OIL & GAS: Govt lists mega oil, energy projects

KAMPALA - Uganda will be an investment destination in the extractives and energy sector for the next five years. 

According to the government plan, the country will spend at least sh70 trillion on petroleum, mineral and energy development in the next five years. 

Of this, at least sh39,677b will be spent on petroleum and mineral development, while sh30,485b will be spent on energy development. The investment capital expenditure will drive the country towards its energy capacity by 2040. 

The planned capital investment is enshrined in the National Development Plan Four (NDPIV), whose implementation starts in July.

New hydro, nuclear plants 

Under the plan, the Government has outlined 44 projects to be undertaken in the energy and mineral development sector in the next five years. 

On top of the ongoing projects under energy development, the Government will undertake both the Kiba and Oriang hydropower projects. 

The duo will have a capacity of about 400 megawatts each, and they will drive the country’s generation capacity to about 3,000 megawatts. 

Currently, Uganda’s generation capacity stands at 2,048.1mw. Relatedly, under the sub-sector, the Government will commence the development of the country’s first nuclear energy plant. 

The trio are at different levels of development, including feasibility studies.

Revival of Nalubaale, Kiira dams 

The Government will also rehabilitate both Nalubaale and Kiira (380Mw) hydro Power plants to increase their generation capacity to 380 megawatts. 

Under the plan, pre-activities will commence in the coming financial year 2025/2026. The Government also plans to undertake the promotion of Wind Energy Resources as well as Geothermal Energy Resources Development Project -Phase II. Geothermal energy resources development is expected to cost about sh183b. 

The other planned projects include the Electricity Access Scale-up Project, which will cost at least sh1.4trillion, and the Hoima-Kinyara–Kafu 220kv Transmission Line and associated substations project at a cost of sh406.1b. 

The Government will also implement the GET Access Uganda Mini-Grid Systems Project at a cost of sh142.5b and the 132kv Mbale–Bulambuli– Kween transmission line, costing sh309.6b. 

The Government will also implement a Centre for Nuclear Science and Technology Project at sh812.8b, as well as the Electrification of Industrial Parks and Free Trade Zones at sh818.9b.

Govt plans to increase energy export to neighbours 

Energy export  

The Government plans to increase energy export to neighbours South Sudan, DR Congo and Tanzania. As part of the plan, the country will setup the Olwiyo–Nimule (Uganda)– Juba (Sudan) 400kv Transmission Line Project expected to cost sh541.8b.

In addition, Uganda will build the Nkenda (Uganda)–Beni–Bunia (DR Congo) 220kv Transmission Line Project and associated substations at a cost of sh106.4b. 

Governmnet will build the Masaka-Mwanza 400kv transmission line project and associated substations (Uganda Part) at a cost of sh168.5b Relatedly, there will be a Kikagati -Nsongezi Transmission Line connecting Uganda to the Tanzanian border at a cost of sh131b. 

Government will also build the Mirama-Kikagati-Nsongezi 132kv Transmission Line and associated substations at a cost of sh162.2b, which will connect to Rwanda.

Oil, gas and mining monitoring 

Under the government plan, the country will invest at least sh400b under the midstream petroleum infrastructure development project. 

As the country draws closer to becoming an oil producer, government plans to invest at least sh59.9b in the Petroleum Authority of Uganda (PAU) to set up the National Oil Spill response and monitoring infrastructure. 

Under the project, PAU will have modern facilities to detect any possible oil leaks from the projects and respond immediately. 

Government will invest sh47.2b to support local content development for the oil and gas industry. 

The plan also outlines that work on the Hoima oil refinery will be accomplished within the set period, and have petrochemical industries running. 

Aerial view of the Kikagati-Murongo Hydro Power Project dam in Isingiro district.

A recent macroeconomic study for the refinery that was conducted by Stanbic Bank and Uganda National Oil Company (UNOC) projected that the oil refinery alone will have a projected fiscal impact of $804m (about sh3.1 trillion) per annum, driven by taxes going to the treasury. 

The study also projected that the Kabalega Industrial Park (KIP) in Hoima, which will host the petrochemical industries, will create an estimated fiscal impact of $1.2b (about sh5.7 trillion) per year in taxes from the economic activities.

Relatedly, the study indicated that the KIP and refinery projects will enable Uganda save at least sh5.56 trillion import Bill annually on the different products. 

The data from the study highlights why the refinery and petrochemical industries will be of huge significance to Uganda in the next five years. 

