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Gov’t in awkward situation as Oil production delays further


Gov’t in awkward situation as Oil production delays further

Minister of Energy Irene Irene Muloni

Minister of Energy Irene Irene Muloni

The two leading oil companies Total and CNOOC that intend to extract oil from Uganda are allegedly pushing the decision of when they will start to produce the black gold to beyond the 2021 elections.

A report by indicates that the oil companies are sceptical about the political situation in the country that has continued to be characterised by the violent suppression of opposition politicians. Currently, People Power front Robert Kyagulanyi a.k.a Bobi Wine is in jail in Luzira for opposing the government social media tax. While appearing before Buganda road magistrate Esther Nahilya on Tuesday this week, Bobi Wine defiantly said he is proud of the fact that he’s suffering for the people.

The report indicates that the investors are anxious about the trajectory the country’s politics is taking and therefore are postponing the date of the Final Investment Decision. The FDI is basically the point at which the companies determine everything is in place for a project to start.

Such a decision could further impact production timelines, moving first oil from the projected 2023 to 2025 and beyond. Such a decision is likely to have a knock on effect on timelines for the crude export pipeline and the ongoing construction of an airport in Hoima.

While both the government and the oil majors have publicly stated a desire to lock in FDI by the third quarter of 2019, sources familiar with the industry say the prospectors and their financiers are increasingly wary of Uganda’s political prospects.

The continuing delays that date as far back as 2010, will have serious implications for the government finances. Experts note that Uganda, has borrowed heavily in recent years in hope of repaying using oil money. Without oil, the government of President Yoweri Museveni is likely to face an uphill task to repay the loans, most of which went into long-term projects that don’t easily yield returns.




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