy?" aper resenLed on 30Lh uecember 2009 aL 8agungu SLudenLs
AssoclaLlon (8ASA) Annual Semlnar aL klgorobya 1own Councll, Polma ulsLrlcL.
12
Mwakall, !ackson A., Peum, er, Lkern, Cle lredrlk, 8yaruhanga, !ackson n.M., koo[o, Charles A. and
8lglrwenkya, naphLall k. (2011), Lnhanclng naLlonal arLlclpaLlon ln Lhe Cll and Cas lndusLry ln uganda, llnal
reporL on 1he naLlonal ConLenL SLudy ln Lhe Cll and Cas SecLor ln uganda. MlnlsLry of Lnergy and Mlneral
uevelopmenL, kampala.
13
lbld.
14
lbld.
13
lbld.
age S of 19


ManufacLurlng share of Cu, 1960-1999
16
.
ulfferences ln performance send one clear message: 1he key deLermlnlng facLor for a counLry Lo
beneflL from oll and gas, ls Lo ensure a broad-based capaclLy bulldlng programme ln local lndusLrles
and among lLs clLlzens. 1hls ls called local conLenL or naLlonal conLenL or naLlonal parLlclpaLlon.

3.0 WnA1 LLSL WLN1 WkCNG IN NIGLkIA?
17

J.1 Oll ooJ Cos ltoJoctloo copoclty
1he peLroleum lndusLry ln nlgerla ls Lhe largesL lndusLry and maln generaLor of Cu ln Lhe naLlon
whlch ls also Lhe conLlnenL's mosL populous
18
. Slnce Lhe 8rlLlsh dlscovered oll ln Lhe nlger uelLa ln
Lhe laLe 1930s, Lhe oll lndusLry has been marred by pollLlcal and economlc sLrlfe largely due Lo a long
hlsLory of corrupL mlllLary reglmes and compllclLy of mulLlnaLlonal oll corporaLlons. uesplLe Lhls, lL
was noL unLll Lhe early 1990s LhaL Lhe slLuaLlon was glven lnLernaLlonal aLLenLlon, parLlcularly
followlng Lhe murder by Lhe nlgerlan sLaLe of playwrlghL and acLlvlsL ken Saro-Wlwa, provoklng Lhe
lmmedlaLe suspenslon of nlgerla from Lhe CommonwealLh of naLlons. 1he nlgerlan governmenL, oll
corporaLlons, and oll-dependenL WesLern counLrles have been crlLlclzed as Loo slow Lo lmplemenL

16
World Lconomlc lorum (2010), 1he Clobal CompeLlLlveness 8eporL 2010-2011", Ceneva.
17
1hls secLlon largely borrows from Mwakall, !.A. (2009), Pow Can We 8eneflL from Cll ulscovery as Lhe
CommunlLy?" aper presenLed on 30Lh uecember 2009 aL 8agungu SLudenLs AssoclaLlon (8ASA) Annual
Semlnar aL klgorobya 1own Councll, Polma ulsLrlcL.
18
As of 2000, oll and gas exporLs accounLed for more Lhan 98 of exporL earnlngs and abouL 83 of federal
governmenL revenue, as well as generaLlng more Lhan 40 of lLs Cu. lL also provldes 93 of forelgn exchange
earnlngs, and abouL 63 of governmenL budgeLary revenues.

0
5
10
15
20
25
30
35
40
1
9
6
0
1
9
6
2
1
9
6
4
1
9
6
6
1
9
6
8
1
9
7
0
1
9
7
2
1
9
7
4
1
9
7
6
1
9
7
8
1
9
8
0
1
9
8
2
1
9
8
4
1
9
8
6
1
9
8
8
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
p
e
r
c
e
n
t
Brazil Indonesia Malaysia Mexico Nigeria
age 6 of 19

reforms almed aL aldlng a desperaLely under-developed area and remedlaLlng Lhe unsusLalnable
envlronmenLal degradaLlon LhaL peLroleum exLracLlon has wroughL.
nlgerla's proven oll reserves are esLlmaLed aL beLween 16 and 22 bllllon barrels
19
. lLs reserves make
nlgerla Lhe LenLh mosL peLroleum-rlch naLlon, and by far Lhe mosL affluenL ln Afrlca. ln mld-2001 lLs
crude oll producLlon was averaglng around 2.2 mllllon barrels per day.
nearly all of Lhe counLry's prlmary reserves are concenLraLed ln and around Lhe delLa of Lhe nlger
8lver, buL off-shore rlgs are also promlnenL ln Lhe well-endowed coasLal reglon. nlgerla ls one of Lhe
few ma[or oll-produclng naLlons sLlll capable of lncreaslng lLs oll ouLpuL. More recenLly, producLlon
has been forced Lo a halL lnLermlLLenLly by Lhe demands and acLlons of Lhe nlger uelLa's lnhablLanLs
who feel Lhey are belng explolLed.
All peLroleum exploraLlon and producLlon ls Laken under Lhe ausplces of [olnL venLures beLween
forelgn mulLl-naLlonal corporaLlons and Lhe nlgerlan federal governmenL. 1hls [olnL venLure
manlfesLs lLself as Lhe nlgerlan naLlonal eLroleum CorporaLlon, a naLlonallzed sLaLe corporaLlon.
!olnL venLures accounL for approxlmaLely 93 percenL of all crude oll ouLpuL, whlle local lndependenL
companles operaLlng ln marglnal flelds accounL for Lhe remalnlng 3 percenL. AddlLlonally, Lhe
nlgerlan consLlLuLlon sLaLes LhaL all mlnerals, oll, and gas legally belong Lo Lhe federal governmenL.
1he slx oll companles operaLlng ln nlgerla are: 8oyal uuLch Shell (8rlLlsh/uuLch), Lxxon-Mobll
(Amerlcan), Chevron (Amerlcan), Aglp (lLallan), 1oLal (lrench), 1exaco (now merged wlLh Chevron)
20
.
naLural gas reserves are well over 2,800 km, l.e Lhree Llmes as subsLanLlal as Lhe crude oll reserves.
CurrenLly, however, Lhe ma[orlLy of nlgerla's naLural gas ls flared off and lL ls esLlmaLed LhaL nlgerla
loses uS$ 18.2 mllllon dally from Lhe loss of Lhe flared gas.
nlgerla's LoLal peLroleum reflnlng capaclLy ls 443,000 barrels per day, however, only 240,000 bbl/d
was alloLLed durlng Lhe 1990s. SubsequenLly crude oll producLlon for reflnerles was reduced furLher
Lo as llLLle as 73,000 bbl/d durlng Lhe reglme of Sannl Abacha. 1here are four ma[or oll reflnerles LhaL
operaLe aL less Lhan 30 capaclLy. AlLhough demand and consumpLlon of peLroleum ln nlgerla ls
very hlgh, peLroleum producLs are unavallable Lo mosL nlgerlans and are qulLe cosLly, because
almosL all of Lhe oll exLracLed by Lhe mulLlnaLlonal oll companles ls reflned overseas, whlle only a
llmlLed quanLlLy ls supplled Lo nlgerlans Lhemselves.
J.2 nlstoty ooJ polltlcs
lour culLural enLlLles, Lhe Pausa-lulanl, Lhe lgbo (someLlmes spelled lbo), Lhe ?oruba and Lhe Lflk
domlnaLe naLlonal pollLlcs ln nlgerla. 1he nlger uelLa reglon has always been a zone of dense
culLural dlverslLy and ls currenLly lnhablLed by roughly forLy eLhnlc groups speaklng an esLlmaLed 230
dlalecLs. 1he eLhnlc groups lnclude Lhe l[aw (or ljo), lLseklrl, Cgonl and Lflk. 1he l[aw Lhe fourLh mosL
populous Lrlbe ln nlgerla and by far Lhe largesL ln Lhe uelLa reglon, have LradlLlonally llved ln small
flshlng vlllages wlLhln Lhe lnleLs of Lhe delLa. 1he map below shows nlgerla's eLhno-llngulsLlc
landscape.

