Special thread: EACOP updates

Special thread: EACOP updates

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In defence of EACOP, oil refinery​

Saturday, May 21, 2022


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By Elison Karuhanga
Columnist

What you need to know:​

In Stopping EACOP, we shall only be entrenching climate poverty



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This has been a busy week in the oil and gas sector in Uganda. The pipeline project known as EACOP (East African Crude Oil Pipeline) has come under serious criticism from environmental activists. Two young activists confronted the president of France, Mr Emmanuel Macron, and asked him to denounce EACOP.
Environmental activists have not just met president Macron. They have been travelling around Europe drumming up support for their “Stop EACOP” campaign. They have staged protests outside Total Energies offices in Paris and Berlin. They have met with bank officials from some of the biggest banks in the world. They continue to receive excellent coverage from the international press, particularly Financial Times. They have even had the good fortune of making their case directly to the Pope. These activists travel in planes, cars and trains powered by fossil fuels in their fight against fossil fuels. They continue to use phones to post pictures on social media sites supported by massive data centres that rely to some extent on fossil fuels.
I am sure most of these activists are people of genuine good will. I understand that their campaign is about the effect of fossil fuels on our climate.
The fact is that for a country like Uganda we have to develop EACOP. We must also develop a refinery.
Activists argue that EACOP must be stopped because, among other things, it is the longest pipeline in the world. EACOP will not be the longest pipeline in the world. It will be the longest heated crude oil cross border pipeline in the world. The longest pipeline in the world is the Druzhba oil pipeline which is 5,500km. It connects Russia, Ukraine, Belarus, Poland, Hungary, Slovakia, Czech Republic, and Germany.

To put the length of EACOP in context, let us take an example of the United States. The US Department of Transportation says America has 2.6 million miles of pipeline. The US Department of Transportation explains that this is a good thing because, “Pipelines enable the safe movement of extraordinary quantities of energy products to industry and consumers, literally fuelling our economy and way of life. The arteries of the nation’s energy infrastructure, as well as one of the safest and least costly ways to transport energy products, our oil and gas pipelines provide the resources needed for national defence, heat and cool our homes, generate power for business and fuel an unparalleled transportation system.. more than 2.6 million miles of pipelines safely deliver trillions of cubic feet of natural gas and hundreds of billions of tonne/miles of liquid petroleum products each year. They are essential: the volumes of energy products they move are well beyond the capacity of other forms of transportation.”
So, when these activists reach Washington DC and go to meet secretary of state Antony Blinken to attack EACOP they should know that they are probably walking on top of a pipeline.
In arguing for EACOP, we are not making a case for environmental recklessness. EACOP must comply with the highest safety standards. EACOP companies like Total Energies and CNOOC are some of the biggest companies in the world. They have the financial muscle and technical knowhow to deliver a world-class project. We must make sure that they do.

In arguing for the refinery we are making a case for our own energy security. President Museveni once argued that: “If you take all the rivers in Africa, the total capacity of the hydropower is about 300,000 megawatts. If you take the United States they are now using 1 million megawatts. If all the sites on African rivers were developed you would not have enough electricity to support the Africans, unless, you are saying that it has been scientifically proven that Africans do not need electricity.”
The refinery would be able to generate not just fuel for transportation but also it would broaden our energy mix. The fact is we need EACOP. The fact is we need a refinery as well. The “Stop EACOP” campaign should lend us their expertise in holding EACOP partners to the highest standards in delivering the project. If we “Stop EACOP”, we will not be solving climate change. We shall only be entrenching climate poverty.
The writer is an advocate and partner at Kampala Associated Advocates
elisonk@kaa.co.ug
 

Oil, conservation and development​

Saturday, May 28, 2022

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Elison Karuhanga
By Elison Karuhanga
Columnist

What you need to know:​

We can develop these natural assets and conserve the environment at the same time.
"We are in the middle of an interesting debate in Uganda. It is a debate about development and conservation. As the reader may know, Uganda is set to start producing oil in the next three years. This is likely to cause increased economic growth. We are already seeing a new airport, brand new roads and a number of interesting opportunities as a result of this project.

