The Acting Executive Director of the Petroleum Authority of Uganda (PAU), Otonga Michael Ochan, has confirmed that Uganda is set to start commercial oil production during the current financial year. He made this statement while appearing before the Parliamentary Budget Committee, chaired by Hon. Amos Kankunda. Ochan assured the committee that all oil projects are being closely monitored to ensure the country meets its production targets.
According to PAU's projections, Uganda is expected to produce approximately 47.5 million barrels of crude oil in the first year of commercial production. The production is anticipated to rise significantly to over 83 million barrels annually from 2027/28. By 2027/28, oil production is projected to reach 83.86 million barrels, and then stabilize at around 84 million barrels per year for the following years.
The Petroleum Authority of Uganda presented its Charter of Fiscal Responsibility for the financial years 2026/27 to 2030/31 to the Parliamentary Budget Committee. The projections indicate that oil production will remain steady, with 83.95 million barrels expected in 2028/29, 83.92 million barrels in 2029/30, and 83.15 million barrels in 2030/31. These projections will be crucial in determining Uganda's revenue from oil.
The Ugandan government is expected to earn significant revenue from oil through various channels, including royalties, taxes, profit oil, and participating interests. According to Ochan, the government could receive between 70 and 75 percent of total oil revenues, depending on international oil prices. Using a conservative oil price assumption of $50 per barrel, the government projects oil revenue of Shs1.8 trillion in the current financial year.
The projected government revenue from oil is expected to increase substantially over the next few years. By 2027/28, the revenue is anticipated to reach Shs3.2 trillion, and further increase to Shs3.8 trillion in 2028/29, Shs4.5 trillion in 2029/30, and Shs4.8 trillion in 2030/31. These projections assume an oil price of $50 per barrel, and actual revenues could be higher if prices remain above this assumption.
The Ugandan government has already factored in approximately Shs1.44 trillion in expected oil revenue as a source of financing for the current financial year's budget. According to Ochan, part of the oil revenue will be used to support the national budget, while the balance should ideally be directed towards investment. This approach aims to ensure that Uganda's emerging oil sector contributes to the country's economic growth.
As Uganda prepares to transition from the oil development phase to commercial production, Parliament is scrutinizing projected production volumes, government revenues, and fiscal risks associated with the country's emerging oil sector. The PAU's presentation provides critical insights into Uganda's oil sector, and lawmakers will use this information to inform their decisions on the country's fiscal policy over the next five financial years.
Key points
- Uganda is projected to produce 47.5 million barrels of crude oil in the first year of commercial production.
- The government expects to receive between 70 and 75 percent of total oil revenues, depending on international oil prices.
- Uganda's oil production is anticipated to rise to over 83 million barrels annually from 2027/28.