19
u.S. Lnergy lnformaLlon AdmlnlsLraLlon (uecember 1997), nlgerla CounLry Analysls 8rlef.
20
Puman 8lghLs WaLch (1999), 1he rlce of Cll: CorporaLe 8esponslblllLy and Puman 8lghLs vlolaLlons ln
nlgerla's Cll roduclng CommunlLles
age 7 of 19


J.J 1be coloolol leqocy (1800s-1960s)
lnLeresL ln nlgerlan oll orlglnaLed ln 1914
wlLh an ordlnance maklng any oll and
mlneral under nlgerlan soll legal properLy
of Lhe 8rlLlsh Crown. 8y 1938 Lhe colonlal
governmenL had granLed Lhe sLaLe-
sponsored company, Shell, monopoly over
exploraLlon of all mlnerals and peLroleum
LhroughouL Lhe enLlre colony.
Commerclally vlable oll was dlscovered by
Shell roughly 90 km wesL of Lhe soon-Lo-
be oll caplLal of orL ParcourL ln 1936,
lnlLlally a 30-30 proflL sharlng sysLem was lmplemenLed beLween Lhe company and Lhe governmenL.
unLll Lhe laLe 1930s concesslons on producLlon and exploraLlon conLlnued Lo be Lhe excluslve
domaln of Lhe company. Powever, oLher flrms became lnLeresLed and by Lhe early 1960s Mobll,
1exaco, and Culf had purchased concesslons.
ln CcLober 1960 nlgerla galned full lndependence from 8rlLaln buL Lhe flarlng of eLhnlc Lenslons
assured LhaL Lhls new republlc would be shorL-llved, as on !anuary 13, 1966, a small group of army
offlcers conslsLlng mosLly souLheasLern lgbo, sLaged a successful coup d'eLaL agalnsL Lhe clvlllan
governmenL. 1hls federal mlllLary governmenL whlch assumed power under Ceneral Agulyl-lronsl,
was unable Lo quleL eLhnlc Lenslons, resulLlng ln anoLher coup ln !uly led by Ma[or Ceneral ?akubu
Cowon, a norLherner. SubsequenLly, Lhe massacre of Lhousands of lgbo ln Lhe norLh prompLed
hundreds of Lhousands Lo reLurn Lo Lhe souLheasL, where lncreaslngly sLrong lgbo secesslonlsL
senLlmenL emerged under Lhe leadershlp of LL. Colonel Chukwuemeka Cdumegwu C[ukwu. WlLh
Lenslons sLoked beLween Lhe LasLern reglon and Cowon's federal governmenL, on 4-3 !anuary 1967,
a summlL aLLended by Cowon, C[ukwu and oLher members of Lhe Supreme MlllLary Councll was held
aL Aburl ln Chana Lo resolve all ouLsLandlng confllcLs and esLabllsh nlgerla as a confederaLlon of
reglons. 1he ouLcome of Lhls summlL was Lhe Aburl Accord, Lhe dlfferlng lnLerpreLaLlons of whlch
would soon cause C[ukwu Lo declare 8lafran lndependence and plunge nlgerla lnLo clvll war.
J.4 lmpllcotloos ooJ cooses of tbe 8loftoo clvll wot (1966-1970)
lgbo secesslonlsm arose ln parL from pollLlcal lsolaLlon durlng Lhe years followlng lndependence, as
Lhe LasLern 8eglon lncreaslngly found lLself havlng Lo compeLe agalnsL boLh Lhe ?oruba-domlnaLed
wesL and Pausa-domlnaLed norLh. Powever, slnce Lhe souLheasL encompassed mosL of Lhe
peLroleum-rlch nlger uelLa, Lhe prospecL emerged of Lhe LasLern 8eglon galnlng self-sufflclency and
lncreaslng prosperlLy. 1he excluslon of easLerners from power caused many ln Lhe easL Lo fear LhaL
oll revenues would be used Lo beneflL areas ln Lhe norLh and wesL raLher Lhan Lhelr own. 1he deslre
Lo accrue proflLs from oll revenues comblned wlLh eLhnlc Lenslons acLed as a caLalysL for Lhe lgbo-
spearheaded secesslon.
tboo-lloqolstlc mop of Nlqetlo
age 8 of 19

Cn Lop of scores of deaLhs, Lhe war caused producLlon of crude Lo drop slgnlflcanLly, parLlcularly ln
8lafra. 1oLal crude ouLpuL decreased from 420,000 bbl/d ln 1966 aL Lhe sLarL of Lhe war, Lo only
140,000 bbl/d ln 1968. ln addlLlon Lo concerns abouL producLlon, oll companles began experlenclng
uncerLalnLy as Lo Lhe fuLure of Lhelr lnvesLmenLs. 1hls led Lo relaLlons beLween oll companles and
Lhe federal governmenL becomlng sLralned, wlLh Lhe governmenL aL one polnL accuslng some oll
companles of supporLlng Lhe 8lafran cause.
uesplLe oll's promlnenL role ln naLlonal affalrs, up Lo Lhls Llme, Lhe nlgerlan federal governmenL had
only llmlLed lnvolvemenL ln Lhe oll lndusLry, and Lhe governmenL conflned lLs flnanclal lnvolvemenL
ln Lhe oll lndusLry Lo Laxes and royalLles on Lhe oll companles. Cowon's mlllLary governmenL
lnsLlLuLed Lhe 1969 eLroleum uecree whlch dlsmanLled Lhe exlsLlng revenue allocaLlon sysLem LhaL
had dlvlded revenue from oll Laxes equally beLween federal and sLaLe governmenL, lnsLead favorlng
an allocaLlon formula ln whlch Lhe federal governmenL conLrolled Lhe dlspensaLlon of revenues Lo
Lhe sLaLes.
WlLh Lhe loss of 300,000 llves, Lhe war concluded ln 1970 and resulLed ln a vlcLory for Lhe nlgerlan
sLaLe, as Lhe secesslonlsL reglons were subsequenLly broughL back lnLo Lhe nlgerlan fold. Powever,
Lhe former LasLern 8eglon had been spllL lnLo Lwo new sLaLes ln order Lo dlscourage llngerlng ldeas
of lndependence. uelLa peoples and Lhelr lands, wlLh Lhelr vasL peLroleum reserves came Lo be seen
by many ln Lhe nlgerlan governmenL as colonles of sorLs. As a resulL Lhese groups, noLably Lhe lgbo,
have Lo an exLenL been marglnallzed ln nlgerlan pollLlcs slnce Lhls Llme, whllsL nlgerla's long llne of
mlllLary rulers have reaped lmmense proflLs from Lhelr land.
J.5 loJostty ootlooollzotloo ooJ Jemoctocy (1970 to Jote)
ln May 1971 Lhe nlgerlan federal governmenL naLlonallzed Lhe oll lndusLry by creaLlng Lhe nlgerlan
naLlonal Cll CorporaLlon (nnCC). lollowlng Lhe war wlLh 8lafra, Lhe governmenL felL lL necessary Lo
secure and galn more conLrol over Lhe oll lndusLry. naLlonallzaLlon was also preclplLaLed by nlgerla's
deslre Lo [oln CLC, whlch requlred LhaL member sLaLes acqulre 31 sLake.
ln 1979 Lhere was merglng and resLrucLurlng of Lhe nnCC and Lhe MlnlsLry of eLroleum Lo form Lhe
nlgerlan naLlonal eLroleum CorporaLlon (nnC), whlch galned 60 percenL parLlclpaLlon ln Lhe oll
lndusLry. Powever, Lhe followlng have ma[orly characLerlzed nlgerla's oll lndusLry:
uurlng Lhe 1970s Lhe pollLlcal economy of peLroleum ln nlgerla became characLerlzed by
endemlc paLronage and corrupLlon by Lhe pollLlcal ellLes, whlch plagues Lhe naLlon Lo Lhls
day. 1he paLronage and corrupLlon are Lyplcally based on eLhnlc/Lrlbal or rellglous
afflllaLlons, fuellng eLhnlc unresL and vlolence LhroughouL nlgerla, buL parLlcularly ln Lhe
nlger uelLa sLaLes. AlLhough Lhe oll produclng sLaLes of Lhe nlger uelLa accounL for almosL all
federal governmenL revenue Lhe populaLlon of Lhese areas recelves very llLLle compensaLlon.
AlLhough ln Lhe 1980s oll-generaLed revenues aLLalned an all-Llme cllmax of uS$ 24.9 bllllon
nlgerla sLlll managed an lnLernaLlonal debL of $9 bllllon. 1hls was because, desplLe over uS$
101 bllllon havlng been generaLed by Lhe oll lndusLry beLween 1938 and 1983, nearly all of
Lhese funds had been slphoned lnLo Lhe prlvaLe bank accounLs of governmenLal ellLes. 1he
governmenL lmplemenLed Lhe lMl's SLrucLural Ad[usLmenL rogram (SA) ln CcLober 1986 ln
age 9 of 19