There is also a strong lobby fighting this project. They are mainly international NGOs and “climate activists”. They are well resourced, have an excellent public relations team and have been careful to mainly use young Ugandans aged 16-21 as the face of this activism. These young climate activists have met and continue to meet all manner of world leaders including the Pope. They appear and are interviewed on international television networks that use more energy than Wakiso District.
What is their case? They claim the pipeline will be emitting about 34.3 million metric tonnes of carbon dioxide per year. This is false. Uganda will be emitting a total of approximately 1.7 million tonnes of carbon dioxide from all its oil projects and not just the pipeline. The pipeline contribution is almost negligible. This is because the pipeline will be buried underground and, therefore, will not be emitting much into the atmosphere. By contrast, tree cutting in Uganda causes emissions of at least 3.7 million tonnes of carbon dioxide a year. That is double the emissions from oil and gas. Deforestation, not oil and gas is and will be, the biggest cause of greenhouse gas emissions in Uganda. Deforestation is caused mainly by underdevelopment and poverty.

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In any event, the emissions from our oil can easily be neutralised by planting trees. Trees literally breathe in carbon dioxide. Any student of primary school science can tell you that trees remove carbon dioxide from the air. It follows, therefore, that tree planting can actually make our oil project carbon neutral.

Clearly, we can develop these natural assets and conserve the environment at the same time. It is not a binary choice.
Uganda has been serious about its climate change obligations. In August 2021, President Museveni signed the National Climate Change Act. Uganda also amended its Public Finance law to provide that before any budget is passed the Finance minister must ensure that the proposed budget is climate change responsive and “contains adequate allocation for funding climate change measures and actions”.
Under the Paris Agreement, Uganda is supposed to be funded to reduce its carbon emissions. Instead of waiting for this funding, Uganda from its meagre resources puts aside money in every budget to fund climate change measures.
So why can’t the environmentalists see that development and conservation can coexist? I am getting persuaded that to some in the international NGO community, backwardness and under development in Africa is what they actually are trying to conserve. A recent article in the German paper Tagesspiegel on the pipeline persuaded me of this. The research in the article was sponsored by the “European Development Journalism Grants Programme” which itself is funded by the Bill and Melinda Gates Foundation. Among the many bad things that EACOP had caused, according to this research, was the construction of “oil roads”.
The article states: “After resettlement, all families received a standard house as a replacement - three small bedrooms, a tiny bathroom, a living room, a cooking area and latrine behind the house.” The people were not used to living in such houses. Before, the article claims, when a son became 18 he had his own hut. Now he has the inconvenience of a house. Clearly the people don’t need roads, electricity, piped water when they can go to boreholes and live in huts. This is conservation of under development.

It is no wonder that the Ugandan activists who are at the forefront of this campaign are people between 16 to 20 years. Some of them should be in school sitting exams. I agree that they are the most genuine activists. They are firm believers in their cause. However, it seems to me that the public relations companies that send these people to speak are actually worried about having an adult conversation.
The writer is an advocate and partner at Kampala Associated Advocates
elisonk@kaa.co.ug

Monitor. Empower Uganda.​

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Activists sabotaging oil sector, says Nankabirwa​

Wednesday, June 01, 2022
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Ms Ruth Nankabirwa, the minister of Energy
By Robert Muhereza

What you need to know:​

  • She also asked the clergy to mobilise Christians to take advantage of the opportunities created in the oil and gas sector.
The Minister of Energy and Mineral Development, Ms Ruth Nankabirwa, has appealed to the clergy to bless Uganda’s oil and gas projects so that it can overcome local and international activists who are sabotaging it.

