“Governance principles that apply to oil-production are very important in oil-rich developing countries. Sharing oil revenue may be a source of conflict and bad governance if it is mishandled. Ensuring that oil and gas production revenues provide economy-wide benefits, that a fair share accrues to districts or regions where oil and gas fields are located, and that there is general awareness of how oil revenues are used all potentially contribute to
sustainable development. A system of sharing oil revenues which is perceived as just, equitable and fair has the potential to ensure political stability. Care in planning expenditures is required; (i) to prevent
volatility in resource prices and public spending and (ii) to provide some public saving when oil resource revenues exceed immediate spending needs. Uganda is a well endowed country and is politically on the course to democratic consolidation. Oil wealth if well governed could enhance
democratization. On the other hand, if poorly governed, the oil boom could negatively reverse democratic gains and become a nightmare for the citizens. The proposed oil revenue sharing mechanism is underpinned by the desire to use oil to banish poverty, advance democratic governance and transform the country economically.”