order Lo faclllLaLe debL repaymenL LhaL saw a dramaLlc drop ln real wages for Lhe ma[orlLy of
nlgerlans and Lhe annlhllaLlon of Lhe nlgerlan economlc mlddle class.
Slnce Lhe 1970s Lhere has been a sLeep drop ln agrlculLural producLlon correlaLlng roughly
wlLh Lhe rlse ln federal revenues from peLroleum exLracLlon. Whereas prevlously nlgerla had
been Lhe world's lead exporLer of cocoa, producLlon of Lhls cash crop dropped by 43, whlle
producLlvlLy ln oLher lmporLanL lncome generaLors llke rubber (29), groundnuLs (64), and
coLLon (63) plummeLed as well. 1he naLlonal ouLpuL of sLaple foodsLuffs also fell. 1he drop
ln producLlon was so subsLanLlal LhaL by Lhe early 1980s Lhe governmenL was forced Lo
lmporL baslc food lLems.
1he 1980s mlllLary [unLas conducLed several aLLempLed re-organlsaLlons of Lhe nnC Lo
lncrease lLs efflclency. Powever, by Lhe early 1990s Lhe nnC was characLerlzed by chronlc
lnefflclency and wasLe. As a resulL, Lhe funcLlonallLy of Lhe lndusLry ls dependenL on forelgn
corporaLlons, noL Lhe nnC.
1he sudden [ump ln oll prlces caused by Lhe llrsL Culf War ln 1990 and 1991, as mosL
researchers conflrm, was aL besL squandered Lhrough corrupLlon.


8ampanL corrupLlon has ofLen led Lo clvll unresL, parLlcularly ln Lhe nlger uelLa reglon where
varlous eLhnlc groups have been demandlng compensaLlon for years of ecologlcal damage as
well as conLrol over Lhelr land's oll resources. Cne of Lhe mosL promlnenL of Lhese
organlsaLlons Lo emerge ln Lhe reglon was Lhe MovemenL for Lhe Survlval of Lhe Cgonl
eople (MCSC). 1he group declared LhaL Lhe Cgonl people, a small mlnorlLy ln 8lvers sLaLe
of nlgerla, were slowly belng annlhllaLed as Lhe arable Lerraln of Lhelr homeland (known as
Cgonlland) was degraded by polluLlon from oll producLlon by Chevron and Shell. LLhnlc and
pollLlcal unresL has conLlnued Lo daLe desplLe Lhe converslon Lo a more democraLlc, clvlllan
federal sysLem ln 1999. CompeLlLlon for oll wealLh has fuelled vlolence beLween
lnnumerable eLhnlc groups, causlng Lhe mlllLarlzaLlon of nearly Lhe enLlre reglon by eLhnlc
mlllLla groups as well as nlgerlan securlLy forces
J.6 lmpoct of oll loJostty oo tbe eovltoomeot
Vegetat|on: 1he nlger uelLa comprlses 70,000 km of weLlands. 1he floodplaln makes up 7.3 of
nlgerla's LoLal land mass and ls home Lo 20 mllllon people. lL ls Lhe largesL weLland ln Afrlca. 1he
uelLa's envlronmenL can be broken down lnLo four ecologlcal zones: coasLal barrler lslands,
mangrove swamp foresLs, freshwaLer swamps, and lowland ralnforesLs. 1hls lncredlbly well-
endowed ecosysLem, whlch conLalns one of Lhe hlghesL concenLraLlons of blodlverslLy on Lhe planeL,
ln addlLlon Lo supporLlng Lhe abundanL flora and fauna, arable Lerraln LhaL can susLaln a wlde varleLy
of crops, economlc Lrees, and more specles of freshwaLer flsh Lhan any ecosysLem ln WesL Afrlca.
1he envlronmenLal degradaLlon by oll operaLlons can perhaps be besL encapsulaLed by a reporL
lssued by Lhe nnC ln 1983, long before popular unresL surfaced:
we wltoesseJ tbe slow polsooloq of tbe wotets of tbls coootty ooJ tbe Jesttoctloo of veqetotloo ooJ
oqtlcoltotol looJ by oll spllls wblcb occot Jotloq pettoleom opetotloos. 8ot sloce tbe loceptloo of tbe
oll loJostty lo Nlqetlo, mote tboo tweoty-flve yeots oqo, tbete bos beeo oo coocetoeJ ooJ effectlve
age 10 of 19