According to Ms Nankabirwa, the activists are undermining government’s efforts to ensure the sector is sustainable.
“A group of local and international activists are using all the means available to sabotage the Uganda’s oil and gas projects at this time when it has progressed from the early exploration period, the discovery of commercial oil reserves and now the ongoing development stage, which entails putting in place the infrastructure required to produce and commercialise our oil resource,” she said.

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“It’s our humble appeal and prayer that through your grace the archbishop and the House of Bishops of the Church of Uganda, you bless and offer special prayers for Uganda’s oil and gas projects to ensure sustainable development of the resources,” Ms Nankabirwa added.
The minister was on Monday addressing the House of Bishops together with Archbishop Stephen Kaziimba during their one-day retreat at Bushara Island on Lake Bunyonyi in Kabale District.
She also asked the clergy to mobilise Christians to take advantage of the opportunities created in the oil and gas sector.
Ms Nankabirwa also revealed government plans to construct national oil reserves in Mpigi District with capacity of 351 million litres as a measure against scarcity.
West Buganda Diocese Bishop Henry Katumba Tamale wondered why the government has delayed to compensate the people affected by the oil pipeline project.
Government plans
But the executive director of the Petroleum Authority of Uganda, Mr Ernest Rubondo, said that the delayed compensation is a result of the bureaucracies involved. He explained that a 30 percent disturbance allowance shall be given to the affected persons.
 

Omitting a national content plan will cost you a contract​

Thursday, June 09, 2022
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Oil operators have a duty to consider Ugandans, Ugandan companies, goods and services within the country while placing bids in the oil and gas sector. PHOTO | PAUL MURUNGI
By Guest Writer
As Uganda’s oil and gas sector settles into the development phase, the question on everyone’s mind is how best the country can retain as much value as possible.

The signing of the Final Investment Decision on February 1 by joint venture partners in the Tilenga, Kingfisher, and East African Crude Oil Pipeline (EACOP) projects unlocked $10b worth of investment in the sector.
This investment is part of the between $15b and $20b expected to be invested in the broader gas and oil sector during the construction phase, that is estimated to last three to five years.

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One of the best and lasting strategies to ensure value retention in Uganda is to ensure that Ugandans and Ugandan companies participate and benefit from the projects.
READ: Making sense of oil contracts
In 2008, Cabinet approved the National Oil and Gas Policy, whose objective is to ensure optimum national participation in the oil and gas activities.
This gave a basis for the petroleum sector laws – the Petroleum (Exploration, Development, and Production) Act 2013, the Petroleum (Refining, Conversion, Transmission, and Midstream Storage) Act 2013, and the more recent EACOP (Special Provisions) Act 2021.
These laws, together with their attendant regulations, mandate oil and gas operators and licensees to give preference to Ugandan companies, individuals and entities, as well as locally manufactured goods and services in the course of their procurement activities.
The Petroleum Authority of Uganda ensures compliance by checking that every procurement undertaken in the sector includes and weights national content in the bid evaluation process.
READ: A look at already awarded oil contracts

The law defines national content as the level of use of Ugandan local expertise, goods and services, Ugandan companies, citizens, registered entities, business and financing in petroleum activities, or the substantial combined value added or created in the Ugandan economy through utilisation of Ugandan human and material resources for the provision of goods and services to the petroleum industry in Uganda.
The first step for every bidder participating in procurements in the oil and gas sector is to propose a national content plan as part of a bid proposal.
This is a critical requirement, carrying at least 10 percent of the total evaluation score during the evaluation process.
HERE: Disclose oil contracts to the public
To emphasise how critical this requirement is, the law mandates the licensees to award a contract to the bidder with the highest national content score, whenever bids are close to each other at financial evaluation, by a margin of at most 5 percent.
Therefore, suppliers who intend to win contracts in the oil and gas sector need to propose a competitive national content plan to get an edge during the evaluation process.
The Authority has observed, however, that some suppliers fail to put together a comprehensive and convincing national content plan, thus affecting their chances of winning contracts in the sector.
Issues in national content plan
The PAU will, therefore, look at the key issues that need to stand out in a national content plan.
For starters, licensees have their respective internal national content policies that inform the national content programmes and targets that they intend to achieve over an agreed period of time.

