Uganda National Oil Company (UNOC) plans to invest $840million in joint infrastructure projects in the country’s oil and gas sector, said its Chief Executive Officer, Proscovia Nabbanja.
Nabbanja, who signed a memorandum of understanding with Stanbic Bank on Feb. 05 to facilitate the two entities collaborate in training local entrepreneurs a head of oil developments told The Independent in an interview that the company plans to invest big.
She said a substantial amount of money either through the national budget or loans will go towards investments in the refinery, pipeline, storage tank, bulk trading as well as the industrial park.
“We hope that this level of equity will be spread in a period of five years in our national budgets to ease pressure on the country’s debt burden,” she said. “The investment will be based on the medium–term expenditure framework.”
Out of the planned $4bn and $3.5bn investment in the oil refinery and pipeline, UNOC will provide $480million and $258million towards their development, respectively. The company will also invest $71.4million out of the planned $1.6million in the storage tanks.
However, UNOC will singly invest $12million in oil and gas bulk trading and $19million in the industrial park. Nabbanja said UNOC will also need approximately Shs80bn annually to cater for day-to day operations.
This development comes as the government remains optimistic that its standoff with the joint venture partners – Tullow Oil, Total E&P Uganda and China National Offshore Oil Corporation (CNOOC) – will be resolved soon and the Final Investment Decision reached before April, 2020. Reaching the FID will unlock more than $20bn investment in the nascent industry.
Uganda discovered oil deposits estimated to be 1bn recoverable barrels in 2006 but have repeatedly stumbled over disagreements between the government and oil companies.
The latest was a tax dispute that threw the whole project into limbo, holding up the commencement of commercial production. The disagreement emerged from the transfer of assets between the three oil companies who are developing the fields.
Though Tullow announced to sell most of its interests in the Uganda project to its two larger partners, reducing its own stake to 11.76%, the government’s interest in the transaction to impose tax scuttled the deal.
Meanwhile, executives in the oil and gas industry say the delay to reach the FID in itself is a good opportunity for local companies to strengthen their capacity in terms of human resource and capital that would enable them tap into the industry once development begin.