effott oo tbe pott of tbe qovetomeot, let olooe tbe oll opetotots, to coottol eovltoomeotol ptoblems
ossocloteJ wltb tbe loJostty
21
.
C|| sp|||s: Cll spllls ln nlgerla occur due Lo a number of causes whlch lnclude: corroslon of plpellnes
and, saboLage, and oll producLlon operaLlons, lncludlng lnadequaLe or non-funcLlonal producLlon
equlpmenL. ln onshore areas, mosL plpellnes and flowllnes are lald above ground. lpellnes, whlch
have an esLlmaLed llfe span of abouL flfLeen years, are old and suscepLlble Lo corroslon. Lven Shell
admlLs LhaL "mosL of Lhe faclllLles were consLrucLed beLween Lhe 1960s and early 1980s Lo Lhe Lhen
prevalllng sLandards. [Shell] would noL bulld Lhem LhaL way Loday".
22
.
SaboLage ls performed prlmarlly Lhrough whaL ls known as "bunkerlng", whereby Lhe saboLeur
aLLempLs Lo Lap Lhe plpellne, and ln Lhe process of exLracLlon someLlmes Lhe plpellne ls damaged or
desLroyed.
1he nnC places Lhe quanLlLy of oll [eLLlsoned lnLo Lhe envlronmenL yearly aL 2,300 cublc meLers
wlLh an average of 300 lndlvldual spllls annually. Powever, because Lhls amounL does noL Lake lnLo
accounL "mlnor" spllls, Lhe Lrue quanLlLy of oll spllled lnLo Lhe envlronmenL could be as much as Len
Llmes Lhe offlclally clalmed amounL.
Cll splllage has a ma[or lmpacL on Lhe ecosysLem lnLo whlch lL ls released. lmmense LracLs of Lhe
mangrove foresLs have been desLroyed. An esLlmaLed 3-10 of nlgerlan mangrove ecosysLems have
been wlped ouL elLher by seLLlemenL or oll. 1he ralnforesL whlch prevlously occupled some
7,400 km of land (more Lhan Lwlce Lhe area of 8ulllsa ulsLrlcL ln uganda) has dlsappeared as well
23
.
Spllls ln populaLed areas ofLen spread ouL over a wlde area, Laklng ouL crops and aquaculLures
Lhrough conLamlnaLlon of Lhe groundwaLer and solls, Lhough Lhe consumpLlon of dlssolved oxygen
by bacLerla feedlng on Lhe spllled hydrocarbons also conLrlbuLes Lo Lhe deaLh of flshes. ln
agrlculLural communlLles, ofLen a year's supply of food can be desLroyed by only a mlnor leak,
deblllLaLlng Lhe farmers and Lhelr famllles who depend on Lhe land for Lhelr llvellhood. urlnklng
waLer ls also frequenLly conLamlnaLed.
Cffshore spllls, whlch are usually much greaLer ln scale, conLamlnaLe coasLal envlronmenLs and
cause a decllne ln local flshlng producLlon.
Natura| gas f|ar|ng: nlgerla flares more naLural gas assoclaLed wlLh oll exLracLlon Lhan any oLher
counLry on Lhe planeL, wlLh esLlmaLes suggesLlng LhaL of Lhe 99,000,000 m
3
of assoclaLed gas (AC)
produced annually, abouL 70 ls wasLed vla flarlng. 1hls equals abouL 23 of Lhe uk's LoLal naLural
gas consumpLlon, and ls equlvalenL Lo 40 of Lhe enLlre Afrlcan conLlnenL's gas consumpLlon ln
2001.
1he reason for Lhls pracLlce, whlch ls generally agreed world-wlde Lo be wasLeful boLh economlcally
and envlronmenLally, ls LhaL ln order Lo maxlmlze producLlon of crude oll, Lhe assoclaLed gas
accompanylng lL ls ofLen burned off. Lven Lhough companles operaLlng ln nlgerla also harvesL

21
Creenpeace lnLernaLlonal (1983), 5bell 5bockeJ.
22
Shell lnLernaLlonal eLroleum Company (1993), uevelopmenLs ln nlgerla, London.
23
Puman 8lghLs WaLch (1999), 1he rlce of Cll: CorporaLe 8esponslblllLy and Puman 8lghLs vlolaLlons ln
nlgerla's Cll roduclng CommunlLles
age 11 of 19

naLural gas for commerclal purposes, Lhey prefer Lo exLracL naLural gas from deposlLs where lL ls
found ln lsolaLlon, Lhls lsolaLed gas ls known as non-assoclaLed gas. 1hls occurs because lL ls cosLly Lo
separaLe commerclally vlable assoclaLed gas from Lhe oll. 1herefore Lhe AC found wlLh oll ls ofLen
burned off ln order Lo lncrease crude producLlon.
PlsLorlcally, gas flarlng began slmulLaneously wlLh oll exLracLlon ln Lhe 1960s by Shell-8. AlLhough,
Lhe 8rlLlsh governmenL subsequenLly acknowledged LhaL Lhe flarlng was unaccepLable, lL was
allowed Lo conLlnue wlLhouL any real efforLs Lo change lnfrasLrucLure and prevenL Lhe wasLe of Lhe
gas. 1hls ls ln conLrasL Lo 8rlLaln's pollcles on gas flarlng ln Lhelr own LerrlLory, where gas flarlng has
been reduced Lo a mlnlmum. ln facL, ln WesLern Lurope 99 of assoclaLed gas ls used or re-ln[ecLed
lnLo Lhe ground. Cas flarlng ls generally dlscouraged and condemned by Lhe lnLernaLlonal
communlLy, as lL conLrlbuLes greaLly Lo cllmaLe change, whlch lronlcally can dlsplay lLs mosL
devasLaLlng effecLs ln developlng counLrles llke nlgerla.
Cas flarlng ln nlgerla ls also hlghly lnefflclenL and releases large amounLs of meLhane, whlch has very
hlgh global warmlng poLenLlal. 1he meLhane ls accompanled by Lhe oLher ma[or greenhouse gas,
carbon dloxlde. ln splLe of Lhe facL LhaL gas flarlng ln nlgerla has Lechnlcally been lllegal slnce 1984
under secLlon 3 of Lhe "AssoclaLed Cas 8eln[ecLlon AcL", none of Lhe regulaLlons sLlpulaLed by Lhls
documenL have ever been made publlc, leL alone fully lmplemenLed by Lhe governmenL or Lhe oll
companles.
Cas flares can have poLenLlally harmful effecLs on Lhe healLh and llvellhood of Lhe communlLles ln
Lhelr vlclnlLy, as Lhey release a varleLy of polsonous chemlcals, such as Lhe combusLlon by-producLs
nlLrogen dloxldes, sulphur dloxlde, benzene, Loluene, xylene, hydrogen sulflde, benzapyrene and
dloxln. Pumans exposed Lo such subsLances can suffer from a varleLy of resplraLory problems, whlch
have been reporLed amongsL many chlldren ln Lhe uelLa buL have apparenLly gone unlnvesLlgaLed.
1hese chemlcals can aggravaLe asLhma and chronlc bronchlLls. 8enzene ls a causaLlve agenL for
leukemla.
CfLen gas flares are locaLed close Lo local communlLles, and regularly lack adequaLe fenclng or
proLecLlon for vlllagers who may rlsk nearlng Lhe Lremendous heaL of Lhe flare ln order Lo carry ouL
Lhelr dally acLlvlLles. Many of Lhese communlLles clalm LhaL nearby flares cause acld raln whlch
corrodes Lhelr homes and oLher local sLrucLures, many of whlch have meLal rooflng. llares whlch are
ofLen older and lnefflclenL are known Lo coaL Lhe land and communlLles ln Lhe area wlLh sooL and
damage ad[acenL vegeLaLlon. AlmosL no vegeLaLlon can grow ln Lhe area dlrecLly surroundlng Lhe
flare due Lo Lhe Lremendous heaL lL produces.
J.7 lmpoct of oll loJostty oo bomoo tlqbts
kepress|on of protest and government corrupt|on: Cne of Lhe greaLesL LhreaLs faclng Lhe people of
Lhe nlger 8lver uelLa has acLually been Lhelr own governmenL. 1he nlgerlan governmenL has LoLal
conLrol over properLy rlghLs and Lhey have Lhe auLhorlLy Lo selze any properLy for use by Lhe oll
companles. A ma[orlLy of every dollar LhaL comes ouL of Lhe ground ln Lhe delLa goes Lo Lhe
governmenL of nlgerla. As a resulL of Lhe enormous amounLs of crude LhaL comes ouL of Lhe delLa
age 12 of 19

