Why govt is tabling sh7.12 trillion loan request for UNOC

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Government has tabled in Parliament a loan request amounting $2 billion (about shillings 7.12 trillion) from Vitol Ballrain E.C (VBA) to enable the Uganda National Oil Company (UNOC) to finance a number of government Infrastructure projects.

Tabling the request in Parliament on December 16, 2025, finance state minister Henry Musasizi told MPs that the money will be used for the development of the Kampala Storage Terminal, development of pipeline jetty and associated terminal enhancement at Jinja Storage Terminal, acquisition of Mombasa storage to handle gasoil through purchase of a terminal, first year of construction of the Uganda refinery, acquisition of shares in Kenya Pipeline Company, extension of the finished products pipeline from Eldoret to Kampala and financing National Roads Infrastructure projects.

In August 2023, the Government, through UNOC, entered into a Petroleum Products Supply Agreement with Vitol Bahrain E.C. (VBA), a global leader in crude oil and petroleum products supply and marketing, for the purpose of sole importation of all Uganda's demand for petrol, diesel and aviation fuel.

The two have since commenced a sole importation business since July 2024 and have, as of December 2025, successfully delivered this mandate, attaining the principal objectives of market supply stability and competitive prices while generating revenue.

Musasizi told MPs that to date, UNOC has generated a gross profit of up to $15O million.

Musasizi added that in addition to the sole importation mandate, UNOC is engaged in several projects across the petroleum value chain, including the development of the Kampala Storage Terminal, Development of Pipeline Jetty and associated terminal enhancement at Jinja Storage Terminal, and the acquisition of Mombasa storage to handle gasoil through purchase of a terminal.

UNOC is also engaged in the construction of the Uganda Refinery, acquisition of shares in Kenya Pipeline Company, and the extension of the finished products pipeline from Eldoret to Kampala.

“In addition, there is an urgent need to revamp and build key national roads to support the 10-fold growth strategy, inclusive of enabling and facilitating oil and gas infrastructure to ease movement of petroleum products across the country,” Musasizi said.

“On the backdrop of the successful partnership on sole fuel importation, VBA indicated willingness to provide financing to support implementation of UNOC projects and other critical government infrastructure,” he added.

In May 2025, UNOC and VBA concluded a Memorandum of Understanding (MoU) for financing co-operation to explore the potential funding of UNOC projects and critical infrastructure projects.

Justifying the borrowing, Musasizi said government infrastructure has faced challenges whereby the sources of financing for infrastructure have become increasingly expensive, and several infrastructure projects have experienced a slow-down or stoppage due to limited funding.

“Therefore, the purpose of the VBA enhancing proposal presents an opportunity to access non-traditional financing to implement UNOC projects and support the Government in developing national infrastructure,” he said.

“In addition to the macro-economic impacts that the projects will have on the economy, UNOC will be able to generate revenues of up to $5.6b from the projects when implemented. In addition, these projects that have been approved by the UNOC board and Cabinet would have required Government funding through the consolidated fund over the next five years, this loan thus eases the debt burden of funding UNOC and enables quick realisation of revenues from the projects,” Musasizi added.

The request was forwarded to the Parliamentary Committee on Economy for processing.