By; Our Reporter

09th July 2020

Uganda’s dream to be an oil-producing country may not be realized until 2025, the World Bank has said.

In its Economic Update report, the bank says “the sharp decline in world oil prices resulting from the COVID-19 crisis could delay oil sector investments in the medium term and oil production beyond 2025” even when the private sector remains optimistic about oil production in Uganda.

This will bring the wait to have the first oil to more than nineteen years after the country discovered the hydrocarbons in 2006.

“Given the significant fall in oil prices to date and the projection that they will remain well below the estimated break-even price of US$60 for Ugandan production over the next two to three years, this could postpone key investment decisions into the oil sector, thus pushing back further the timing of oil production,” the World Bank says.

The delay in oil production can impact how Uganda will be able to afford to pay its debts. Last October, Bank of Governor Emmanuel Mutebile said the expectation of oil revenues had pushed Uganda to go for more expensive loans to finance infrastructure projects, a precursor for the much dreaded ‘oil curse’.

And the central bank has also been on record that if Uganda doesn’t earn oil revenue by 2023, it will struggle to pay its debts. The country is raking in more debts in the name of fighting coronavirus.

Richard Walker, the economist at the World Bank Uganda country office, said Uganda should not peg all its future on oil but rather prioritize investment in other sectors like agriculture and education to develop human capital.

Uganda has discovered 6.5bn barrels of oil with between 1.4bn and 1.7bn barrels commercially viable.


Thursday 9th July 2020 05:30:08 PM