Emmanuel Erem PhD, is a research Fellow at, Economic Policy Research Centre, Makerere University, Kampala (PHOTO/Courtesy)
Today, when one talks of the Oil and Gas industry in Uganda, all we think of is the opportunity that comes with this sector; the production gaps that will be filled, the jobs that will be created, the market exposures that Uganda will get, the international leverage that we, as a country will have. Yes, all these are good and required for the development of any State. The facts are known, at peak, it is estimated that Uganda will produce 230,000 barrels of crude oil per day. Crude oil reserves are estimated at about 6.5 million barrels, and 1.4 million barrels are recoverable. All this is wonderful for growth. The industrial revolution (1760-1840) was powered by the brilliance of many inventors and innovators, coupled with the availability of a cheap and continuous supply of fossil fuels-coal, oil, and natural gas in this case. Countries in the West flourished and made great strides during this period, something that is likely to start off in developing countries this time around.
Notwithstanding all the pros that will come with the growth of the Oil and Gas industry in Uganda, the Government and the people of our country need to strongly consider and think about the cons of this industry. The sector has a great negative impact on the environment, a concern that has been raised, particularly in the West. There has been a strong move toward the production of the electric car in Europe. According to data from Euronews.net, sales of electric cars in Europe broke records in 2022. The sale of Alternative Powered Vehicles (APV) claimed more than half of the EU car market during the last quarter of 2022, 53.1 percent, to be precise. Furthermore, the source clearly states that the effect of Covid 19, Ukraine-Russia war, coupled with the rising global inflation, and energy and fuel costs, have had a significant effect on car sales, however, sales of electric cars were virtually untouched. In the United States alone, the Biden Administration has drastically reduced the number of oil drilling licenses it issues to investors interested in the Oil and Gas industry, USA is no longer energy independent despite the fact that it appears among the top 10 countries with the most oil reserves in the world. This is because of the movement towards green energy and alternative sources of energy. Our own, Makerere University, embarked on the production of electric vehicles, the Kirra EV, Africa’s first electric vehicle launched in 2011. A project that has morphed into Kiira Motors Corporation, a fully functioning electric car production company.
Where does this leave us as a country? We are looking forward to oil production and the necessary preparations have and are still being done, environmental impact assessments, skills development centres like the Uganda Petroleum Institute, Kigumba (UPIK), have been refinanced and equipped to handle skills gaps in this industry. But how about the market? How will we counter the global move towards green energy, the move away from the fossil fuels? Will we have a big enough market? Policymakers must consider this, 10-20 years from now, how big will the green energy market be? Will it replace the fossil fuel industry? These remain important questions that need to be addressed and researched on.
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The writer, Emmanuel Erem, is Research Fellow, Economic Policy Research Centre, Makerere University, Kampala
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