As part of the invitations to tender documents, therefore, bidders will normally be given a guide on the minimum national content expectations that they will need to consider as part of their national content plans.
Over and above these minimum expectations, bidders have an opportunity to tailor relevant and reasonable national content initiatives for each procurement they participate in.
As a bidder, you should have done your homework and identified the parties you will work with and where you will source your requirements, both nationally and at the community level.
The regulations provide for three broad parameters that bidders should articulate in a national content plan including employment and training of Ugandan citizens, utilisation of local goods and services and proposals for technology transfer.
A sound national content plan, therefore, includes specific initiatives such as the number of Ugandans to be employed or assigned to the contract in subject and their respective positions or roles, the percentage value of the wage bill allocated to these employees, any proposed training initiatives for Ugandan employees together with the duration and expected certifications, if any, internship opportunities for students and collaborations with training institutions to enhance their expertise.
A winning national content plan should also include local goods and services to be sourced within the country during the execution of the contracts together with their estimated value, opportunities for subcontracting local companies as well as any identified potential subcontractors, any enterprise capacity development initiatives and a monitoring and reporting mechanism for the proposed national content initiatives.

Important
It is important that a winning national content plan is measurable, specific, relevant, and aligned to the licensees’ overall national content aspirations and targets. This not only allows the licensees to evaluate a national content proposal adequately and fairly, but it also eases the reporting and monitoring activities for both parties. Bidders are also encouraged to familiarise themselves with the legal framework that governs the sector to get a foundation and knowledge of suppliers’ duties and rights.

Alex M. Byamukamais a National Content Officer-Contracts at the Petroleum Authority of Uganda.
 

How shall we power Africa sustainably?​

Saturday, June 11, 2022
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Elison Karuhanga

By Elison Karuhanga
Columnist

What you need to know:​

We can’t rule out the sustainable exploitation of Africa’s oil and gas resources



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Africa has 117 per cent more sunshine than Germany, the global leader in solar energy, and the continent has shown great progress in the development of its solar energy markets over the recent years. In all of these markets, it has been proven that sustainable energy alternatives are only fruitful through the provision of financing, technology, and capacity building aimed at sustainable exploitation of our energy resources including fossil fuels while striving to minimise emissions.
In a May article, President Museveni made a powerful case for the EACOP pipeline and the development of Uganda’s oil in the Lake Albert Basin. In addition, during this week’s State-of-the-Nation address, the President advocated for the value addition of several commodities including the construction of a refinery for our crude oil. It came as no surprise when, earlier this week, a collection of Ugandan civil society organisations led by AFIEGO (African Institute for Energy Governance) wrote an open letter responding to the article.
This rejoinder from AFIEGO spells out in excellent detail the energy poverty in Uganda. For example, it states that “the Ugandan population still relies on crude biomass to meet its cooking energy needs; 73 per cent rely on firewood and 21 per cent on charcoal.” The core argument is that we need to prioritise our energy needs and develop renewable energy sources while abandoning oil. While I agree that we need to develop solar projects, I disagree with the argument that we should abandon fossil fuels haphazardly. We cannot rule out the sustainable exploitation of Africa’s oil and gas resources.

