Plan or risk squander of oil revenues – Josephine Wapakabulo
Kampala August 25- While oil revenues can help Uganda achieve its quest for middle-income status, advance consumption and unstructured spending of income from the oil and gas sector could see the country miss its opportunities, warns National Oil Company Chief Executive Dr. Josephine Wapakabulo.
Speaking during a panel discussion at the seventh edition of the Annual CEO Forum, Wapakabulo said it was important to resolve the contentious issues surrounding the management of Uganda’s oil resource well ahead of first oil.
“Priority among the aspects government needs to lay out clearly include; how the oil money will be invested and when. Expenditures from oil revenues should be based on real capital investments and not on assumptions, we should not spend oil money before we actualize oil production, otherwise we risk mortgaging our country,” she said.
In addition to clear measures on when and where oil revenues are put, the country also needs to agree on a sovereign fund model that clearly outlines the investment needs of the country, a plan on how to navigate the ever growing population growth, ensuring corruption is dealt with and clear guidelines on how government intends to protect domestic revenue management, she added.
Wapakabulo also warns that if the population growth rate is not capped, Uganda will only rip diluted net benefits from her oil resource.
And given that the transformative potential of the oil resource on the economy to middle income status and beyond, potential benefits accruing from oil revenues will only be realised if a diagnosis to key issues is arrived; and fortunately for Uganda, there is a wide range of lessons to adopt from countries whose oil has turned out to be a blessing.
Even as she took note of the steps government has taken to ring fence local content through the Public Finance Management Act which will govern oil revenues, local suppliers will still need to meet the standards required of them by the industry.
Uganda has so far confirmed 6.5 billion barrels of crude in place of which 1.3 billion barrels are recoverable. So far, only 40 percent of the country’s potential has been explored and Wapakabulo says with combined effort from all sector players, Uganda’s long desired dream of achieving middle income status is achievable.