every day nlgerla has Lhe second largesL Cu ln Sub-Saharan Afrlca
24
. uesplLe Lhe wealLh flowlng
lnLo Lhe naLlon from oll revenues many of nlgerla's soclo-economlc facLors are worse now Lhan Lhey
were 30 years ago. Accordlng Lo Lhe World 8ank, mosL of nlgerla's oll wealLh geLs slphoned off by
1 of Lhe populaLlon. CorrupLlon ln Lhe governmenL ls rampanL, ln facL slnce 1960 lL ls esLlmaLed
LhaL 300 Lo 400 bllllon dollars has been sLolen by corrupL governmenL offlclals. 1he slLuaLlon ls very
bad and Lhe people have engaged ln proLesLs. 1he problem ls many of Lhese proLesLs have been meL
wlLh unmlLlgaLed vlolence. Cne example of Lhls occurred ln 1994. 1he nlgerlan mlllLary moved lnLo a
reglon called Cgonlland ln force. 1hey razed 30 vlllages, arresLed hundreds of proLesLors, and kllled
an esLlmaLed 2,000 people
23
.
Cne of Lhe proLesLors Lhey arresLed was ken Saro-Wlwa, a nlgerlan 1v producer, wrlLer and soclal
acLlvlsL. ln 1990 he founded Lhe MovemenL for Lhe Survlval of Lhe Cgonl eople (MCSC). Pe wroLe
and spoke ouL abouL Lhe rampanL corrupLlon ln Lhe nlgerlan governmenL and condemned Shell and
8rlLlsh eLroleum. Pe was arresLed by Lhe nlgerlan CovernmenL and lmprlsoned for 17 monLhs.
1hen ln a show Lrlal ken and elghL oLhers were condemned Lo deaLh. Pe and Lhe oLhers were hanged
ln 1993 and he was burled ln an unmarked common grave
26
.
overty and chron|c underdeve|opment: 1he people of Lhe delLa sLaLes llve ln exLreme poverLy even
ln Lhe face of greaL oll wealLh found ln Lhelr reglon. Accordlng Lo AmnesLy lnLernaLlonal (2006) 70
of Lhe slx mllllon people ln Lhe nlger 8lver uelLa llve off less Lhan one dollar per day. lor many
people Lhls means flndlng work ln a labour markeL, whlch ls ln many lnsLances hosLlle Lo Lhem. Much
of Lhe labour ln Lhe pasL has been lmporLed. 1o a growlng degree Lhe labour force for Lhe oll
companles ls more and more comlng from nlgerla. 8uL dlscrlmlnaLlon ls rampanL and for Lhe mosL
parL locals are dlscrlmlnaLed agalnsL
27
. 1hls leads Lo a slLuaLlon where Lhe men ln Lhe communlLy
have Lo search for Lemporary employmenL.
As Lhe governmenL offlclals slphon off all Lhe money generaLed from oll sales Lhe lnfrasLrucLure
suffers. MosL of Lhe vlllages do noL have elecLrlclLy or even runnlng waLer
28
. 1hey do noL have good
access Lo schools or medlcal cllnlcs. lor many, even clean drlnklng waLer ls dlfflculL Lo come by. 1he
deLerloraLlon of Lhe lnfrasLrucLure ln Lhe delLa sLaLes ls so severe lL ls even a problem ln Lhe more
urban areas. Cne example of Lhls ls Lhe alrporL aL orL ParcourL. arL of a fence was noL properly
malnLalned and an Alr lrance fllghL hlL a herd of caLLle on Lhe runway.


24
8oele, 8., lablg, P., Wheeler, u. (2001). Shell, nlgerla and Lhe Cgonl: A SLudy ln unsusLalnable
uevelopmenL: l. 1he SLory of Shell, nlgerla and Lhe Cgonl eople - LnvlronmenL, Lconomy, 8elaLlonshlps:
ConfllcL and rospecLs for 8esoluLlon", 5ostolooble uevelopmeot, 9, 74-86.
23
!unger, S. (2007). 8lood Cll. hLLp://www.vanlLyfalr.com/pollLlcs/feaLures/2007/02/[unger200702. Accessed
on uecember 28, 2009.
26
8ooks and WrlLers. (2003). ken Saro-Wlwa (1941-1993). hLLp://www.klr[sLo.scl.fl/saro.hLm. Accessed on
uecember 28, 2009.
27
8oele, 8., lablg, P., Wheeler, u. (2001). Shell, nlgerla and Lhe Cgonl: A SLudy ln unsusLalnable
uevelopmenL: l. 1he SLory of Shell, nlgerla and Lhe Cgonl eople - LnvlronmenL, Lconomy, 8elaLlonshlps:
ConfllcL and rospecLs for 8esoluLlon", 5ostolooble uevelopmeot, 9, 74-86.
28
Lgan, !. (1999). 1roubled 1lmes ln Lhe nlger uelLa. hLLp://news.bbc.co.uk/2/hl/programes/crosslng-
conLlnenLs/323300.sLm. Accessed on uecember 28, 2009.
age 13 of 19

4.0 LLSSCNS ICk UGANDA
Cll dlscovery and Lhe wealLh expecLed Lo accrue ls seen as Lhe mosL reallsLlc avenue for propelllng
uganda from an lmpoverlshed 1hlrd World counLry Lo a modern lndusLrlallzed sLaLe. 1he AlberLlne
Craben Lhus becomes Lhe counLry's flnal fronLler". 1he sLakes are so hlgh LhaL Lhere should be no
allowance for mlsLakes ln Lrylng Lo explolL Lhls flnlLe resource.
4.1 lotollels wltb Nlqetlo
lrom Lhe foregolng dlscusslon of Lhe oll lndusLry ln nlgerla, lL ls lmmedlaLely clear LhaL uganda's
LurbulenL hlsLory ls a splLLlng lmage of nlgerla's. 1he Lable below shows a few of Lhe uncomforLable
slmllarlLles ln our hlsLorles. We are Lhus prone Lo repeaL Lhe same mlsLakes Lhey made unless we
deLermlne Lo learn from Lhem.
Attribute Nigeria Uganda
Population >100m 30m
Ethnic make up Tribal groupings Tribal groupings
Colonial power Britain Britain
Independence 1960 1962
1
st
major post-independence crisis 1966 (Biafra secession) 1966 (Buganda secession)
Post-independence statehood Highly unstable & militaristic Highly unstable & militaristic
Oil discovery c1957 2007
Main oil region Delta area Lake Albert area
Ecology of oil area Flood plain with rich
biodiversity of both flora and
fauna
Flood plain with rich biodiversity of both
flora and fauna (including the Queen
Elizabeth and Kabalega National Parks)
Main ethnic group in oil area Ijaw, Itsekiri, Ogoni, Efik and
Igbo
Banyoro, Bagungu, Bakiga, Bakonzo,
Acholi & Alur.
Percent of national population 5% 5%
Integration of ethnic group in oil
area
Marginalised/suppressed Marginalised
Regional pre-oil economy Peasantry farming and fishing Peasantry farming and fishing
Regional post-oil economy Peasantry ???

4.2 1wo Jlffeteot pollcy opptoocbes to copoclty bollJloq
lrom economlc Lheory and Lhe llLeraLure on lndusLrlal growLh lL ls posslble Lo exLracL Lwo prlnclpally
dlfferenL approaches as Lo how Lhe exLracLlon of oll and gas may expand Lhe local lndusLrlal base. ln
pracLlce, Lhey should be comblned
29
.
Cne approach ls whaL may be labeled revenue moximitotion on Lhe parL of governmenL.
1hls approach alms aL glvlng Lhe hlghesL prlorlLy Lo economlc efflclency when deallng
wlLh how Lo explore for oll and gas, how Lo develop Lhese resources and how Lo
dlsLrlbuLe and reallze Lhelr value ln energy markeLs. 1he purpose ls Lo maxlmlze Lax
revenues from Lhe oll and gas acLlvlLles. Lfflclency wlll maxlmlze proflLs ln Lhe oll lndusLry.

