Uganda’s Oil and Gas Sectoral Linkages an opportunity to diversity Uganda’s economy

Uganda’s Oil and Gas Sector is in development following the Final Investment Decision announcement on 1^st February 2022. Over US$15 billion is expected to be invested in the sector in the next three (3) to five (5) years.

One area of investment is the development of the facilities to produce the discovered Oil and Gas resources will require about US$ 6 – 8 billion. Another area is the development of the commercialisation infrastructure; including the refinery at Kabaale, Hoima at a cost of about US$ 4 billion and a crude oil export pipeline from Hoima, Kabaale to Tanga estimated to cost US$ 5 billion. Not to mention attendant infrastructure including Uganda’s second international airport at Kabaale, a network of 12 tarmac roads and the Kabaale Industrial Park.

“In line with the common saying that if you want to go far, you go with others, the development of Uganda’s Oil and Gas Sector needs to go hand in hand with the other sectors of the economy so that it goes far, especially in achieving the desired goal of using the country’s oil and gas resources to create lasting value for society,” Mr Ernest Rubondo, the Executive Director of the Petroleum Authority of Uganda said.

Sectoral linkages opportunities

Mr Rubondo made the remarks during the 1^st Sectoral Linkages Conference in Kampala, Uganda. The two (2)-day conference took place on 11^th-12^th April 2024 under the theme, “Linkages: Leveraging Uganda’s Oil and Gas Sector to enhance broad-based economic growth and development”. The goal of the conference is to promote investment in the opportunities arising from the linkages between the Oil and Gas Sector and other economic sectors.

Oil and gas industry developments coupled with the Albertine region’s strategic location sharing borders with Rwanda, the Democratic Republic of Congo, and South Sudan present indirect effects on the non-oil Gross Domestic Product (GDP). This is through the creation of linkages with other sectors of the economy including agriculture, education, land use planning, housing, health, transport, banking and financial services, ICT, and tourism among others.

Developing and exploiting the linkages between the Oil and Gas Sector and other sectors of the economy is, therefore, key for broad-based economic growth and development expected to be derived from the sector. The Petroleum Authority of Uganda has taken different steps to identify these linkages and how they can be harnessed.

The place of these linkages in economic development

“The first baby steps include bringing together industry captains for a conversation, and benchmarking with countries such as Ghana, Nigeria, Canada and Norway, which have been producing oil. This benchmarking revealed that we can benefit from backward and forward linkages such as education, health, agriculture, and land use planning, among others,” Mr Ali Ssekatawa, the Director Legal, and Corporate Affairs at the PAU, said while speaking about how Uganda can leverage the opportunities in the Oil and Gas Sector. He added that the PAU commissioned research studies to identify the opportunities sectoral linkages present, thanking the private and public sector partners who participated in these studies. He stressed that taking these findings forward will require a proper structure because they cut across several issues such as budgeting, national planning, and programming.

Prof. Pamella K. Mbabazi, the Executive Chair of, National Planning Authority (NPA), who was the chief guest at the conference, commended the PAU for carrying out the studies. She called on other ministries, departments and agencies to carry out research studies on the opportunities their areas of work present, noting that this is how all areas of Uganda’s economy can grow at the same rate.

The NPA recognised the Oil and Gas Sector’s potential to diversify the economy if these sectoral linkages are taken advantage of. Mr Asumani Guloba, the Director Development Planning at NPA noted that these linkages can contribute to the achievement of the goals in Uganda’s fourth National Development Plan (NDP IV). The NDP IV is supposed to come into effect in the next financial year, 2024/25. Mr Guloba noted that this contribution includes directly financing capital investments, human capital through skilling, supporting the private sector by creating jobs, building, and maintaining infrastructural development, and ensuring that the oil resources are well-managed for all Ugandans.  

The Permanent Secretary, Ministry of Energy and Mineral Development, Ms Irene Bateebe stressed that these sectoral linkages would indeed contribute to the diversification of the economy. They would also ensure that the infrastructure set up for the oil and gas projects is sustained over the long term during the decline of activities in the oil and gas sector. 

“Several countries including the UAE and Norway among others leveraged the oil and gas sector to develop their other sectors,” she noted.

In her keynote speech, Dr Valerie Marcel, Executive Director & founder New Producers for Sustainable Energy shared some of the risks and opportunities from other countries such as Ghana, Guyana, and Ecuador. She noted the risks relating to starting development in a sector as the world exerts pressure on new oil and gas producers not to produce. These risks have mainly arisen from growing conversations on energy transition and climate change.

She stressed that despite these risks, the opportunities for new oil and gas producers to develop their economies while learning from the mistakes of older producers are great. It is therefore important to create linkages between the oil and gas sector and other sectors of the economy to maximise and ensure broad-based economic growth and development.

“Uganda has all the ingredients to succeed,” Mr Gunnar Sjøgren, the Project Director International Cooperation, Norwegian Offshore Directorate remarked during the conference. This is because responsible bodies such as the Energy Ministry and the PAU have taken steps to learn from the mistakes of other oil producers and put measures in place to avoid them.

“We have a team of scientists, economists and so on who are tasked with finding local solutions to risks such as the ‘Dutch disease’ and ‘oil curse,” Mr Ssekatawa said concerning how Uganda is addressing the risks and challenges identified from old oil producers.

The oil and gas sector therefore presents an opportunity to diversify Uganda’s economy by creating last value in terms of ensuring participation of Ugandans not just in all sectors linked to Oil and Gas.