The Uganda oil debate

In summary, therefore, it is not uncommon that a crude oil barrel (159 Litres) sourced at say US$ 60 can end up yielding US$ 200-300 (about US$ 90 on transport fuels, and the rest, from the 70 L or so, of refinery byproducts). For the case of Uganda’s pipeline above, this means annual revenue of up to US$ 21.9 billion (i.e. US$6.57 billion on transport fuels and US$15.33 billion on others) to national economies of those companies.

It can be asked: what about their refinery costs in handling this crude oil? Straightforward – these are minimal because of marginal costing. Following the proliferation of national refineries in many ‘enlightened’ oil producing countries since the 1970s, the oil majors got stuck with refinery overcapacity, which they try to plug by outsourcing some crude from unsophisticated suppliers.

This indeed is the reason they are insisting on a pipeline in Uganda’s case. At 78% and 60 US$ a barrel, they promise Uganda say US$ 2.7 billion a year and claim they are earning only US$ 1 billion. But in truth, from their underutilised refineries they earn US$ 6.57 billion plus a fraction of the 15.33 billion at a nominally small expense.

This is how the hologram comes about: Under the 78% illusion, Uganda gets a mere 12.3% of what it could otherwise get if it were to work hard and smart enough to develop its oil drilling, refining and other technical capacities with or without involvement of willing partners. I have said before: this is not out of reach in these modern times! Look – weren’t the Igbos in Nigeria refining crude oil during the Biafran secession war of 1967-70, and even today, don’t we have hundreds of so called ‘illegal’ refineries in the Niger delta?

The fallacy –   Following the foregoing, it is fictitious to think that crude oil will be useless after ‘cleaner’ forms of energy replace it, particularly in transport. Even electric vehicle transmission systems need lubrication; their windscreens and many body parts need plastics (actually – more than current fossil fuel powered ones), etc. More importantly, the necessary infrastructure changeover in a country like Uganda may take so long that we could even start questioning its feasibility. Outside transport, i.e. industrial machinery, chemical and pharmaceutical industries, hydraulic lifting and automation, heating/cooling systems, etc., would literally die out. In short, those elites thinking of stampeding the country into the typical African curse of donating our scarce and dear resources in exchange for trinkets had better think again.

Make no mistake please: I am not against foreign companies. What I hate – with a passion – is our African elites’ unsophisticated dealings with them, and our well demonstrated sluggishness in acquiring technological skills and competencies – thus creating natural room for our exploitation by foreigners. Why should I hate multinationals – after being molded by the likes of BAT and Unilever? We would rather they did their work here, together with us. Otherwise, off they can go. In good time, we will manage one way or the other.

****

Prof. Kanyarusoke is a pan Africanist Energy Engineer and a Cape Town-based Engineering Educator, currently on sabbatical leave: kantkanyarusoke@yahoo.co.uk

CLICK TO READ ONLINE MAGAZINE HERE