The United Kingdom has at least £500 million in loans for businesses wishing to invest in Uganda’s oil and gas sector.
The UK, through its Department for International Trade, is offering the credit especially for the development stage which is already on. Over 6.5 billion barrels of oil and large quantities of gas have been discovered in Uganda.
Production licenses have already been issued to the three joint venture partners operating in the Lake Albert Basin – China National Offshore Oil Corporation (CNOOC), Total and Tullow.
The credit facility is being offered under the United Kingdom Export Fund (UKEF), which promotes exports from the UK. The Head of the UK Department for International Trade at the British High Commission in Kampala, Eric Olanya, says the development stage of the oil and gas sector will require huge investments.
As a result, UKEF revised the country cover for Uganda from between £50 and 100 million to between £250 and 500 million, with the possibility of revising it upwards.
The upper limit of £500 million is equivalent to nearly Shs 2 trillion. Speaking in an interview with URN, Olanya says the credit will fetch low interest rates of 0.63 percent.
This is massively cheap considering that private sector credit in Uganda is upwards of 23 per cent and for the short term. A number of oil and gas service providers, as well as other borrowers, have been grappling with the burden of repaying high interest rates, with some going belly up.
The credit facility requires that any project they fund has at least 30 percent local content, 20 per cent UK content and the rest can come from elsewhere.
According to Olanya, Ugandans could offer things like land, construction materials and sub-contracts while the UK could provide high-tech equipment and expertise in the funded projects.
Sadly though, so far no Ugandan business has partaken of the credit and neither is UKEF funding a project yet. Olanya says a number of projects are under consideration but he never gave details. He says the uniqueness of Uganda’s oil and gas sector is that it will transform literally half of the country.
He says the Albertine Graben is so underdeveloped that it will need literally complete overhaul with huge investments in roads, bridges, airports, oil pipeline, refinery, processing facilities, storage and other facilities that require loads of money.
It is estimated that the development stage alone will require investments of up to $20 billion in the next four years. The First Oil is expected in 2020, a date that has been revised from 2018.