29
Mwakall, !ackson A., Peum, er, Lkern, Cle lredrlk, 8yaruhanga, !ackson n.M., koo[o, Charles A. and
8lglrwenkya, naphLall k. (2011), Lnhanclng naLlonal arLlclpaLlon ln Lhe Cll and Cas lndusLry ln uganda, llnal
reporL on 1he naLlonal ConLenL SLudy ln Lhe Cll and Cas SecLor ln uganda. MlnlsLry of Lnergy and Mlneral
uevelopmenL, kampala.
age 14 of 19

As oll lndusLry proflLs become parL of Lhe governmenL's Lax base, Lax revenues LhaL Lhe
governmenL can have aL lLs dlsposal are maxlmlzed. 1he ldea ls LhaL Lhe governmenL wlll
have more revenues Lo lnvesL ln lnfrasLrucLures and oLher efforLs LhaL enable buslness
and prlvaLe secLor Lo develop. 1hls wlll expand value added capaclLy ln Lhe economy ln
general, whlch ls cruclal ln creaLlng an lndusLrlal base whlch, ln Lurn, may generaLe
susLalnable naLlonal wealLh.
1he oLher approach ls whaL ls known as notiono/ or /oco/ content. 1hls approach lmplles
LhaL hlgher prlorlLy ls glven Lo Lhe employmenL of ugandans and flrms wlLh an
lnfrasLrucLure ln uganda. 1he governmenL requlres Lhe share of naLlonal conLenL Lo
exceed whaL wlll resulL from Lhe procuremenL of goods and servlces ln an open markeL.
1he ldea ls Lo Lake advanLage of Lhe opporLunlLy Lo palr ugandans and ugandan flrms
wlLh leadlng lnLernaLlonal companles. As many leadlng lnLernaLlonal flrms are lnLeresLed
ln parLlclpaLlng ln Lhe oll and gas acLlvlLles ln uganda, Lhey wlll also be lncllned Lo Leam
up wlLh ugandans and ugandan flrms for Lhelr own purpose. 1hls wlll conLrlbuLe Lo
Lralnlng, Lransfer of Lechnology and compeLences, and ln Lurn capaclLy bulldlng, whlch
may be more efflclenL Lhan Lrylng Lo bulld capaclLy purely Lhrough enabllng lnfrasLrucLure
programs alone.

4.J Moxlmlsloq beoeflts ftom tbe oll ooJ qos loJostty - tbe Jos ooJ Joots
1he panacea for ugandans Lo avold Lhe oll curse and reap maxlmum beneflLs from Lhelr oll and gas
resource ls 8ulLulnC CAACl1? ln uganda's prlvaLe and publlc secLors ln such a way LhaL Lhe enLlre
economy develops hollsLlcally. A recenL ground-breaklng sLudy on naLlonal conLenL enhancemenL
30

has made several recommendaLlons for maxlmlzlng Lhe oll and gas lndusLry beneflLs, lncludlng
bulldlng capaclLy ln Lhe followlng areas.
lnsLlLuLlonal framework
LsLabllsh a governmenL body for naLlonal conLenL enhancemenL
8egulaLe procedures for procuremenL under Lhe (soon-Lo-be-enacLed) peLroleum law -
enLalllng Lransparency ln conLracL plans and awards and ensurlng local parLlclpaLlon
Pave Lhe oll companles commlL Lo local conLenL developmenL, Lhrough Lralnlng ugandan
clLlzens, keep ugandan flrms lnformed abouL fuLure demand and whaL lL requlres Lo supply,
Leamlng ugandan flrms wlLh forelgn supply and servlce provlders, Lralnlng local flrms,
deslgnlng conLracLs and conLracLlng sLraLegles wlLh regard Lo ugandan flrms
1he corrupLlon percepLlon should be reduced. A hlgh corrupLlon percepLlon ls llkely Lo acL as
a maln barrler for lnLernaLlonal companles Lo esLabllsh Lhemselves ln Lhe counLry. uganda
has presenLly a raLlng LhaL puLs Lhe counLry aL par wlLh nlgerla. lL ls recommended LhaL
uganda subscrlbes Lo Lhe prlnclples of LxLracLlve lndusLrles 1ransparency lnlLlaLlve (Ll1l) and

30
lbld.
age 1S of 19

LhaL all oll companles operaLlng ln Lhe counLry do Lhe same
31
. 1hls wlll also mean LhaL
uganda complles wlLh Lhe prlnclple of lree, prlor and lnformed consenL (llC)" for people
affecLed by peLroleum pro[ecLs
32
.
CapaclLy bulldlng ln people
CapaclLy of vocaLlonal Lralnlng has Lo be sLrengLhened. A large parL of Lhe work force needed
by Lhe oll companles and Lhelr subconLracLors wlll be skllled and seml-skllled wlLh a
vocaLlonal Lralnlng background. 1he CovernmenL should make 81vL1 and educaLlon ln
general a key budgeL prlorlLy ln cooperaLlon wlLh lnLernaLlonal lnsLlLuLlons as well as Lhe oll
companles.
LnLerprlse developmenL
An adequaLe capaclLy bulldlng program for Lhe lndusLry should be developed. 1hls may be
wlLhln areas as accounLlng, lC1 and PSL. 1he program could be lmplemenLed by Lhe rlvaLe
SecLor loundaLlon uganda.
1eamlng beLween ugandan and forelgn flrms should be encouraged. 1he requlremenL of a
ugandan parLner may be lnLroduced ln Lhe roducLlon Sharlng AgreemenL (SA) as a
condlLlon for Lhe procuremenL. lL ls essenLlal, however, LhaL Lhls Leamlng should be clearly
llnked Lo lndusLrlal developmenL and monlLored on value added. Shell companles
33
should
be sLrongly dlscouraged.
An SML program for Lhe peLroleum secLor should be esLabllshed. uganda's lndusLrlal
enLerprlses are faclng several barrlers Lo become quallfled suppllers Lo Lhe peLroleum secLor.
An SML program should be puL ln place Lo address Lhese barrlers.
lndusLry pro[ecLs wlLh a large markeL poLenLlal should be ldenLlfled. lL ls of lmporLance LhaL
any producLs LhaL on a shorL-Lerm basls can be produced ln uganda and serve larger markeLs
are ldenLlfled. 1he producLlon of hlgh-grade cemenL has been ldenLlfled as one pro[ecL
posslblllLy. Such lndusLrlal pro[ecLs do noL really have Lo be dlrecLly llnked Lo core oll
acLlvlLles. lf food supply Lo Lhe oll lndusLry, for example, could be used as a means Lo
esLabllsh sysLems for quallLy assurance ln Lhe producLlon of agrlculLural producLs, larger
markeLs could open for an lndusLry LhaL makes up mosL of uganda's economy. AnoLher area

31
1he Cslo-based Ll1l seLs a global sLandard for Lransparency ln oll, gas and mlnlng. lL ls: an efforL Lo make
naLural resources beneflL all, a coallLlon of governmenLs, companles and clvll socleLy, and a sLandard for
companles Lo publlsh whaL Lhey pay and for governmenLs Lo dlsclose whaL Lhey recelve. nlger was accepLed by
Lhe lnLernaLlonal Ll1l 8oard as Ll1l CompllanL on 1 March 2011. Cn 28 november 2011, for example, nlger
became an oll producer wlLh Lhe openlng of a reflnery ln Zlnder. Ll1l nlger ls already worklng Lo ensure LhaL oll
revenues are dlsclosed ln Ll1l reporLs from 2012 onwards. lnformaLlon accessed from hLLp://elLl.org/news-
evenLs/nlger-enLers-oll-era-commlLs-dlsclose-revenues-2012 on 13Lh uecember 2011.
32
lree prlor and lnformed consenL" (llC), ls Lhe prlnclple LhaL a communlLy has Lhe rlghL Lo glve or wlLhhold
lLs consenL Lo proposed pro[ecLs LhaL may affecL Lhe lands Lhey cusLomarlly own, occupy or oLherwlse use. llC
ls now a key prlnclple ln lnLernaLlonal law and [urlsprudence relaLed Lo lndlgenous peoples.
33
A shell company ls a company LhaL exlsLs buL does noL acLually do any buslness or have any asseLs. 1hese are
companles LhaL exlsL merely as a fronL for a person or organlsaLlon LhaL wlshes Lo hlde lLs ldenLlLy.
age 16 of 19

