The Independent Uganda: You get the Truth we Pay the Price
This lesson finally made a home recently when Ugandans employed by the French oil company, Total Uganda, went on strike claiming they were being poorly paid.
Now imagine that the least paid fresh university graduate at Total earns anything between Shs4 million to Shs5 million. Some of the people who went on strike earn more than Shs15m per month. On top of this each one of them has club membership at Kabira or Sheraton, free lunch of Shs500,000 a month, medical insurance for a spouse and up four biological children, a life insurance policy, and transport allowance of Shs500,000 per month. They have opportunities for training both in Uganda and abroad. Every year every Total staff member gets a salary increment and a bonus for those who perform well.
I called PriceWaterhouse Coopers (PWC), the audit firm that does annual surveys of wages across all sectors – public and private. They told me on average, a fresh graduate in Uganda earns Shs800,000 per month. So why do Total staff members feel underpaid?
I think it is because of these overblown expectations about the oil; they work for an oil production company and believe that they should earn much more.
But how rich will oil make Uganda? At peak (which is expected to be reached by end of the second year of production), Uganda will be producing 230,000 barrels a day. Even if the prices of oil increase to $100 a barrel (today it is $55), that would translate into $8.3 billion in revenue. In the first three to four years, the oil companies will be recovering their investment costs at a rate of 60% of total oil revenue. Therefore, actual revenue will be $3.4 billion. Under the revenue sharing agreements, government takes 70% and the oil companies 30%. So government revenue will be $2.4 billion. We can add here royalties and corporation tax from the oil companies, and the total would still not exceed $3 billion.
For a poor country like Uganda, $3 billion in extra government revenue per year is a lot of money. Indeed after oil companies recover their initial investment, the government’s take will reach almost 80 of total oil revenues i.e. $6.4 billion – which is the entire budget of Uganda today. But it is not a lot to foster a fundamental change in the quality and quantity of public goods and services.
In fact we need to divide this revenue by the population of about 45m by 2022, during the period when oil companies are recovering their initial investment cost. That gives us only $67 dollars per person, after which it increases to $142 per person. This is not the kind of money that paves roads with gold or decorates traffic lights with diamonds. In the context of our poverty, however, political demagogues and ignorant journalists will combine with wannabe pundits to tell tall stories of how much this money can do.
This toxic combination of high ignorance and little knowledge will get married to overblown expectations to pollute the political atmosphere to dangerous levels. I really hate to be a prophet of doom but I notice that more than the Dutch disease and corruption, it is overblown expectations that will cause trouble. Inside the government alone, there will be serious competition on who gets what while outside of it, people will be scheming on how to get into power and grab the spoils.
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amwenda@independent.co.ug
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editor@independent.co.ug
Ugandans especially MPs have alot of hope in the oil industry this is quite worrying.The current investigation on the oil hand shake tells it all those who received the money have acknowledged that they indeed received the money but the MPs are still investigating.
The world price for Diamond and Gold is higher than that of oil thats why countries like S.Africa,Namibia,Botswana are performing well economically other nations like Britain and USA have made it coz of investing in technology and research.
Ugandans should accept that oil is a new discovery Ugandans may have little participation in this business and they should not feel bad 2ndly, the govt has borrowed alot to finance the railway and refinery construction it may take us years to breakeven after oil production.
Uganda’s real curse is the former colonialists and UPC who judged each Ugandan’s capabilities basing on the tribe they were from e.g the Bakonzo coz of their height could not make it to the civil service coz Doctors,Teachers Policemen have to be presentable and should be of a certain height up to now some tribes are so traumatized.
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It is not true that oil wealth has always been a curse. Say that to the wealthy Arab Sheikhs, whose countries and lives have been immensely transformed by the largest, historic transfer of financial economic resources from the industrialized west to the Middle East. The dollar is a world currency because the Saudi Kingdom underwrote it by agreeing to peg all oil transactions to the US dollar. Norway is doing just fine with its new found oil wealth. Those who have been afflicted with the so-called oil curse are using oil as an excuse for their perpetual economic shortcomings. For Uganda the only problem may that the oil boom is about to bottom out with the discovery of alternative resources and newer and better technologies, especially with increasing concerns about and focus on global warming.
Ocheto who told u that the govt will be relying on oil o as its main source of export in future? You mention threats of Global warming but Europe ,America ,Japan ,China have more industries why do you think Ug will fail to manage the waste from oil production? have you ever heard of the term environmental impact assessment?
its not easy to be a 1st world country you can see how India is struggling economically despite having exports like Machinery,Pharmaceutical products,Oil,Minerals,ICT etc.
The Sheikhs of the Arab world are progressing coz they are independent minded they dont listen to the stories of the West.2ndly there is no democarcy ,3rdly they are headed by monarchs who by nature are brutal thats why their citizens are so ‘disciplined’ coz of intimidation the Kings there dont have time for big headed people.
The protest must be about what the expats earn compared to the ‘local’ employees. You have tactically dodged that discussion. Now, can you please show us the statistics for: Expats vs local employees in benefits, recent handshakes et al