Did Uganda Negotiate A Raw Deal With Total Energies

Should It Have Constructed An Oil Refinery Instead Of A Pipe Line?

Following a recent European Union Parliament resolution citing environmental and human rights concern to halt construction of East African  Crude Oil Pipeline Project that is intended to run from Uganda to Tanga in Tanzania,  Lumumba Amin,  opines that Uganda got a raw deal in its oil excavation. Also read ugandatoday.co.ug/eu-warns-uganda-tanzania-over-eacop/

TOTAL TO BRING OIL CURSE TO UGANDANS.
So the oil giant Total is in trouble in France for its activities in East Africa. Meanwhile they have a petition supporting their work in Uganda mainly because Ugandans have been smeared with hope that oil will improve their lives. Meanwhile the local media is mysteriously censoring all dissenting voices against the oil project. Activists have been arrested, foreign ambassadors went to their rescue, and nothing was reported. Climate activist Vanessa Nakate and others travelled all the way to France and even made a major presentation before the French Parliament, and were even invited to speak with President Macron at the Elysee Palace, but not a word was published in the country about that unique occasion. That is probably why to many in the country, the EU’s decision seems to be coming out of the blue. All the activism that has led to the European Union’s condemnation of the Total project is by design largely unknown in the general population of the country. This media censorship is a common behaviour when money has exchanged hands under the table, and values like standing for free speech and professional journalism ethics of holding leaders to account and unbiased reporting have all been thrown out of the window by the independent media itself.

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People in France demonstrating against EACOP funding in France

Besides the serious environmental and human rights concerns, the people are not being told that compared to Total which is estimated to make a staggering $2 Trillion US dollars from Uganda’s oil, Uganda itself stands to make only $24 billion from its own oil.
Tell me who is being “eaten alive” in the savannah by Total?
The few people who have done the maths have probably found out the following financial timeline:

Eat African Crude Oil Pipeline Project being objected to by EU

– Uganda sells each barrel of oil to Total at $90 dollars per barrel (todays market price).
– Total deducts 70% from that money as payment to themselves for getting that oil for Uganda from the ground in the first place, leaving Uganda earning only $25 dollars from each barrel of its oil.
– Yet another $12 dollars is deducted from this to pay Tanzania for using their territory to put the pipeline which will get Uganda’s oil to the international market.. Leaving Uganda actually earning only $12 dollars per barrel from the original $90 dollars per barrel of the international market price.
Now Uganda’s recoverable oil reserves have been estimated by experts to be about 2 billion barrels in total. Therefore $12
dollars multiplied by 2 billion barrels means Uganda will earn in total $24billion dollars from all its oil.
Total then takes all Uganda’s oil to their own refineries overseas and produces all the by-products of oil, namely petrol, diesel, kerosene, butane gas, sulfur…etc.
Few are aware that each barrel of crude oil produces upto $800 dollars worth of all the by-products at the refinery. If you multiply this $800 times the barrels of recoverable oil you find that Total will make $1.6 TRILLION dollars from Uganda’s oil, and this money will not be shared with Uganda.
– Plus the $120 billion that Total had deducted at the beginning for getting the oil out of the ground for us, this means Total makes up to $1.720 Trillion dollars in total from Uganda’s oil, while Uganda itself makes only $24 billion from its own oil.
For this reason, Total might secretly tell you that only an idiot with little oil builds a pipeline instead of a refinery. Because it is only Total who benefits the most from this pipeline. They mostly benefit from the fact that Uganda does not have its own refinery.
For a picture on how little there is in the country, Saudi Arabia which produces 10 million barrels of crude oil per day, would essentially deplete Uganda’s entire oil reserves in under one year.
Yet Total is establishing just enough capacity to keep themselves acting very busy and earning their salaries in Uganda for 20 years, the duration they have told Ugandans the project will last.
For the record, the limited oil reserves is one of the main reasons why previous Ugandan governments left Uganda’s oil where it was under the earth. However today if the current regime had put the resources of building a pipeline into building a refinery, at least Ugandans would enjoy the $2 Trillion dollars.


As things stand, someone’s financial illiteracy is in the process of causing a huge financial loss to the people of Uganda as the population and their impoverished communities will not see any hoped improvements to their standard of living.
Therefore unless Total splits the $2 trillion with Uganda on a 50/50 basis, common sense and business acumen indicate that this is maybe the chance for Uganda to walk away from a bad deal, build our own refinery, and make the $2 Trillion dollars ourselves simply by supplying all the refined by-products to the entire East African region and further afield, thus giving ourselves the funds to accelerate our own development and that of our neighbours.
With a refinery, the oil reserves automatically also become strategic fuel reserves for the region, away from the shortages and volatilities of the international market. It also puts Uganda in a unique oil hub position as we can even refine oil from our neighbour even after our own oil has been depleted, thus still making around $85 dollars per barrel (the price for refining each barrel of oil). This is equivalent in income to still being a crude oil exporter.
Whatever the case, with a refinery we maximize tenfold the country’s returns from its resource. This refinery path also eliminates upto 90% of the environmental concerns being raised by the European Union.
Remember also that Uganda’s national debt has gone from $10 billion dollars in 2015, to almost $50 billion today, far more than the entire $24 billion that we stand to earn from the oil project in its current format. A project that therefore guarantees the oil curse of continued poverty and squalor brought by a company that is trying to snatch away Uganda’s God-sent single chance for accelerated development to upper middle income status in 10 years. A company that seems used to ruthlessly enriching itself off the poor of the world, at the expense of the poor of the world, while acting like they are investing billions of dollars in Uganda, when in reality it is Uganda’s investment because we must repay every single coin of that investment. Unless we gain the right perspective about our country and its resources, we will surely be taken advantage of by the cunning, supported by a few corrupt local idiots.

Signed: Lumumba Amin
Kampala, Uganda

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Chris Kato

Uganda Today is a source of analytical, hard and entertaining news for audiences of all categories in Uganda and internationally. Uganda Today cut its teeth in Ugandan media industry with its print copies hitting the streets in October 2014. We are heavily indebted to all our publics and stakeholders who support our cause in one way or the other. To comment on our stories, or share any news or pertinent information, please follow us on: Facebook: Uganda Today Twitter: @ugtodaynews WhatsApp:+256 702 239 337 Email: ugandatodayedition@gmail.com Website: https://www.ugandatoday.co.ug

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