M7 New Year Message On Oil, Energy


online geneva; font-size: small;”>He says Uganda is now capable of moving from a low income to a medium income and self-sustaining economy.

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Museveni says experience from some oil producing countries clearly demonstrates the need to have prudent management of the oil revenues through establishment of a strong and appropriate legal and institutional framework for oil revenue management.

“The NRM Government will ensure that these resources are managed in a manner that facilitates sustainable development and avoids economic distortions,” Museveni says in his New Year message to the nation.

“Oil and gas resources will be managed in a manner that is consistent with the macro-economic framework of the country. Because Oil is a non-renewable resource, the revenues will be only to the primary development sectors of the economy as identified in the National Development Plan (NDP),” he notes.

Museveni says the key priority sectors will be in energy infrastructure including enhancing electricity generation, and transmission capacity and rural electrification.

He says revenue from the vast oil wells will be further channelled to investment in rail transport and major road infrastructure; establishment of irrigation schemes to ensure availability of water for agricultural production; skills development through Science and Technology including enhancing technical and vocational education.

Parliament recently unearthed corruption in the nascent oil sector.

It was alleged several ministers took bribes from oil companies Eni and Tullow for favourable deals in the oil extraction.

“Oil revenues shall not be used for consumption but for durable investments that will benefit the present and future generations,” Museveni notes.

“Oil and gas activities will provide opportunities for both forward and backward linkages in the country’s quest for industrialization,” he says.

In order to achieve the above objectives, Museveni notes, government will establish a strong and appropriate legal and fiscal regime to guide overall management of the oil resource.


On energy, Museveni says the government subsidy has ensured that the full cost of power is not borne by the consumer as would have been the case had Government left the power tariffs to be determined by the forces of demand and supply.

As a result, he explains, power tariffs have remained manageable.

“It is, however, evident that the thermal power is too costly and unsustainable in both the short and medium term. It is estimated that since the year 2006, we have paid more than US$ 1.0 billion in Energy Subsidy,” Museveni notes.

“With the full completion of Bujagali hydro power station in 2012, an additional 250 MW will be added to the national power grid and power outages will become much less frequent,” Museveni notes.

The country has been facing severe power shortage due to increased domestic and business consumption.

Traders last year took to the streets, protesting increased costs of production sparked by inadequate power supply.

Nevertheless, Museveni says government is also aware that in order to meet the increased demand for power to support industrialization and avert environmental degradation, we will have to scale up power supply by constructing more hydro-electricity generation plants.

“At present, the demand for electricity at peak hours is 450 MW. Yet electricity production, including the very expensive diesel generated electricity, is 375 MW therefore, the deficit is 75 MW.” he says.

Museveni notes with the 250 MW of Bujagali, the deficit will be eliminated for about two years.

Bujagali is expected to open early this year.


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