Under the mineral sub-sector, government will also invest at least sh87.6b in the mineral regulation infrastructure, as well as sh359b to support Uganda Mineral-based Industrialisation. 

The Government will also prioritise Iron and Steel production in Uganda and the Moroto Nadunget Limestone plant.

Energy projects 

In a recent interview with New Vision, Irene Bateebe, the energy ministry permanent secretary, said the country has developed a robust plan to improve the country’s energy security. 

The plan, she said, speaks to the country’s energy demands and future projects in the coming years. 

“At some time in the near future, our energy mix will include hydropower, solar and nuclear energy, geothermal, and petroleum resources. This kind of energy mix will facilitate the country’s initiatives of protecting the environment, but also meeting the country’s energy needs,” she said. 

Bateebe added that the country continues to search for more oil and gas resources to ensure that the country sustainably utilises the infrastructure under development. 

According to the energy ministry figures, the current peak power demand is growing at a 15% rate per year. 

However, the ministry indicates that under the National Development Plan (NDP), the projected power demand growth rate will be 22.7% per annum in the near future. 

Under the Nuclear Power Roadmap Development Strategy, government attributes the increase in demand for energy to the industrial and urban centre development countrywide. 

The urban centres, the roadmap says, host a number of small-scale industries, whose demand for electricity has increased over the years. 

Uganda plans to develop at least 24,000 megawatts of nuclear energy in phases, over a period of time.

What the sector says 

Onesmus Mugyenyi, a policy analyst and deputy executive director of Advocates Coalition for Development and Environment, welcomed the investment, saying the country still needs energy, and that when we produce enough, we should be able to export to get the revenue. 

On the investment for the national oil spill response and monitoring infrastructure, Mugyenyi said it is commendable, adding: “We have always asked the Government on how we are prepared to handle oil spills in case of an emergency. It gives hope that they are doing something.” 

The planned investments, he said, to some extent speak to the recently launched energy transitional plan. 

However, Mugyenyi asked where the Government will get the funding to meet the investment targets. 

“We would love to know where the money will come from, especially now that the public debt is huge. Mobilisation of resources has always been a challenge for a number of projects,” he said.

NDP IV key targets 

The Government will prioritise fiscal discipline and reduction in the persistent supplementary expenditure in the next national development plan, officials have revealed. 

According to the highlights of the planned NDP IV, government will eliminate duplication by strengthening institutions, as well as reduce the cost of public sector management, co-ordination and administration. 

Under the proposed NDP IV, the Government targets to increase domestic revenue generation from the current sh26.1 trillion representing 14.2% of the Gross Domestic Product (GDP), to sh93 trillion representing 17.8% of the GDP in 2029/2030. 

With the first oil expected in the financial year 2025/2026, the Government plan indicates that oil and gas revenues will play a significant role in achieving these revenue targets.

The above targets are part of the 14 focus areas enshrined in the paper for the proposed strategic direction for the fourth NDP. 

The paper was presented for the first time by the National Planning Authority on March 21, last year, during the Joint Leadership Committee Meeting for the Public Sector Transformation Programme led by the public service ministry. 

The meeting was held at the National Records Centre and Archives in Wandegeya, a Kampala suburb.

Jobs, average earnings 

Under the plan, government targets to create at least 885,000 jobs annually, which translates into 4.4 million jobs in five years. According to the government paper, the average earnings for a Ugandan will increase from $1,051 (about sh4m) to $2,008 (sh7.7m) a year. 

This implies that an average Ugandan will earn at least sh640,000 a month in wages. 
Relatedly, the government paper projects that the average monthly nominal household income will increase from sh200,000 to sh578,635 by 2029/2030. 

In addition, the population below the poverty line will reduce from 20.3 million to 15.51 million by 2029/2030, and the share of the working population will increase from 78.8% to 87.2%. 

According to the paper, the proportion of the population accessing social insurance will be 5%, whereas the health insurance coverage will be at 2%. 

The other focus areas for Uganda as per the proposed fourth national development plan will include a reduction in interest rates on bank loans, strengthening and building a strong and competitive private sector, strengthening human capital development as well as a sustainable use of natural resources and mitigating climate change effects. 

The other areas of focus will include ensuring faster growth of the economy by double digits, increased production, productivity and value addition in key growth areas, as well as increased application of science, technology and innovation along the different value chains. 

Government will also focus on adequate and improved exploitation of the available domestic, regional and continental markets for our produce.