Lo conslder ls lf Lhe oll acLlvlLles acLually may offer opporLunlLles for banklng and lnsurance
ln uganda, whlch ln Lurn also may lmprove Lhe funcLlonlng of uganda's flnanclal sysLem.
8esLrucLurlng of Lhe lndusLry should be encouraged. lL ls a requlremenL for any company Lo
be a candldaLe for servlng Lhe peLroleum secLor LhaL lL belongs Lo Lhe formal economy.
lurLher, larger unlLs wlll be needed Lo be quallfled for more advanced dellverles Lo Lhe
secLor. A resLrucLurlng of Lhe secLor ls lmporLanL boLh for Lhe naLlonal parLlclpaLlon ln Lhe
peLroleum secLor as for Lhe lndusLrlal developmenL ln general.
laclllLaLlng naLlonal parLlclpaLlon
ConLracLs should be sLrucLured Lo allgn wlLh local capaclLy. lor example, Lhe requlred area of
supply should be assessed wlLh Lhe perspecLlve of sLrucLurlng procuremenL lnLo smaller
packages LhaL can be served by Lhe ugandan lndusLry. Also Lhe conLracL should allow a
paymenL sLrucLure mlnlmlzlng Lhe need for worklng caplLal wlLh Lhe suppller. 1he
CovernmenL has Lhe means Lo enforce Lhe approprlaLe conLracL sLrucLures Lhrough Lhe SAs
whlch sLlpulaLe LhaL purchase procedures shall ensure LhaL domesLlc suppllers have
adequaLe opporLunlLles Lo compeLe.

4.4 lllc ooJ tbe 8oqooqo of 8olllso ulsttlct
J4

1he 8agungu Lrlbal grouplng, numberlng abouL 100,000 occuples 8ulllsa ulsLrlcL and parLs of Maslndl
and Polma ulsLrlcLs. 1hey consLlLuLe roughly 20 of Lhe populaLlon of 8unyoro reglon (8ulllsa,
Polma, Maslndl and klbale ulsLrlcLs). 1he 8agungu are predomlnanLly a pasLoral, flshlng and farmlng
communlLy, wlLh Lhe ma[orlLy clusLered along Lhe norLhern half of Lhe easLern shores of Lake AlberL
ln WesLern uganda. 8ulllsa ulsLrlcL, consldered Lhe home dlsLrlcL" of 8agungu ls endowed wlLh
naLural resources ranglng from a porLlon of Lhe 8udongo ralnforesL, a porLlon of Lhe famous
Murchlson (kabalega) lalls naLlonal ark, a porLlon of Lhe freshwaLer Lake AlberL and a slgnlflcanL
quanLlLy of oll reserves and llmesLone deposlLs. 8ulllsa has been descrlbed as land floaLlng on oll"
33
.
lronlcally, 8ulllsa ulsLrlcL, recenLly carved ouL of Maslndl ulsLrlcL, ls also one of Lhe pooresL and mosL
underdeveloped parLs of uganda. lf lL was noL for Lhe oll dlscovery ln Lhe area and Lhe percelved
economlc poLenLlal lL offers Lo uganda, 8ulllsa would probably have remalned a rural backwaLer for
a long Llme Lo come. 8uL now a casual Coogle search on Lhe lnLerneL of 8ugungu", 8agungu" and
8ulllsa" reLurns 1 mllllon hlLs. 8ulllsa ulsLrlcL now recelves a loL of ugandan and lnLernaLlonal medla
aLLenLlon. So, oll dlscovery ln Lhe AlberLlne Craben ls noL an lssue of lnLeresL Lo Lhe people of 8ulllsa
alone buL Lo all ugandans and Lhe wlder lnLernaLlonal communlLy as well.

34
See also Mwakall, !.A. (2009), Pow Can We 8eneflL from Cll ulscovery as Lhe CommunlLy?" aper presenLed
on 30Lh uecember 2009 aL 8agungu SLudenLs AssoclaLlon (8ASA) Annual Semlnar aL klgorobya 1own Councll,
Polma ulsLrlcL.
33
1he lndependenL (2009), hLLp://www.lndependenL.co.ug/lndex.php/componenL/[omcommenL/feed/1171/
com_conLenL. Accessed on 28
Lh
uecember 2009.
age 17 of 19

1he changed sLaLus of 8ulllsa presenLs boLh opporLunlLles and challenges Lo Lhe lndlgenous 8agungu.
1he opporLunlLles and fears over Lhe dlscovery of oll ln uganda are beauLlfully expressed ln Lhe
followlng quoLaLlon (paraphrased)
36
.
AccotJloq to 1be wotlJ 8ooks uqooJo coootty kepteseototlve kooJbovl koJltesoo
uqooJo sboolJ jolo tbe xttoctlve loJosttles 1toospoteocy loltlotlve to eosote tbot tbe
exploltotloo of oll tesetves ls moooqeJ wlsely ooJ coottlbotes to sostolooble ecooomlc
Jevelopmeot wblle sofeqootJloq tbe eovltoomeot ooJ lmpocteJ commooltles.
Meoowblle, tbe skeptlclsm ls moootloq ovet wbetbet uqooJoos wlll beoeflt ftom tbe oll.
A teslJeot of kyeboto 1toJloq ceotte ls ooqty oboot tbe ctomblloq wooJeo sttoctotes of
tbe oteo scbool tbot 1ollow bollt ooJ polltlcloos joblloteJ ovet. 1be wbole oll bosloess ls
o olqbtmote to uqooJoos. leople Joloq oo-job ttololoq ote oll wbltes. wbete ote tbe
uqooJoos wbo ote sopposeJ to be Joloq tbls ttololoq?
Aootbet petsoo complolos. 1ollow sobcoottocteJ o compooy colleJ Nobots to Jtlll oll
wells ot tbe Mpoto sltes ooJ Nobots ls JeJoctloq N55l (Notloool 5oclol 5ecotlty looJ)
ftom tbe wotkets ooJ wbeo tbey qo to tbe nolmo N55l offlce to cbeck wbetbet tbelt
mooey ls tbete, tbey Joot floJ lt becoose Nobos Joesot temlt lt. 8otb tbe polltlcloos ooJ
tbe boteooctots feot cooftootloq tbese 1ollow people.
1be Notloool Oll ooJ Cos lollcy fot uqooJo pobllsbeJ lo lebtooty 2008 empboslses
ttoospoteocy ooJ occoootoblllty os ltloclple lll of tbe qools, objectlves ooJ octloos of
tbe oll pollcy ftomewotk. 1be qovetomeots blJloq of slqoloq boooses polJ befote
compooles ote olloweJ explototloo tlqbts, ooJ tbe teveooe sbotloq oqteemeots wbeo tbe
oll compooles blt oll Joes oot teflect ttoospoteocy.
uesplte tbe skeptlclsm, 5toott 8lqltweokyo, o teslJeot of kokloJo vllloqe lo 8olllso coooty
temolos bopefol. keceotly, bls tloy vllloqe bos become o smoll oll explototloo towo. nls
lotetest lo oll leJ blm to opply to be oo oo lotetootloool vlsltots leoJetsblp ltoqtomme
otqoolseJ by tbe u5 uepottmeot of 5tote tbtooqb tbe u5 embossy lo kompolo. 1be
ptoqtomme olloweJ 8lqltweokyo ooJ flve otbets to toot some oll stotes lo tbe u5A. ne
oow wlsbes uqooJo coolJ oJopt some of tbe metboJs oseJ by tbe u5 qovetomeot to
moooqe oll teveooes. up to ooe tbltJ of tbe oll teveooe ls left fot tbe commoolty
tbtooqb tbe stote qovetomeot, be soys, oollke bete, tbe oll mooey ls coottolleJ by tbe
stotes oot tbe ceottol qovetomeot. Oot bope of ooy qooJ comloq oot of oot oll JepeoJs
oo tbe oll ooJ qos low tbot ls beloq fotmoloteJ by tbe qovetomeot.

lL ls Lhe conLenLlon of Lhls auLhor LhaL Lhe followlng lssues are especlally perLlnenL for Lhe people of
8ulllsa
37
, as one of Lhe lndlgenous communlLles or pro[ecL-affecLed people (A) ln Lhe AlberLlne
Craben, lf Lhey are Lo derlve maxlmum beneflL from Lhe oll and gas resource:.

