Uganda's Extractive Sector - a Transformative Year Ahead in 2025

opinion

Kampala, Uganda — This year, Uganda's extractive sector is on the cusp of significant growth and transformation, fueled by both regional and global dynamics. Spanning oil, gas, and mining, the sector is set to play an increasingly pivotal role in Uganda's economic development. Key developments are expected across the industries, promising new opportunities while addressing longstanding challenges.

The oil and gas sector is poised for a landmark year, with the long-awaited commencement of commercial oil production anticipated. The East African Crude Oil Pipeline (EACOP), a $3.5 billion infrastructure project, is slated to become fully operational by mid-2025. Designed to transport Uganda's crude oil to the Tanzanian port of Tanga for export, the pipeline marks Uganda's emergence as a significant player in global oil markets.

Should unforeseen delays in enabling infrastructure postpone production, the government is expected to announce revised timelines, maintaining momentum toward this critical milestone.

Major projects such as the Tilenga and Kingfisher oil fields are set to progress further, with over $10 billion invested in the development of production and processing facilities. These projects underscore Uganda's commitment to maximizing its oil potential and creating a robust energy sector.

Meanwhile, the Energy Transition Plan, launched in 2024, will gain traction this year with an estimated $1.5 billion invested in renewable energy initiatives such as solar and geothermal. This diversification effort complements ongoing oil and gas operations and aligns Uganda with global energy transition goals.

Efforts to bolster transparency, particularly in environmental management and community engagement, will continue to strengthen public trust and align the sector with global best practices.

Capitalizing on critical minerals

In the mining sector, Uganda's rich reserves of critical minerals--such as lithium, cobalt, and rare earth elements--are expected to drive significant investment this year. Rising global demand for these minerals, crucial for renewable energy technologies, has put regions like Karamoja at the forefront of exploration and extraction activities.

The lithium industry, in particular, is set to attract substantial interest as Uganda positions itself as a key supplier in the global transition to green technologies. To support this growth, the government has allocated significant resources for infrastructure development in Karamoja, including roads and power supply, aimed at enhancing operational efficiency and investor confidence.

Regulatory reforms under the Mining and Minerals Act, 2021, continue to simplify licensing processes and improve transparency, creating a more favorable investment climate. These efforts, coupled with partnerships between foreign investors and local businesses, are expected to accelerate local capacity building and drive economic benefits to communities.

Mining companies are also embracing higher Environmental, Social, and Governance (ESG) standards, prioritizing sustainability and community engagement. This shift reflects a growing recognition of the need to balance resource exploitation with environmental preservation and social responsibility.

Navigating global and regional dynamics

The broader outlook for Uganda's extractive sector remains tied to fluctuating global commodity prices, particularly for oil and critical minerals. While price volatility presents challenges, it also offers opportunities for strategic investments and market positioning.

Regional integration initiatives, such as the African Mining Vision and the African Continental Free Trade Area (AfCFTA), will continue to enhance competitiveness and address cross-border challenges. By fostering collaboration among East African nations, these frameworks aim to unlock shared benefits and promote sustainable development in the sector.

Infrastructure development remains a critical focus area, particularly in remote mining regions where logistical constraints hinder operations. Investments in roads, power, and transport networks will be vital for supporting exploration and ensuring efficient resource transportation.

Capacity building will also be prioritized, with efforts to bridge workforce gaps through targeted education and training programs. Building a skilled local workforce will not only enhance competitiveness but also ensure long-term sustainability in the sector.

Stakeholder engagement, regulatory compliance, and environmental safeguards will remain central to Uganda's extractive ambitions. Emphasis on aligning operations with global standards while addressing social and environmental impacts will be crucial for maintaining investor confidence and fostering public support.

Opportunities in engagement and investment

Sector conventions focusing on oil, gas, mining, and energy, both domestically and internationally, are expected to play a key role this year. These events provide platforms for policymakers, investors, and researchers to collaborate, define opportunities, and address emerging challenges. By driving dialogue and facilitating partnerships, such gatherings are instrumental in attracting new investments and accelerating sector growth.

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