Another idea from AFIEGO is that instead of producing oil, Uganda can produce 5,000MW (Megawatts) of solar power. For a number of reasons, this is not sustainable. The production of solar energy on such a massive scale would require hundreds of thousands or even millions of solar panels. If producing 1MW of solar energy requires between four to seven acres of land, therefore, 5,000MW would require approximately 35,000 acres of land. If activists are worried about the number of people EACOP will allegedly displace, how many people would such an extensive solar project have to displace permanently?
AFIEGO proposed that Uganda should divert $15b meant for oil projects to renewable energy. We must ask where this $15b will come from. It will not be from government so, it is possible that they are suggesting we demand it from the private sector players Total Energies and CNOOC. Over the last decade, both of these companies have invested substantial sums of their money to find and extract oil in Uganda. This investment continues and should not be discouraged. We must maximise the presence of these companies in Uganda, their resources, and experience, to help develop EACOP and commercialise our oil. The companies have employed and trained several Ugandans and have added value to a significant number of Ugandan businesses. The people affected by this project will be compensated and resettled. Not to mention the sizable infrastructure and investment in the oil-rich areas.
It goes without saying that we must ensure that we develop a refinery in Uganda. The lack of refining capacity in Africa was the subject of a recent study. It found that Africa produces more than four million barrels of oil per day but has a refining capacity of just over a million barrels a day and of which only 30 per cent of that capacity was used last year. This means the whole continent imports all of its fuel at astronomical prices.

The parable of the talents in Matthew 25: 14-30 comes to mind. In that story, three men were given talents to use. Two used them and were blessed. One did not use his talent but conserved it and gave it back to the master as he had received it. The master, angry that the man had failed to utilise the available resources told the man who had conserved what he was given that that man will be thrown into a place “where there is weeping and gnashing of teeth”. We have lived far too long in that place already and cannot afford to keep our resources buried in the ground any longer.


The writer is an advocate and partner at Kampala Associated Advocates
elisonk@kaa.co.ug
 

We shall announce pipeline financiers next month - UNOC​


Thursday, June 23, 2022​

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A number of people both within and outside Uganda have challenged the East African Crude Oil Pipeline, claiming that it will damage the environment. PHOTO | FILE
By Julius Barigaba

What you need to know:​

  • Peter Muliisa is the Uganda National Oil Company (UNOC) chief legal and corporate affairs officer. He spoke to Julius Barigaba on a variety of issues in the oil and gas sector including the on status and viability of the East African Crude Oil Pipeline (EACOP).
What is the fate of EACOP considering the current financing, environmental and legal pressures?

We have had environmental and climate activists start a hashtag and movement to mobilise people to stop EACOP.
The thrust of their argument is that it is dangerous to the environment, it is going to displace people and wildlife and that it is going to cause major emissions, which would worsen climate change.

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We do a Resettlement Action Plan, which looks at the impact of the projects on the people, and comes up with mitigation measures, based on International Finance Corporation standards, accepted by all banks in the world.
The land that EACOP needs is a 30-metre corridor. So, in most places you are not taking people’s whole land but a piece.
After construction, the pipeline is buried all the way. When it’s laid and everything is done, the land will be restored.
Why was there a delay in the first place?
It was largely because we had not taken a Final Investment Decision. But we had done everything else - we had prepared the Project Affected Persons, done the valuations, and in addition to the normal values, we have added the disturbance allowance. Now we are at the end of the resettlement action plan. It’s a long process.
The project has also been accused of damage to the environment. We know the project has an environmental issue, so we did an environmental and social impact assessment.
An oil spill could happen anytime on a pipeline. How do you mitigate this?
The pipeline is double layered steel. It has insulations that enable us to monitor what is happening at any point, from the control centres. And for every river crossing, we have put a valve on both sides of the river.

We have put in place an oil spill contingency plan, which is a requirement by law, and which is best practice. It lays out steps we would take to ensure that there is very quick efficient action.
EACOP will produce emissions. Could that derail Paris Agreement targets?
We have done as much as possible to make it a net-zero emitter project. That basically means you look at the carbon it is going to emit and you offset it by creating scenarios that will reduce carbon emission to the amount that you might emit.
Is the call to ditch fossil fuels too early, especially for Uganda?
Fossil fuels are not going to be eliminated; it is about how we use them, and the alternatives we create so that we have a balanced ecosystem so that you emit enough, not to be in danger of climate change effects.
Critics say that by pushing this project, Uganda will miss the transition to green energy. Are we thinking about that transition?
Up to 68 percent of people in sub-Saharan Africa have no access to electricity. That’s the energy poverty we are dealing with.
You are not transiting them from anything; they are at zero. I have read credible reports that say we are not likely to meet the Paris targets by 2050.
Does that mean we will not “develop in a responsible manner”?
Upstream operations contribute 10 percent emissions, but within upstream there are certain elements such as methane leakage.
One element that contributes a lot of emissions is flaring. As a country we made it a criminal act to flare in Uganda.

