Business partnerships to drive Uganda to first oil in 2025 – sector players

Uganda’s target of achieving first oil, scheduled for 2025, will be achieved mainly through further collaboration among sector players, players within the sector have said.

Speaking on a television live show on October 25, Irene Bateebe, the permanent secretary, at the ministry of Energy and Mineral Development, said government remains optimistic about achieving first oil in 2025, but emphasized the need to embrace meaningful collaboration among sector players to achieve the target.

“Revenues from oil and gas will support development in other sectors of the economy, including agriculture, tourism, infrastructure and services sector,” Bateebe said. “But without embracing partnerships within the sectors and businesses, not much can be achieved.”

She added that the government continues to engage key stakeholders in all sectors and putting in place the required institutions to achieve the set targets. She cited the Petroleum Authority of Uganda, the regulator of the oil and gas sector activities, which has embraced partnerships with private sector players and development partners including the Stanbic Business Incubator, African Development Bank and more.

Some of the partnerships have already yielded results. For instance, the Petroleum Authority of Uganda (PAU) recently revealed that micro-small and medium enterprises (MSMEs) had signed a memorandum of understanding (MoU) with large and medium contractors, who will be working on the East African Crude Oil Pipeline (EACOP).

The MSMEs were selected from the 10 districts, where the pipeline is expected to pass. This was part of the $500,000 project that PAU has been implementing with the African Development Bank (AfDB) for MSMEs business linkages training along the EACOP project.

Elly Karuhanga, a trustee on the Uganda Chamber of Mines and Petroleum Board, said the country’s national content framework is designed to benefit Ugandans and their businesses. However, he explained that many Ugandan small businesses lack capacity in terms of capital, human resources, and related corporate governance ethos to win contracts in the oil and gas sector.

“Embracing joint ventures and training of Ugandan companies can help companies to overcome these problems,” Karuhanga said, “At the chamber, our interest has always been one – local content…our interest is to retain at least 50 per cent of the money coming in.”

Data from PAU indicates that a lot has been achieved so far if you go down to the Kingfisher and Tilenga project areas in terms of national content. The latest official figures from PAU indicates that about 73 per cent of the companies, equivalent to 460 out of 624, involved in supplying the sector have been Ugandan.

More than $988,650 has been channeled to the community economy in exchange for the provision of goods and services. Many of these companies have won oil contracts after forming joint ventures.

Investment after the FID will facilitate Uganda’s GDP growth by 22 per cent and also unlock several opportunities. We expect investments of between $15 billion – $20 billion to be made ahead of our first oil in 2025.

A significant amount of this money has so far been invested in the development of the Kingfisher and Tilenga projects in the Albertine graben and the construction of the East African Crude Oil Pipeline (EACOP), among other projects.

“As I speak to you now, a team from PAU is in China seeing our pipes for the pipeline being loaded to get to Uganda to get our oil out of the ground,” Karuhanga said in an interview on October 20. That means more business is coming into our economy.