The impact of Uganda's Final Investment Decision on its low carbon future
By Damalie Tebajjukira
The signing of the Final Investment Decision (FID) between Total Energies, CNOOC and the Ugandan government on 1st February positioned Uganda as a potential league member of oil exporting countries in Africa. The agreement will see investments close to $10 billion in developing Uganda’s oil resources and construction of a 1,444-kilometer pipeline from Uganda to the ports of Tanga in Tanzania. This FID generated considerable excitement amongst government officials and various segments of the public after a long period of inertia characterised by tax and investment disputes between the government and the oil companies. At the same time, there has been backlash from environmental groups, including a campaign to stop South Africa’s commercial banks from investing in the project, due to its impact on Uganda’s low carbon future.
Like all mineral discoveries, the justification behind their commercial exploitation is rationalised through a prism of revenues and royalties to be collected and earned which provide an avenue for the government to uplift citizens out of poverty through interventions in healthcare, infrastructure, job creation among others. According to the president, collected revenue from the oil and gas sector will enable Uganda’s next development phase in fulfilment of vision 2040. Vision 2040 is centered on strengthening the fundamentals of the economy to harness the abundant opportunities in which oil and gas are listed. While this has to an extent been true for the Western world, given how they used coal and oil to drive their economies, it has mostly been the contrast for Africa; limited economic development with massive destruction of the environment, pollution and displacement of communities with little improvement of their socio-economic positions have been the order of the day.
Uganda, just like most developing countries is no exception. Weak state institutions have limited the ability of the government to exhibit efficient leadership and tackle challenges such as poverty. Unemployment continues to rise while people’s living standards are worsening with corruption at the brim. Nonetheless, the country still holds high hopes on its fossil fuel “treasures” as a solution to most socio-economic challenges. Offcourse this is a failed attempt.
The development of Uganda’s oil and gas sector will significantly increase carbon emissions and therefore sabotage the current global campaigns geared towards accelerating a low carbon future. Uganda is a signatory to the Paris Climate Agreement whose goal is to limit global warming to 1.5 degrees Celsius by 2030. At a time when member countries are transitioning to low carbon development pathways in fulfilment of the set goals and guidelines, it is unfortunate that Uganda is rather pursuing fossil fuels which contribute highly to green gas emissions.
Last year in November at COP26, Uganda submitted its Nationally Determined Contributions (NDCs) which highlighted the country’s measures for a lower carbon footprint and renewed commitment to climate action especially when it enacted its climate change act. Months later, we are met with an FID also guaranteeing commitment to the development of oil and gas as a tool for economic growth. This rather depicts the dishonesty of our leaders , how COP has turned out to be a meet and greet event for politicians with no environmental interests at heart and most importantly, it further makes us question Uganda’s readiness to commit to climate action.
Not only that, but the country is already reeling from the loss of forest cover due to human activity such as charcoal burning for energy needs. Recent figures indicate a decrease from 4.9 million in 1990 to 1.8 hectares in 2015. As a result, many animal species which are dependent on these natural habitats have over the years decreased. Therefore, hydrocarbon exploration involving gas flaring, drilling of oil wells and construction of the pipeline to crude oil transportation will exacerbate environmental destruction and encroachment on wildlife and biodiversity in Murchison Falls National Park, Bugoma Forest Reserve , Taala Forest Reserve and the surrounding areas. According to statistics, approximately 2,000 square kilometres of wildlife habitats are at the verge of being destructed by the pipeline. Worse off, river Nile has tributaries that flow near the pipeline route hence there is fear amongst communities about the possibilities of oil spills leading to environmental pollution and loss of livelihoods.
Furthermore, Uganda’s oil risks being stranded asset in the future which will lead to detrimental losses for the government. Stranded assets are sources of fossil fuel which are prone to losing value due to the transition to low-carbon development pathways. In a period when the world is moving away from dirty energy sources due to climate change, the long-term future of a fossil fuel driven economies are uncertain. More so, if the world is to limit global warming to 1.5 degrees Celsius as required by the Paris Agreement, more than half of oil and gas world reserves need to stay in the ground. This would mean fossil fuels like oil will be unprofitable and worthless as the call for net-zero emissions deepens.
In addition, there is a wide concern amongst local communities, because many of them have not been adequately compensated for their land and other properties. Approximately 12,000 families are at the verge of being displaced from their ancestral land as the construction of the pipeline takes shape. The pipeline will also result into massive loss of farmlands which are a source of income and food to most people living in these communities hence with no substantial timely compensation, locals are at the risk of living an uncertain future coupled with livelihood disruption and increased food insecurity.
Therefore, further growing Uganda’s oil and gas sector will pose a serious threat to the environment, livelihoods and ecosystems which are key aspects of the economy. Oil cannot be the solution to the current socio-economic challenges the country is faced with. Instead, there is a need to adopt low carbon development pathways which not only provide sustainable employment opportunities to the growing youthful population but also directly respond to the worrying climate crisis.
Damalie Tebajjukira
Marketing & Communications Associate
African Centre for a Green Economy
About African Centre for a Green Economy (AfriCGE)
African Centre for a Green Economy (AfriCGE) is a non-profit think tank and capacity building organisation, working towards accelerating the transition to a low carbon development in Africa. AfriCGE is the Convenor of the New Economy Accelerator (NEA), a programme that has been supporting green entrepreneurs in South Africa since 2014.