Are the activists unfairly targeting Uganda?
There is a need for reducing emissions to achieve the Paris targets by all countries.
What we would want to see from activists is not to target a project that is neutral, that is aimed at getting people out of energy poverty.
Why have you struggled with financing for EACOP?
We are confident with financing. Project finance is a standard process.
You reach out to financing entities and do market sounding as the project starts. When the project matures, you now issue an information memorandum to all these financiers.
Some will tell you we are not going to participate and others will tell you we are going to participate.
Those that say they are going to participate, you give them a term sheet, they return their response to the term sheet. When we got our returns, we were oversubscribed by 20 percent.
By July, we should be able to announce all the financing entities. We have entities from Europe, from Asia and all over the world.
Respected voices in oil and gas have repeatedly said EACOP’s financing will come from anywhere but Europe. Is that the case?
It’s a general feeling because the Organisation for Economic Co-operation and Development and I think the G7 have all come up and said we don’t want to finance fossil fuels.
But the reality is that banks will continue to finance good responsible projects, even in the fossil fuel space.
You must have seen that press statement by UK Energy Secretary, where he said fossil fuels will continue to be here with us for the coming decades. It’s the truth.

Upstream exploration efforts
We negotiated a production sharing agreement (PSA) for Kasuruban; we bid for two, but we didn’t get Omuka. We’ve negotiated a PSA with the ministry, we have agreed on the terms. It’s now before the solicitor general for approval and once he approves, we sign it and start exploration of that block.
EACOP was planned to transport crude for 25 to 30 years. If we don’t have new discoveries, we will have the risk of stranded assets in our midst.
Are you confident going into exploration that you will discover oil?
When we were developing the pipeline, these are the questions we were dealing with in the economic model.
The pipeline as it is today is based on the resources we know, otherwise you can’t be sure [of future discoveries].
And with the resources that we know, we shall be able to pay debt, get returns on equity. So it’s a profitable commercially viable project.
We have the technical capacity. We have probably some of the best trained technical people in geology, geophysics and geoscience.
What we’ve had challenges with is generally financing and risk appetite especially now because we are getting money from the Treasury.

​


www.monitor.co.ug

We shall announce pipeline financiers next month - UNOC

Peter Muliisa speaks on a variety of issues in the oil and gas sector including the on status and viability of the East African Crude Oil Pipeline (EACOP)
www.monitor.co.ug www.monitor.co.ug
 

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www.monitor.co.ug

Can local banks fund heavy oil projects?

As Uganda gears towards production of its first oil, the banking industry is anxiously waiting to make a killing
www.monitor.co.ug www.monitor.co.ug

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Finance​




PRIME

Can local banks fund heavy oil projects?​

Thursday, July 07, 2022
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It is increasingly becoming important that big ticket oil projects seek alternative sources of funding as the campaign against fossil fuels takes centre stage in the West. PHOTO | EDGAR R. BATTE
By COLLINS MUHWEZI

What you need to know:​

  • As the global campaign against fossil fuels sweeps in against Uganda’s oil projects, it is important to examine what is possible and which sources can oil companies tap in to raise capital for projects and investments.
Investments in oil and gas are facing financing challenges due to pressures from environmentalists pushing for renewable energies.

Uganda is caught between a rock and a hard place. More than 15 years after making its oil discovery public, the country is under pressure because its oil deposits are located in protected areas namely Murchison Falls Game Park, Budongo Forest, and the Albertine Graben to mention but a few, which host some of the endangered wildlife.
Added to that, the 1,443 kilometer East African Crude Oil Pipeline (EACOP) will pass through the Lake Victoria basin and in Tanzania’s game reserves - something that green activists are against.

