continue into 2018. In October of 2017, thegovernmentcanceledamanagement contract with the indebted Rift Valley Railways consortium for failure to respect the terms of its concession. Uganda Railways Corporation has taken over the Ugandan side of the rail network. Construction of the crude-oil pipeline from Hoima in western Uganda to the Chongoleani peninsula near the Tanzanian port of Tanga is expected to start in 2018. Uganda and Tanzania are expected to continue their negotiations over the pipeline into 2018 (see box), with the tax regime one of the key issues. The 1,445km pipeline, which will have a flow rate of 216,000 barrels per day, will be the longest heated pipeline in the world. It is expected to cost $3.5bn. Uganda has so far discovered 1.7bn barrels of recoverable oil reserves. To prepare for the boom in activity in western Uganda, the government wants to build a new international airport at Hoima and have it operational by 2019. OIL AND GAS LICENCES
The government has high hopes that other oil exploration projects will produce good results. In September, it awarded two licences to Nigeria’s Oranto Petroleum and one to Australia’s Armour Energy. Other deals are possible in the months ahead from other firms that showed an interest in Uganda’s 2015 oil round covering six blocks.
SOURCE: GOVERNMENT OF UGANDA
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Commercially viable oil and gas finds in Uganda
2006
Construction of a $3.55bn oil pipeline begins, due to be completed by 2020
2017
Completion of a $4bn oil refinery, commercial oil production begins
2020
1,445km
Length of the Hoima-Tanga crude oil pipeline due to begin construction in 2018 A decision to offer exclusive rights to the current upstream oil companies to develop the country’s gas fields and generate power is bearing fruit. French oil major Total has applied for a licence to generate 146MW of power from gas, although it will mainly serve the oil companies’ operations. In August, just as the government laid the foundation stone for the crude oil pipeline, the ministry of energy announced that it had picked the Albertine Graben Refinery Consortium, which includes General Electric, Yaatra Ventures, Intracontinent Asset Holdings
and Italy’s Saipem, to build the refinery at an estimated cost of $4bn. Finding the money to construct the refinery remains a headache. Uganda’s public debt, at 34% of gross domestic product (GDP), remains close to the East African Community ceiling of 50%. The International Monetary Fund estimates government debt will peak at 42% of GDP in the financial year 2019/2020, when the scaling up of infrastructure investment is completed. Non-performing loans are on the rise, but banks could witness a rebound in performance in 2018, especially after the government passed financial regulations to allow bancassurance and agency banking. Agency banking will limit the building of brick and mortar branches, and lead to the closure of some as banks cut costs. The agriculture sector makes up a large share of GDP and employs many Ugandans. The Uganda Sugar Manufacturers’ Association predicted sugar production would rise 10% in 2017 to reach 475,000tn. Coffee is the main cash crop, and its production is rising. The 2017 season produced exports of 4.3m 60kg bags, up 39.4% on the previous season, according to the Uganda Coffee Development Authority (UCDA), which has set a target of 20m bags for 2030. The UCDA is working with the Uganda Cooperative Alliance to train coffee farmers in business development.
Getting neighbourly UGANDA AND TANZANIA plan to build their largest ever cross-border infrastructure project, bringing the two countries closer than they have ever been since Tanzanian forces helped to overthrow President Idi Amin nearly 40 years ago. With the two countries now negotiating the commercial terms that will govern the construction of the 1,445km crude-oil THE AFRICA REPORT
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export pipeline, talks on other partnerships, such as building a gas pipeline and an oil refinery, are also being held. The new friendship with Uganda throws Tanzania back into the East African fold as a key player in regional infrastructure projects. As the oldest leader in the bloc, President Yoweri Museveni was one of the main architects of the
D E C E M B E R 2 017- J A N UA R Y 2 018
northern corridor integration project, in which Uganda, Kenya, Rwanda and later South Sudan collaborate in a variety of spheres. Tanzania was left out because the other partner states felt it was reluctant to participate in East African Community initiatives. Economic ties have been growing slowly. In 2015, the Export-Import Bank of Tanzania entered
the Ugandan market, a year after Tanzanian pay TV company Azam did the same. For now, Tanzania, with its democratic credentials intact, finds itself in a chaotic regional playing field. President John Magufuli, who rarely minces his words, is expected to steer clear of discussing political contests in the region in the spirit of respecting sovereignty.