Why A Delay To Sign FID For Oil & Gas Industry Is Both Good & Bad For Uganda

Why A Delay To Sign FID For Oil & Gas Industry Is Both Good & Bad For Uganda

By Michael Businge

FID means Final investment Decision. And these decisions are taken by the Board of Directors. It can include decisions about financial resources, by finding out whether they are sufficient or not. This is ascertained from developers and in this case oil developers such as Total E&P, CNOOC, etc.

The delay of FID is good anyway, but why?

 It is a blessing in disguise because it has enabled Uganda to put together necessary systems and structures for good oil governance and management.

For instance, unlike countries like Ghana which began oil production without proper oil laws, Uganda had to get enough time to have good laws governing the sector.

Key institutions to oversee proper licensing, regulation and management have been established. Petroleum Authority of Uganda, Uganda National Oil Company, Petroleum Directorate have all been established. This is a plus for us as a country.

It has also given us considerable time to put necessary infrastructure like roads, acquisition of land for pipeline development, preparing people to set up companies to provide goods and services in the oil and gas sector.

It has given us the necessary time to build capacity and man power to work in the oil and gas sector, for instance, there is in built capacity for petroleum engineers, tax experts, negotiators, goods and service providers, and so much more.

However, there is has been some recorded negative impact due to the delay to sign FID.

There is loss of employment for people who were working on the East African Crude Oil Pipeline, in oil camps as cooks, drivers, and so on.

This has also led to less goods and services being provided to the oil industry as I write this. Why? There is no much "physical" work taking place due to the delay to reach a decision.

The uncertainty from a section of Ugandans about when the first oil will come out is rising. This is due to the anxiety created where they have continued to ask themselves as to when the potential of 6.5b barrels will be translated to actual tangible values.

Remember, some communities were displaced for oil infrastructure such as the CPF, oil refinery, pipelines, roads and so on.

Therefore, as we wait for the FID, the first oil to drop, communication about concrete processes and decisions have to be told to various stakeholders in time to reduce on the anxiety, for proper planning for masses to benefit from the oil and gas sector.

The writer works as a coordinator at Youth4Nature Uganda

Youth4Nature Uganda is a youth movement that ensures maximum utilization and management of Natural Resources (Land, Forests, Wildlife, Soils, petroleum resources and minerals in Uganda.