The energy sector in Uganda is gearing up to a new trajectory after the 20-year concession for Umeme Limited drew to an end. The country has also concluded a funding deal to the concession as plans are at an advanced stage to bring to life the East Africa Crude Oil pipeline. CNBC Africa is joined by Carol Nampurira, Corporate Sales Manager, Energy and Infrastructure, Global Markets, Stanbic Bank Uganda for more on this development and implications on markets.
The energy sector is expected to witness interesting developments in Uganda after the 20-year concession for Umeme Limited drew to an end. The country has also concluded a funding deal to the concession as plans are at an advanced stage to bring to life the East Africa Crude Oil pipeline. CNBC Africa is now joined again by Carol Nampurira from Standard Bank Group for more on this development and implications on markets. Thanks Carol for joining and we did experience some technicalities there but happy to see you again. And let's just kick off the conversation looking at the oil program in terms of they have secured funding of about a billion US dollars. What will be the next steps towards commercial development? Thanks Abhi and apologies for those technical glitches. Just highlight that last week the ECOW did close their first tranche of external financing for the project pipeline between Tanzania and Uganda. The funding was provided by a syndicate of regional financial institutions. What is important to highlight is that this pipeline is expected to transport crude oil from Kabale to Hoi Ma all the way to Tano, it's oil. Upon completion it will have capacity to transport 246,000 barrels of crude oil per day. What we have seen is progress of this project in both countries, in Tanzania and Uganda, with overall project progress up to about 50% by the end of 2024. The importance of this project is that we've seen jobs across the two countries, over 8,000 jobs for both Ugandan and Tanzanian citizens. We've seen approximately 400,000 man hours of training across the two countries and investment of close to $500 million locally in goods and services. The pipeline story is not complete, obviously, for Uganda without the refinery story. Just last week we also saw that the Ugandan government in a joint venture partnership with Alpha MBM Investment signed an implementation agreement worth $4 million billion to construct the oil refinery in Hoi Ma district. In this signing, what is expected is then construction and implementation of the pipeline of the oil refinery to kick start within a tenor of three years. The refinery will not only create thousands of jobs for Ugandans, but also allow for Uganda, as an oil-producing country now, export refined products instead of importing them, and in turn spark economic growth. I think what is important to highlight, Abiy, is that we must congratulate the government of Uganda and its key partners, of course, for being able, one, to, you know, achieve these key milestones for the oil and gas sector, but also the resilience and commitment towards the oil and gas projects. Quite indeed major significant developments in Uganda, Carol. And just building up on this, we did also see another key development in the energy sector in Uganda. And this is in regards to Umeme Limited, which is one of the listed firms that trades at the Uganda Stock Exchange. And just walk us through their latest performance, and how does this play out, and what does the road ahead look like for the energy future for Uganda? Thanks, Abiy. Important to highlight is that March 31st, 2025, it marked the end of the 20-year electricity distribution concession held by Umeme, which was a privately listed company. And in turn, Umeme was able to hand over assets to the government-owned entity, which is Uganda Electricity Distribution Company, which commends operation, or commended operations by 1 April. Umeme, which was listed both on the U.S.E. and the NSC, quite, you know, a very interesting company, a great performing company across the different counters, has been suspended to allow for transition, for the transition period to happen, and also create, make sure there's transparency or maintain transparency in the market. What is important to highlight is the concession contract reached its natural end as expected. And therefore, what has happened in terms of suspension was an unexpected action to enable the company to address key concerns regarding price-sensitive information and to mitigate the potential impact of the end of the concession period. Going forward for the energy sector, what we do expect is that the new appointed entity, UEDCL, will run the electricity reform as expected, will continue to service the energy sector as expected, will also continue to avail power and do key investments in the power industry.
Theme: Transformation in Uganda's energy sector post Umeme concession end
The energy sector in Uganda is undergoing significant transformation as the 20-year concession for Umeme Limited, a privately listed electricity distribution company, has officially come to an end. This development marks a pivotal moment for Uganda's energy future, with plans in motion for key projects such as the East Africa Crude Oil pipeline and the construction of an oil refinery in Hoi Ma district. CNBC Africa spoke with Carol Nampurira, Corporate Sales Manager, Energy and Infrastructure, Global Markets, Stanbic Bank Uganda, to delve deeper into these developments and their implications for the market. One of the major milestones in Uganda's energy landscape is the securing of funding amounting to a billion US dollars for the East Africa Crude Oil pipeline. This pipeline is set to transport crude oil from Kabale to Hoi Ma, extending all the way to Tano, and will have the capacity to carry 246,000 barrels of crude oil per day upon completion. The progress of the project stands at around 50% completion by the end of 2024, with significant job creation and investment in local goods and services in both Uganda and Tanzania. The establishment of the oil refinery in Hoi Ma district further enhances Uganda's position as an oil-producing country. The joint venture partnership between the Ugandan government and Alpha MBM Investment, with an implementation agreement worth $4 billion, sets the stage for the construction of the refinery within a three-year timeframe. This strategic move not only creates employment opportunities for Ugandans but also enables the country to export refined oil products, fostering economic growth. The successful progression of these projects underscores the commitment and resilience of the Ugandan government and its key partners in advancing the oil and gas sector. In a separate development, Umeme Limited, a prominent player in Uganda's energy industry, saw the conclusion of its electricity distribution concession on March 31, 2025. The company handed over its assets to the government-owned Uganda Electricity Distribution Company, which assumed operations on April 1. Umeme's listing on both the Uganda Securities Exchange and the Nairobi Securities Exchange has been temporarily suspended to facilitate the transition process and maintain market transparency. While the end of Umeme's concession was a foreseen event, the suspension aims to address concerns related to price-sensitive information and mitigate any potential market disruptions. Looking ahead, the newly appointed entity, UEDCL, is expected to continue driving electricity reforms, providing reliable power services, and making strategic investments in Uganda's energy sector to sustain growth and development. With these significant changes unfolding in Uganda's energy landscape, stakeholders are poised to navigate a new era of opportunities and challenges, shaping the country's energy future in the years to come.
"The successful progression of these projects underscores the commitment and resilience of the Ugandan government and its key partners in advancing the oil and gas sector."
['Uganda', 'energy sector', 'Umeme Limited', 'East Africa Crude Oil pipeline', 'oil refinery', 'Uganda Electricity Distribution Company', 'UEDCL']