The Independent Uganda: You get the Truth we Pay the Price
Dar es Salaam, Uganda | THE INDEPENDENT | While government has decided that expected oil and gas revenues will be reserved in a Petroleum Fund for infrastructure development, experts from across Africa have urged extra caution.
The Petroleum Fund was part of the outcome of a benchmarking exercise in Norway at the time of developing laws and policies for the management of Uganda’s oil and gas resources.
Similar sovereign funds from oil and gas and other mineral resources have been operated by some me countries including Botswana and Libya to ensure that revenues and not spent on consumption which would earn less to the country’s development.
Dr Donald Kaberuka, a former president of the African Development Bank, has researched how oil and mineral revenues have impacted economies in Africa, and says those that created sovereign funds benefited more.
He, however, says such a fund must be well thought out regarding whether it should be aimed at saving for the future, an investment fund or a countercyclical fund – one to run to when the country runs into fiscal challenges.
During the #EAPCE2025 conference, the Vice-President of the United Republic of Tanzania, His Excellency Philip Mpango, visited our booth.
Our Managing Director had the honor of briefing him on the significant progress being made in the development of the #EACOP project. pic.twitter.com/xNg96DweVn
— EACOP (@EACOP_) March 5, 2025
Speaking at the 11th East African Petroleum Conference and Exhibition (EAPCE25) in Dar-es-salaam, Kaberuka said, for example, that tying a fund for future use by law may lead to a country into debt and a slip into poverty because the money available in the fund is protected by law.
Uganda’s stand
Uganda’s Minister for Energy and Mineral Development, Ruth Nankabirwa, told the conference that Uganda’s oil revenues are protected by law for infrastructure and that in this way, future generations should benefit.
She reiterated that Uganda and East Africa, having come late into the oil and gas industry, have learnt from those who went there first to avoid the mistakes committed.
“For example, should a country pay for debt when it runs into a fiscal deficit or turn to the oil fund to fund the deficit?” Kaberuka posed.
But he also warned that most African countries that have oil and other huge mineral resources also have high levels of poverty because the oil industry creates “an enclave economy, yet the oil industry does not create many linkages.
He warned, for example, that minerals and oil and gas tend to get other sectors like agriculture, which otherwise benefits the majority of the households directly.
“Countries with such high deposits of natural resources then become net importers of food, and then what happens when the resource gets depleted?”
In a cautious advice against relying too much on oil and minerals, the economist said East African countries have been developing faster and more steadily than other regions, yet they had not started exploiting oil, unlike, say, West African counterparts.
I was honored to lead the @GovUganda delegation to the 11th East African Petroleum Conference and Exhibition 2025 themed “Unlocking Investment in Future Energy: The Role of Petroleum Resources in the Energy Mix for Sustainable Development in East Africa at The Julius Nyerere… pic.twitter.com/SNeUd4pYYp
— Ruth Nankabirwa Ssentamu (@NankabirwaRS) March 5, 2025
Nankabirwa urged the countries in the region to consider joint investments in the development of the oil and gas sector, thanking Tanzania for agreeing on a critical partnership with Uganda through the East African Crude Oil Pipeline (EACOP) project.
According to her, this partnership also helped the project wither the financing storm caused by anti-fossil fuel crusaders.
She said the Ugandan refinery should also not be seen as only Uganda’s, adding that the Democratic Republic of Congo, Tanzania, South Sudan and others could take advantage of it.
“We need this critical partnership. Can we have a pool of resources that we can invest in any of the EAC partner states when we have a critical need to pull through such an infrastructure?”
The 11th EAPCE25 is running under the theme “Unlocking Investment in Future Energy: The Role of Petroleum Resources in the Energy Mix for Sustainable Development in East Africa,” bringing together key players from across the region.
“We can use the underground resources to pull away from the enclave economy to diversification, value addition that will take us into the knowledge economy, where we need innovation to use this financial resource for future generations,” the minister said.
She expressed hope that besides the revenues unlocked to advance energy transition, petroleum will provide gas to replace the use of biomass energy that has been responsible for the destruction of the environment and health effects to users of firewood for cooking.
***
URN
