Efficiency, Sustainability and Exit Strategy in the Oil and Gas Sector: Lessons from Ecuador for Uganda
This paper forecasts the sustainability challenge in Uganda’s oil and gas sector by drawing lessons from the Ecuadorian experience. It reveals that Ecuador in the recent past realized the challenge of sustainability in its petroleum sector, and since 2006, undertook governance and institutional reforms aimed at making the sector more productive as an engine for the broader socioeconomic transformation of society. This indicates that sustainability demands deliberate emphasis on governance efficacy in the oil and gas sector. This efficacy entails efficient management of industry processes, cautiously meeting present-day needs while investing for future generations, and devising an exit strategy from the industry, which would best work when well planned and executed from the start of the industry. This triple challenge can be addressed using four governance strategies: (i) institutional design and planning for oil-sector efficiency; (ii) balancing oil-sector developments with protection and conservation of natural and social environs; (iii) national and regional diversification of the economy and energy sector; and (iv) strategic investment of petro-revenues. When these strategies are factored in a country’s governance frameworks for the petroleum sector—policies, laws, regulations and guidelines, contracts and agreements, institutional cultures and practices—and infrastructure developments, essential predictability of behaviour and accountability of key stakeholders in the sector are guaranteed.