36
lbld.
37
And posslbly oLher Lrlbal groups ln Lhe oll-rlch areas ln WesLern and norLh-WesLern uganda.
age 18 of 19

Land ownersh|p, 1here ls urgenL need for Lhe local communlLy Lo hold reglsLered LlLles Lo Lhe land
Lhey occupy - oLherwlse sooner Lhan laLer Lhe land wlll be grabbed by rlch people or exproprlaLed by
Lhe sLaLe ln Lhe publlc lnLeresL". 1he local leadershlp wlLh flnanclal and Lechnlcal supporL from Lhe
cenLral governmenL should play a very acLlve role ln helplng Lhe communlLy Lo acqulre land LlLles.
1he pasL few years have demonsLraLed LhaL communally held land wlLhouL Lhe necessary legal
lnsLrumenLs ls really noL owned and only helps breed confllcL, someLlmes even aL famlly level.
C|| po||cy and SA: 1he Cll ollcy and roducLlon Sharlng AgreemenLs (SAs) should be undersLood
by all sLakeholders before oll producLlon sLarLs. lL ls lmporLanL LhaL Lhe local communlLy, Lhe resL of
Lhe counLry and Lhe lnvesLors geL an equlLable share of Lhe proceeds from Lhe peLroleum producLs.
SeLLlng up a speclal oll fund Lhe norweglan way wlll ensure prosperlLy for all ugandans. 1he
eLroleum AuLhorlLy of uganda - whlch ls meanL Lo oversee Lhe lmplemenLaLlon of Lhe oll pollcy and
regulaLe Lhe secLor's lssuance of llcenses, negoLlaLe governmenL deals perLalnlng Lo peLroleum
producLlon, cosL and monlLor proflLs accrulng Lo Lhe sLaLe from oll producLlon - should be
represenLaLlve of all sLakeholders ln Lhe oll lndusLry. Such a wln-wln slLuaLlon ls Lhe only way Lo
ensure a sLable and susLalnable oll lndusLry. Creed and corrupLlon by lndlvlduals, governmenLs or oll
companles are a reclpe for confllcL and soclal unresL.
Lmp|oyment opportun|t|es: ln addlLlon Lo lnsLlLuLlng a well-planned and consclously lmplemenLed
local conLenL sLraLegy ln whlch local flrms are ma[or players ln Lhe oll lndusLry, Lhere ls furLher need
for dellberaLe afflrmaLlve acLlon by Lhe governmenL and oll companles Lo develop Lhe local
lnfrasLrucLure (roads, power, healLh, waLer and sanlLaLlon, schools, eLc.) so as Lo upllfL Lhe sLandard
of llvlng of Lhe local communlLy and Lransform Lhe area lnLo a modern oll clLy" wlLh a sLrong mlddle
class. 1hls wlll reduce resenLmenL and a feellng of colonlzaLlon LhaL would oLherwlse resulL lf
ma[orlLy ln Lhe labour force were non-lndlgenous. ollLlcal and economlc
marglnallzaLlon/suppresslon/domlnaLlon (elLher by Lhe sLaLe or oLher Lrlbes) of Lrlbal groups ln Lhe
oll-produclng areas can only lead Lo confllcL and soclal unresL.
Lducat|on reform: 1o empower Lhe local people Lo serve ln Lhe oll lndusLry Lhey should be Lralned ln
approprlaLe areas, such as englneerlng, physlcs, geology, envlronmenL, medlclne, law, economlcs,
soclology, eLc. 1hls wlll requlre LhaL Lhe local auLhorlLles, educaLlonlsLs and parenLs gulde chlldren
lnLo sclence-based careers. ln addlLlon Lo provldlng scholarshlps Lo young people compleLlng hlgh
school, Lhe sLaLe and oll companles also should seL up vocaLlonal Lralnlng colleges wlLhln Lhe oll-
produclng areas. Area-based colleges have Lhe advanLage LhaL even non-lndlgenous sLudenLs can
learn local cusLoms and norms LhaL ln Lhe end fosLer healLhy co-exlsLence and lnLegraLlon.
Agr|cu|ture: neglecL of agrlculLure and oLher non-oll economlc acLlvlLles ln favour of
overdependence on oll wlll qulckly render uganda a poorer counLry Lhan lL was before oll dlscovery!
A dlverslfled economy ls Lhe way Lo go. Cll producLlon should help develop and noL klll oLher secLors
of Lhe economy.
Lnv|ronment: Slnce generally oll producLlon ls a dlrLy" process, Lhere ls need Lo carry ouL Lhorough
envlronmenLal lmpacL assessmenLs for Lhe varlous acLlvlLles and puL ln place adequaLe mlLlgaLlon
measures agalnsL negaLlve lmpacLs. 1he enLlre ecosysLem (people, anlmals, vegeLaLlon, flsh, eLc.) of
Lhe AlberLlne Craben can be desLroyed ln a generaLlon because of careless explolLaLlon of Lhe oll.
arLlcularly Lhe followlng should be avolded as we exLracL oll:
age 19 of 19

LxporL of crude oll and lmporLaLlon of peLroleum producLs. ln addlLlon Lo reduclng oll
splllage Lhls ls Lhe only way for uganda Lo obLaln maxlmum beneflL from oll producLlon.
llarlng of naLural gas - lL ls wasLeful and very damaglng Lo Lhe envlronmenL.
use of obsoleLe Lechnologles - uganda should lnslsL on clean, modern Lechnologles for oll
exLracLlon, reflnlng and LransporL.
neglecL of malnLenance of lnfrasLrucLure - Lhls wlll avold splllage and oLher avoldable
accldenLs.

S.0 CCNCLUSICN
1he Cll and Cas lndusLry ln uganda need noL be a curse. ln Lhe exploraLlon phase ln Lhe lasL flve
years, ugandans have had a flrsL hand LasLe of whaL could go wrong ln Lhe managemenL of Lhe
resource. ln addlLlon, we are surrounded by a cloud of wlLnesses ln form of oLher oll-produclng
counLrles LhaL had a bad sLarL and Lhose LhaL had a good sLarL. 1hls paper has relLeraLed Lhe facL LhaL
belng an oll-rlch counLry ls no guaranLee LhaL Lhe counLry wlll be properous and sLable. lL requlres
dellberaLe lnlLlaLlves Lo LranslaLe Lhe resource lnLo prosperlLy and susLalned developmenL for all. lL ls
Lherefore lncumbenL upon all ugandans Lo use Lhelr newly dlscovered oll and gas as an epoch-
maklng change LhaL wlll help propel Lhem Lo a new soclo-economlc order. 1haL hlsLory musL and wlll
be wrlLLen now, before even Lhe flrsL Lradable barrel of oll ls pumped ouL of Lhe ground.