The government plans to use oil revenues to diversify the economy, with projections indicating that Uganda could generate up to $2 billion annually from taxes, royalties, license fees, profit oil, and its guaranteed share in upstream oil projects.
Uganda's journey toward becoming an oil-producing nation is progressing steadily, despite both domestic and international criticism.
With an estimated 6.5 billion barrels of oil reserves, the country is poised to unlock significant economic potential, with more than 70% of Ugandans hopeful that oil production will improve the nation's economy, which has long struggled with poverty and high unemployment rates.
At the 9th Uganda International Oil and Gas Summit, Eng Irene Batebe, the Permanent Secretary of the Ministry of Energy and Mineral Development, reaffirmed the government's commitment to a robust legal and regulatory framework.
This framework is designed to address concerns around environmental sustainability, public health, and ensuring that local communities benefit from the sector.
"We have put in place a legal framework that covers all critical aspects, including environmental sustainability, health, and ensuring that the local population benefits from the sector," Batebe explained.
She emphasized that the aim is for Uganda's oil wealth to contribute to long-term prosperity for all citizens, avoiding the pitfalls of the so-called "oil curse" that has affected other African nations.
Despite the promising outlook, production has been delayed due to infrastructure challenges and regulatory processes.
Moses Kaggwa, director of economic affairs at the Ministry of Finance and Economic Development, acknowledged these delays but emphasized Uganda's dedication to responsible oil development, drawing lessons from nations like Ghana, where hasty oil exploitation led to economic instability.
"The dream of oil and gas in Uganda is becoming a reality. We have worked hard to create a favorable fiscal environment and build the necessary infrastructure," Kaggwa noted, stressing the importance of getting things right to avoid repeating past mistakes.
The government plans to use oil revenues to diversify the economy, with projections indicating that Uganda could generate up to $2 billion annually from taxes, royalties, license fees, profit oil, and its guaranteed share in upstream oil projects.
This revenue is expected to fund key infrastructure projects, social programs, and contribute to economic diversification efforts.
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Locally, Uganda aims to reduce its import bill for petroleum products, currently over $1 billion annually, by refining 60,000 barrels of oil per day.
This will not only cut fuel import costs but also enable the export of refined products, boosting the country's revenues.
However, environmental concerns persist. Critics worry about the risks of oil exploration in Uganda's fragile ecosystems, particularly in the Albertine Graben region, known for its rich biodiversity.
International financial institutions like Standard Chartered Bank and the European Investment Bank (EIB) have agreed to support Uganda's oil sector, contingent on the government implementing stringent environmental and social governance (ESG) measures.
A key focus for Uganda is local content development. Lynda Biribonwa, Board Chairperson of the Uganda National Petroleum Authority (UNPA), highlighted that $17 billion in contracts have been awarded to local companies in sectors like logistics, infrastructure, and supply chain management.
These efforts will create job opportunities and enhance local expertise.
Despite ongoing criticisms, the economic benefits of oil production for Uganda are clear.
With careful management, the country's oil wealth has the potential to transform its economy, providing long-term benefits for both the nation and its people.
