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Excitement Over Oil Fizzles As Reality Sets In

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Managing public expectations remains a challenge for the government of Uganda as the country edges ever closer to producing her first crude oil. Dr. Earnest Rubondo, the Petroleum Authority Executive Director, is however excited that Uganda has smoothly navigated through the anxiety and expectations than previously thought.
22 Aug 2017 11:14
Petroleum Authority Executive Director, Earnest Rubondo (L) chats with Tullow Oil Managing Director, Jimmy Mugerwa.

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Managing public expectations remains a challenge for the government of Uganda as the country edges ever closer to producing her first crude oil.

The Petroleum Authority of Uganda says the expectations are gradually fizzling out thanks to strong policies and regulations put in place by government.

Dr. Earnest Rubondo, the Petroleum Authority Executive Director, is however excited that Uganda has smoothly navigated through the anxiety and expectations than previously thought.

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The discovery of oil in Uganda has been a source of both pride and apprehension for the Government and the population. Uganda in 2006 confirmed existence of 6.5 billion barrels of crude, out of which between 1.4 and 1.7 billion barrels are recoverable. Tentative estimates show that the country could earn two billion dollars annually from the resource when production begins.

But the government has faced tough challenges of managing public expectations. It has held a series of consultations about how to manage the anxiety and expectations.  

The African Development Bank (AfDB) in 2009, in a policy note after a seminar held at Speke Resort Munyonyo, advised Uganda to follow a phased utilization of oil revenues.

Uganda had been asked to focus on strategic infrastructure (roads, railway, and energy), and human resource development in education and health. The other area of focus according to AfDB policy note was in scientific research, industrialization and other activities to lower the cost of doing business.

It had advised that Oil revenues should not be used for consumption spending. It said in the first phase basic infrastructure could be established. 

Rubondo in an interview with URN says the government from the onset decided to put in place strong regulations and policies partly to manage the anxiety as well as ensure better management of the sector.

Rubondo says the regulations are paying off now that the structures put in place under those laws get to function. 

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The government was before the enactment of the new laws guided by the 2008 National Oil and Gas Policy. The policy required the enactment of appropriate legal framework to aid the sustainable management of oil and gas revenues.

The Public Finance and Management Act 2015 stipulates how the oil and gas revenues will be shared. 

The other component of the 2008 National Oil and Gas Policy focused on the need for strong communication hence the development of the 2011 Oil and gas communication strategy aimed at improving public understanding of Uganda's oil and gas sector, and promoting transparency and accountability.

Rubondo says the anxiety about oil has gone down because people participated in the making of some of the legal framework on oil and gas. He says the expectations of the people will be met if the available opportunities are put in the public forum.

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Rubondo is cognizant of the fact that majority of Ugandans have not read the Public Finance Act. There is a general feeling among sections of the public that petrol dollars will flow into their pockets as soon as oil production begins.

There was worry about the likely negative impact the flow of oil money would have on the Uganda shilling. But Rubondo says many of those challenges have been dealt with as Uganda gears for first oil by 2020. He says Uganda has only gone through part of the journey and that there are other expectations.

The government has so far generated over 2.3 trillion shillings from the oil and gas sector.

Robert Kasande, the Acting head of the Directorate of Petroleum says the public expectations have been high but majority of Ugandans could not compete for jobs and tenders in the industry.

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The assessments by international oil companies operating in Uganda found that the oil sector will require 160,000 jobs in the next ten years. The study found that the sector will need 14,000 direct jobs in the next four years starting mid next year.

Though the government is happy with its performance in managing expectations in oil and gas sector, Godbar Tumushabe, Executive Director at Great Lakes Institute for Strategic Studies (GLiSS), says government performance will be subjected to an independent assessment.

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Tumushabe says the recent six billion shillings handed to selected government officials for negotiating the capital gains tax case is one of the pointers to some of the fears regarding corruption in the oil sector.