The delayed production of oil and gas is worrying and could cause a debt distress to Uganda, Adam Mugume, executive director for research at Bank of Uganda, told Reuter’s Erias Baryamureeba in an interview this week.
"We have pushed oil very far, every now and then we're not ready. We should start now getting worried about debt distress.” Reuters quotes Mugume who warned that the country’s debt load could become problematic if Uganda does not begin exporting crude soon.
Mugume told Reuters that Uganda will be having a serious challenge and struggle with debt repayments in two to three years. According to Reuters, Uganda’s Total external debt stood at $10.3 billion in May, mostly money borrowed to fund infrastructure projects like roads and hydro power generation.
Despite discovering oil and gas in the albertine graben in 2006, Uganda has not moved into production stage. This delay has been a concern among the industry stakeholders especially oil companies who are desperate to start production.
President Yoweri Museveni said in June that Uganda will start oil production in 2020. Uganda boasts of 6.5 billion barrels of proven oil reserves with 1.7 billion said to be recoverable. Three international oil companies – Tullow Oil Plc, Total E&P and CNOOC together with government are fast tracking oil development.
Uganda and Tanzania earlier this year agreed to construct a crude export pipeline from Hoima to the Port of Tanga. Uganda is also negotiating with a South Korean company to construct a refinery after the Russian firm which had been given the deal pulled out.