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Uganda to Invest U.S.$20 Billion Into Oil

Kampala — Oil industry top officials believe that Uganda must look for between $15 billion to $20 billion if it wants to become an oil producing country.

Jimmy Mugerwa the Tullow Uganda Country Manager said the total investments required for Uganda's oil to come out of the soil is approximately $20 billion, which is almost the country's GDP.

"We have now concluded the exploration phase. We expect this development phase to take another three years that's if the production licenses are issued fast enough. We expect the total investments required for the entire oil sector to be around $15 billion to $20 billion," Mugerwa said, while addressing the 19thInstitute of Certified Public Accountants of Uganda (ICPAU) Annual Seminar at the Imperial Resort Beach Hotel in Entebbe.

He said the investments will include among others, the setting up of an oil refinery, building of the world's longest continuously heated and insulated 24 inch crude oil export pipeline, land acquisitions, the oil project will require more than 250MW of power when in full operations to heat the over 1400KM crude oil pipeline and over 1200 heavy duty trucks to transport over 800,000 tons of steel, pipes and other logistics.

The investments will also see the setting up of an international airport in Hoima for both passenger and cargo planes and various road networks.

Mugerwa who addressed accountants about opportunities in Uganda's oil and gas industry said some of the key challenges facing the sector are the large upfront investments, environmentally and socially sensitive areas where the pipeline route will pass, cross border complexities, the heating of the pipeline which will be very expensive and the different tax regimes with in the EAC.

"Oil companies are expected to take their final Financial Investment Decisions (FIDs) in December 2015. If they finally agree to invest, it will take another three years in the procurement of infrastructure and engineers. This means that even 2019 oil production dates may be ambitious," Mugerwa told the over 1000 accountants.

He asked accountants to position themselves as investors because when the project finally takes off, the sector will require 170,000 cover rolls, safety boots and glasses.

He said they will also require buses to transport workers to the oil region, over 200,000 tons of cement, iron bars and 1200 heavy duty trucks.

"We shall need 1200 trucks to transport over 800,000 tons of pipes and steel from Mombasa for the pipeline and refinery. Accountants can go into PPP arrangements to take up such opportunities. Am I seeing investors in the room," he asked.

The Institute of Certified Public Accountants of Uganda organizes the seminar yearly to help members familiarize themselves with various opportunities and aspects surrounding them.

Mugerwa said Uganda can reap over $63.5 billion from the 75% oil sharing agreement arrangement over a 25 year period. This will mean that on average, the government will earn $3.6 billion every year.

It is also expected that the total net revenues will hit $96b over the 25 years period.

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