Uganda boasts huge oil and gas reserves in a region that has emerged as the new frontier for oil and gas production in Africa. Eng. Irene Muloni (MP), Minister for Energy and Mineral Development of Uganda, explains the wide range of investment opportunities in the industry and the government’s efforts to create investor-friendly environment.

Uganda’s investment and development strategy is premised on three pillars: infrastructure development including technology advancement, access to energy and modernisation of agriculture. The country envisions that by 2040 it will have made a leap from a developing to an upper middle income country. Uganda is blessed with significant natural resources, including ample fertile land, regular rainfall, and mineral deposits. These resources are expected to provide a base upon which the economy is poised for rapid economic growth and development. Petroleum together with other natural resources will play a role in the envisioned economic transformation of the country.


According to the International Monetary Fund (IMF) projections in 2014, Uganda is one of the fastest growing nations in Africa with a projected real Gross Domestic Product rate of 6.3 per cent. With the 6.5 billion barrels of oil initially in place and close to 500 billion cubic feet of gas initially in place in the Albertine Graben ready for development and exploitation, there is every hope that this resource will contribute to the socio-economic transformation of the country.

Uganda’s population is estimated at 34.9 million, with an expanding middle class, and growing market potential for attracting Foreign Direct Investment. As a result there is an increasing demand for petroleum products in Uganda currently estimated at 30,000 bbl/day while the regional consumption is about 200,000 bbl/day with a growth rate of 7 per cent. With the confirmation of commercial petroleum resources in Uganda, the ongoing appraisal work in Kenya’s Turkana Basin, together with the production of gas in Tanzania and Mozambique, the East African Region is now an established petroleum province. These developments have presented the East African region in general and Uganda in particular added opportunities for economic growth.

Uganda’s oil and gas sector is guided by the National Oil and Gas Policy (2008) which emphasizes valuable utilisation of the country’s petroleum resources.  In line with this, Government and the oil companies licensed in the country concluded a memorandum of understanding (MoU) on the commercialisation of the discovered oil and gas resources in the country during February 2014.  The MoU provides for i) use of petroleum for power generation; ii) development of a 60,000 barrels per day refinery; and iii) export of crude oil by pipeline or any other viable option. Planning for the development of infrastructure for crude oil production, transportation, storage, refining and gas conversion is ongoing.

In February 2015, Uganda announced the first competitive licensing round for six blocks in the Albertine Graben which have good data coverage and prospectivity. The exploration work to be undertaken after the arrival of licensees in this round will bring more investment opportunities in the country’s oil and gas sector and also evaluate the potential for additional petroleum resources.

Infrastructure and energy development

Investment in quality and optimal infrastructure is the backbone of business development and is therefore required for Uganda to harness its petroleum potential, modernise agriculture and increase access to energy.

The African Development Bank (AfDB) has estimated that addressing Africa’s infrastructure deficit requires investment of almost US$ 100 billion annually for the next decade. The AfDB notes that while greater efficiency in the use of public funds could help to address the financing gap, it will not sufficiently meet all Africa’s future infrastructure funding needs. Private financing needs to be mobilized if Africa is to achieve the required funding to harness its vast economic potential. Uganda therefore has embraced public private partnerships in key projects such as the petroleum refinery and promotes private players in other energy infrastructure projects.

The Development of Uganda’s oil and gas fields is expected to cost not less than US $10billion within the next 3-5 years. These funds will be needed for among others: Field Development (including drilling of production and injection wells, feeder pipelines, Central Processing Facilities, and so on), Construction of the refinery and its attendant infrastructure such as crude and petroleum products pipelines and storage facilities, among others. This high level of investment can only be attained through partnering with the private sector.

Uganda is also developing several renewable energy projects since reliable and cost-effective supplies of energy are essential to facilitate trade and economic growth at all fronts. The construction of a refinery will ensure security of supply for petroleum products and significantly contribute to the country’s energy mix. It will boost the region’s refining capacity and also improve the country’s balance of payment by reducing the petroleum products import bill which is currently estimated at over US$ 2 billion annually.

Available investment opportunities in Uganda’s Petroleum Sector

Uganda’s oil and gas sector presents a wide array of investment opportunities which include participation in the ongoing licensing round for petroleum exploration, development of existing fields, development of the required infrastructure together with the related Front End Engineering and Design, procurement and construction works, and undertaking geophysical surveys in parts of the Albertine Graben and other basins in the country where little or no exploration work has been undertaken. Interested companies can also form partnerships with the companies which are already licensed in the country and Government to develop required infrastructure as well as set up training institutions specializing in petroleum related disciplines.

Opportunities also exist in the service industry such as transport, clearing and forwarding, environment consultancy, construction and civil works, accommodation (Hotel/Camps site), fabrication and maintenance (plumbing, electrical, mechanical), man power management services – recruitment, heavy equipment and machinery (cranes, forklifts), catering, banking, health services, vocational training in relevant skills and supply of agricultural products. In promoting private sector investment, Government encourages national content development to boost the capacity of Ugandan firms.

Uganda has put in place a strong and robust legal, institutional and regulatory framework to guide the development and offer stability for investments in the sector. These include the Petroleum (Exploration, Development and Production) Act, 2013; and the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act, 2013. These laws together with other national laws provide a sustainable and predictable environment for investment.

Ensuring social welfare to Ugandans

Government has also developed the Oil and Gas Revenue Management Policy 2012, and the Public Finance Act 2015 to guide the utilisation of revenues that will be generated from petroleum. The policy and law call for utilisation of oil revenues in a sustainable manner is to cater for both the present and future generations.

Oil and gas revenues will be utilised to further development in the key growth drivers of infrastructure including Transport, Energy, and Information Communication Technology. This will in turn contribute to the growth and development of non-oil sectors such as agriculture, tourism, and manufacturing which are key to the country’s economy.

Encouraging Public Private Partnerships

Uganda has been rated by Fitch at B+ because of its favourable investment climate and general good economic outlook. The country is politically stable with a functioning democracy and has ensured a conducive environment for investors. The economy is liberalized and government encourages private sector led growth.

Uganda’s economy realized growth of 5.2 per cent in 2013, 5.9 per cent in 2014 and it is projected to reach 6.3 per cent in 2015. This growth shows that the country is on a steady path to socio-economic transformation. Government’s focus is on developing key infrastructure to reduce the cost of doing business in the country. This is through heavy investment in roads, railways and construction of hydropower dams.

In addition to the investment opportunities, the Government of Uganda welcomes other international agencies to partner with it in areas such as education, research and community empowerment.

The measures enumerated above together with an encouraging economic outlook make Uganda an attractive investment destination with assured returns on investments.