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Good planning and transparency should help population benefit from new find.
Beyond the details of its relationship with Tullow, Uganda could benefit from Ghana’s experience trying to develop an oil and gas policy that is politically acceptable to the general public and sophisticated enough to create mechanisms for fiscal management that ensure oil revenues are spent responsibly.
Ghana started the policy process by bringing in the Norwegian government to share its expertise. It has worked to adapt Norway’s policies to construct legislation that is functional for a developing country. The Ghanaian government could share the lessons it has learned with Uganda, which sits at a similar position on the United Nation’s Human Development Index.
The Ghanaian government could also exert some gentle pressure and encourage the Ugandan government to be more transparent about its production-sharing contracts with the oil companies. The Ugandan government has already caused a stir by not being transparent to the public about the terms of its production agreement with the Canadian-based Heritage Oil. Heritage is currently in the process of selling its Ugandan oil assets.
The Ghanaian government’s work has been controversial, especially among fishermen in the region near the oil find, but it has made efforts at broad consultation, including hosting regional forums around the country for an open discussion about the oil policy process. In contrast, activists are in the process of taking the Ugandan government to court for its secrecy over oil contracts.
Uganda should not take Ghana’s approach wholesale, however. Ghana’s management of its oil and gas policy has not been without flaws. The country’s state-run oil company, GNPC, is currently locked in a dispute with Kosmos, one of the companies with rights in the Jubilee Field, over the sale of Kosmos’ stake to ExxonMobil. GNPC would like to prevent the sale and buy Kosmos’ stake itself. As the companies active in Uganda start to put their stakes in Uganda’s oil blocks up for sale, the Ugandan government should pay careful attention to what happens in the Kosmos-GNPC dispute.
With presidential elections scheduled for 2011 in Uganda, emotions are running high and President Museveni is focused on winning re-election. The Ugandan government should not allow itself to be distracted by the coming election.
By consulting the Ghanaian government and investing time and resources into forging a new oil-and-gas policy, Uganda can ensure that its oil windfall does not become a resource curse.