After investing over $9 billion in its oil and gas sector over the past decade, Uganda is set to inject an additional $2.81 billion in 2025, aiming to kick off commercial oil production by 2027.
This renewed financial commitment highlights Uganda’s strategic push to position itself as a major player in the global energy market.
According to the Petroleum Authority of Uganda (PAU), licensed oil companies are expected to invest at least $2.81 billion (UGX 10.291 trillion) in upstream and midstream activities during 2025.
This follows cumulative investments of $9.96 billion (UGX 36.4 trillion) by the end of 2024. Specifically, $1.96 billion was invested in 2023, with a further $2.44 billion committed in 2024—indicating a steady upward trend in capital inflow.
Uganda’s revised oil production timeline now targets Q4 2026, with possible extensions into 2027, depending on how quickly financing is secured for the East African Crude Oil Pipeline (EACOP).
This 1,443 km pipeline is vital for transporting Uganda’s oil from Hoima to the Tanzanian port of Tanga for export.
In a related development, Uganda signed a major investment deal with UAE-based Alpha MBM Investments, awarding the firm a 60% stake in the planned $4 billion crude oil refinery in Kabaale, Hoima District.
The partnership is expected to significantly boost Uganda’s domestic oil processing capacity and strengthen energy independence.
The International Monetary Fund (IMF) projects that once oil production begins, Uganda’s GDP growth could surge to 10.8% in the 2025/2026 fiscal year—up from earlier projections of 6.2%.
The growth is expected to be driven by improved fiscal and current account balances supported by oil revenues.
Despite the optimistic outlook, Uganda faces lingering challenges, particularly around delayed EACOP financing and the need to manage environmental and social concerns related to oil development.
While the first tranche of funding for EACOP was only secured recently from a syndicate of regional lenders, the government remains confident in its strategy to overcome these obstacles.
To attract more exploration activity, Uganda also announced plans to launch its third petroleum licensing round by July 2025.
As Uganda moves closer to becoming a full-fledged oil producer, these large-scale investments and infrastructure developments are poised to transform its economic future, ushering in both significant opportunities and challenges.