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Their campaign has seen them petition financial institutions including Citi Bank, JP Morgan and Societe Generale, among others to reverse their decision of pumping money in oil and gas projects.
As pessimists’ efforts are paying off, EACOP partners including Total Energies and CNOOC are scratching their heads to look for alternatives.
As the global finance market tightens the lid on oil and gas investments, can the local and regional finance markets step in?
How deep are the pockets of bankers?
Both local and regional finance markets have grown over the past years and some have been on the forefront of financing major infrastructure projects such as dams and roads, among others.
However, to the EACOP project partners, the idea of sourcing funding within the local market is something they had not considered.
“The EACOP is a $3.5b project and looking for such type of money on the local market is a tall order. So in our plans we had not considered that idea,” said Philippe Groueix the Total Energies managing director on the sidelines of the launch of the Tilenga Biodiversity Project recently.

As Uganda gears towards production of its first oil, the banking industry is anxiously waiting to make a killing.
One of the regional heavy weights is Equity Banks, which through Anthony Kituuka, the bank’s executive director, said they are setting up a war chest to harness the proceeds from oil.
“As a bank we have setup an oil and gas team composed of experts and some sizable capital which will be spread across various sectors including health, agriculture, logistics, hospitality among others,” he said, noting that the bank has a martial plan that cuts across the region and each country has a different arrangement because the needs are different.
The needs of Uganda a land locked country are different from the needs of Kenya a logistics hub or Tanzania, which will house the tail end of the pipeline. However, Mr Kituuka is quick to note that bankers have to seek partnerships or other sources of funding to reduce on their exposure while thinking of venturing into big money projects such as EACOP.
“The amounts required for this projects a huge and definitely we have to seek for collaborations and syndications or even get financing from outside. There is no single bank in Uganda, however, big that can lock away a billion dollar based on a single borrower’s limits,” he said.
As a bank, he said: “I can borrow but remember nobody can give a loan worth your value. And we are commercial banks at the end of the day we are answerable to our shareholders minus that we can’t put all our eggs in one basket.”

Away from sourcing funds and reducing exposure, bankers are faced with global inflation, which can change borrowing terms in a flash.
For big amounts of money, borrowers tend to look outside but any percentage in the interest rates has a significant effect on the long term borrower.
Capital markets and pension funds are also an option
Equity markets in Uganda have been growing steadily over the years. According the 2020 Capital Markets Authority report, it is estimated that domestic capitalisation of equity markets stands at Shs4.27 trillion.
In times of need, pension funds have been called upon to rescue both government and companies to finance large capital projects.
Dickson Ssembuya, the Capital Markets Authority director research and market development, said to finance projects such as EACOP, governments and partners can look at the $20b, which is held by pension funds across the region.”
Therefore, he said, pension savings can be tapped by issuing a capital markets instrument such as project infrastructure bonds to partly finance the pipeline.
Ssembuya, however, cautions that companies seeking to venture into oil and gas projects need to worry about the concerns of green campaigners, which have driven away investors as the world transitions from fossil fuels to zero emissions.
He also sights the low level of awareness among trustees of pension schemes on alternative investments.
Are fossils still around?
Although a date has been put as to how and when global economies should phase out fossil fuels, the same has not been done for developing economies such as Uganda.

According to Assad Lukwago, a senior partner at KPMG says the agenda in past was to phase out fossil completely but there was some lobbying by developing countries since they are at the bottom of the chain.
The plea from African economies was further boosted by a disruption in the oil supply due to recent events in Europe - the Russian War in Ukraine.
Therefore, the need to restore parity in the global supply chain will have countries such as Uganda breathe a sigh of relief.
Lukwago too points out the need for partnerships and notes: “The local finance market is yet to develop a muscle to raise such huge capital so if any of them is going to venture in they will have to look for partnerships.”
cmuhwezi@ntv.co.ug

Monitor. Empower Uganda.​

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