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KAMPALA, Uganda (MarketWatch) — Every year, thousands of tourists trek into the lush Albertine Rift in western Uganda, where deep forests are home to elephants, chimpanzees and the endangered Mountain gorilla. But in 2006, geologists discovered the Rift was home to something else as well: enough oil to make Uganda one of Africa’s top petroleum producing countries.
Some $1.5 billion has already been invested in Uganda’s oil, the country’s Ministry of Energy announced earlier this month. The UK’s Tullow Oil (LSS:UK:TLW) , France’s Total (NYSE:TOT) and China’s CNOOC (NYSE:CEO) are all eager to begin commercial production, which is slated to begin as early as next year.
With 40% of the oil-rich Albertine Graben explored so far, 2.5 billion barrels have already been confirmed, according to Tullow. Fred Kabagambe-Kaliisa, permanent secretary in the Ministry of Energy, said in October the Graben’s potential could be as high as six billion barrels. Oil revenues could be enough to boost the Ugandan government’s income by as much as 30%, according to the World Bank.
This imminent flood of oil dollars has led some to wonder whether Uganda is about to become the latest victim of the so-called “resource curse,” which has afflicted other resource-rich countries in Africa with lopsided economies, poverty, corruption and weak growth.
If exploited responsibly, the oil could give a badly-needed boost to Uganda’s ailing energy and transport sectors, as well as possibly lowering the runaway price of fuel. But some fear that corruption and economic mismanagement will leave the country even worse off than before.
Africa’s most notorious example of oil mismanagement is Nigeria, where decades of corruption and rampant spending left the majority of the population mired in poverty. Part of the problem lay in Nigeria’s weak institutions, but there were bad decisions made as well. An over-reliance on oil revenues led to neglect of the agricultural sector, on which most Nigerians rely, as well as astronomical levels of public borrowing, much of which never reached the Nigerian public at all.
“Uganda has an opportunity to learn from those countries like Nigeria, and avoid those pitfalls,” says business writer and oil expert Ibrahim Kasiita. “If we are cursed, then no one should forgive us.”
http://www.marketwatch.com/Story/sto...8-002128040CF6
Some $1.5 billion has already been invested in Uganda’s oil, the country’s Ministry of Energy announced earlier this month. The UK’s Tullow Oil (LSS:UK:TLW) , France’s Total (NYSE:TOT) and China’s CNOOC (NYSE:CEO) are all eager to begin commercial production, which is slated to begin as early as next year.
With 40% of the oil-rich Albertine Graben explored so far, 2.5 billion barrels have already been confirmed, according to Tullow. Fred Kabagambe-Kaliisa, permanent secretary in the Ministry of Energy, said in October the Graben’s potential could be as high as six billion barrels. Oil revenues could be enough to boost the Ugandan government’s income by as much as 30%, according to the World Bank.
This imminent flood of oil dollars has led some to wonder whether Uganda is about to become the latest victim of the so-called “resource curse,” which has afflicted other resource-rich countries in Africa with lopsided economies, poverty, corruption and weak growth.
If exploited responsibly, the oil could give a badly-needed boost to Uganda’s ailing energy and transport sectors, as well as possibly lowering the runaway price of fuel. But some fear that corruption and economic mismanagement will leave the country even worse off than before.
Africa’s most notorious example of oil mismanagement is Nigeria, where decades of corruption and rampant spending left the majority of the population mired in poverty. Part of the problem lay in Nigeria’s weak institutions, but there were bad decisions made as well. An over-reliance on oil revenues led to neglect of the agricultural sector, on which most Nigerians rely, as well as astronomical levels of public borrowing, much of which never reached the Nigerian public at all.
“Uganda has an opportunity to learn from those countries like Nigeria, and avoid those pitfalls,” says business writer and oil expert Ibrahim Kasiita. “If we are cursed, then no one should forgive us.”
http://www.marketwatch.com/Story/sto...8-002128040CF6
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