ANALYSIS: Uganda oil project managers face Shs6 trillion challenge
As she juggles the two projects of her life; the construction of Uganda’s first ever oil refinery and the joint venture with international oil companies to construct the country’s first ever oil pipeline, Energy Minister Irene Muloni is working around some tough deadlines. The one that appears to be cast in iron at the moment is the date of when Uganda must produce its first drop of oil – the year 2020.
That deadline was set for Muloni by her boss, President Yoweri Museveni and, in the process of reverse engineering the projects to ensure that apparently immovable target is met, Muloni and her team in the Ministry of Energy zeroed on some critical dates by which certain critical activities must have either been started or ended.
One of these critical dates is March 31. That is the date by which the government should have announced their joint venture partners in the construction of the oil refinery.
The other critical date is December 31, 2017. That is when the oil companies that have oil production licenses must announce their Final Investment Decision (FID). If the fail to do, they will have wiggle room of only two months to February 2018 when the 18-months lifespan of their production licenses, which were given on August 30, 2016, elapse.
So far scheduled activities appear to be following the Gantt charts for the oil companies working on the oil pipeline.
For Muloni and her team working on the refinery, however, things appear not to be moving so smoothly. The March 31 deadline is fast approaching but the decision on the oil refinery investor appears far from finalized.
Muloni also appears to be having difficulty with her budget; specifically how to raise money to fund any equity requirement that could be agreed with the oil refinery investor, and build roads and a field airstrip/airport to support all the ventures. She also needs to find money fund two critical state agencies that should be helping her run the show; that is the Uganda National Oil Company (UNOC) and the Petroleum Authority of Uganda (PAU). According to some expert estimates, Muloni needs about Shs6 trillion for these activities. The most optimistic estimates claim she has raised only Shs2 trillion in the budget.
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