Uganda still on track to produce oil by 2025 – PAU

Speaking at the International Monetary Fund (IMF) sub-Saharan Africa Regional Economic Outlook 2024 presentation at Sheraton Kampala Hotel last week, the PAU manager for economic and financial analysis, Mr Tom Ayebare Rukundo, said preparations to pump the 1.4 billion barrels of Stock Tank of Oil are in high gear.

“The first oil production will start in the fourth quarter of 2025. The quotation in the construction of the oil pipelines from the manufacturing of the pipeline is 14 months which translates into the fourth quarter of next year,” he said.

Mr Rukundi said a total of $7.5 billion (about Shs28.1 trillion) had been invested in the oil sector by the end of 2023, and an additional $15 billion (about Shs56.3 trillion) is expected to be invested over the following 25 years of production.

“The government revenue from the sector; over $1.3 billion (about Shs4.9 trillion) was generated in tax revenue before First Oil. Sector forecasted to generate between $1 billion (Shs3.8 trillion) and 2.5 billion (Shs9.4 trillion) annually (on average) after First Oil,” he said.

He further revealed that the authority had undertaken several studies on the linkages between the oil sector and others including real estate/housing undertaken by Stanbic Bank in May 2023; tourism with the support of GIZ and completed in June 2023; agriculture, which is being undertaken by Makerere University’s Economic Policy Research Center (EPRC) in June 2022; and one on banking and financial services was being guided by the Uganda Bankers Association.

According to PAU, contracts worth more than $ 1.8 billion (Shs6.8 trillion) have been awarded to Ugandan companies, while more than 14,000 Ugandans have been trained and certified in various oil and gas disciplines such as welding, health safety, environment, heavy goods vehicle, and scaffolding, among others. 

The IMF publishes its Regional Economic Outlook for Sub-Saharan Africa (SSA) twice a year.
The IMF resident representative, Ms Izabela Karpowicz, said the overall regional outlook of Sub-Saharan Africa is gradually improving, with economic activity slowly picking up.

Ms Karpowicz said growth will rise from 3.4 percent in 2023 to 3.8 percent in 2024, with nearly two-thirds of countries anticipating higher growth. 

“Economic recovery is expected to continue beyond this year, with growth projected to reach 4.0 percent in 2025. In parallel, median inflation has almost halved from nearly 10 percent in November 2022 to about 6 percent in February 2024,” she said.

Regarding economic growth in Uganda, Ms Karpowicz said Uganda’s economic growth rate has returned to a pre-pandemic level of 5.3 percent and is expected to reach 6 percent. 

However, she said while Uganda’s fiscal deficit has declined to a single digit, the government is incurring high-interest payments on public debt. 

Concerning the exchange rate, Ms Karpowicz dismissed public concerns over the drastic depreciation of the Uganda shilling saying it has been stable and has performed better than other countries’ currencies in the region.

The International Growth Centre (IGC) country economist, Mr Andrew Womer, said shifting labour to more productive activities is the key to unlocking growth in African countries stressing that services are already driving structural transformation in Africa and elsewhere.

“Our results suggest a large and consistent impact of human capital levels on services exports. Institutions, infrastructure, and internet connectivity are also important pieces,” he said.

About the pipeline
The $10b (Shs38trillion) Uganda oil project encompasses the EACOP, Tilenga oil fields straddling Nwoya and Buliisa districts operated by French TotalEnergies EP, and Kingfisher development area south of Lake Albert operated by China’s CNOOC.