Finance Ministry Urges UNOC to Seek Alternative Funding for Oil Sector

The Ministry of Finance is pushing the Uganda National Oil Company (UNOC) to move away from direct budget allocations and instead pursue alternative financing avenues. This directive comes at a critical juncture as Uganda prepares for its first oil production, a period marked by increasing capital demands across the entire oil and gas value chain.

During a performance review, Finance Minister Henry Musasizi, accompanied by State Ministers Amos Lugoloobi and Cissy Mulondo, urged the UNOC Board to innovate in its funding strategies. This push for self-sufficiency is also driven by the Treasury’s need to prioritize other vital sectors like health, education, and infrastructure.

Despite commending UNOC for maintaining a stable petroleum supply amidst global geopolitical challenges, Minister Musasizi also raised concerns about significant price disparities in fuel across different regions of Uganda. He called upon UNOC to investigate these variations and propose solutions to ensure more equitable pricing for consumers nationwide.

UNOC officials reported significant progress in upstream projects, with the East African Crude Oil Pipeline nearing 89.4% completion and key development areas like Kingfisher and Tilenga also advancing steadily. The company faces substantial cash-call obligations for its joint venture share, estimated at $72 million and expected to rise.

On the downstream front, UNOC’s role as the sole importer has seen a 39% year-on-year volume increase, supplying fuel to 36 Oil Marketing Companies. This expansion has boosted revenues, with gross margins rising to Shs540 billion in the 2025/2026 financial year. The company is also leveraging a $2 billion facility with Vitol Bahrain for imports and has transferred Shs536 billion to the Ministry of Finance from its operations.

UNOC is actively developing infrastructure, including storage terminals in Kampala and Mombasa, and plans for a refinery. While proposing a self-financing model, the company emphasizes that continued government equity support remains crucial for meeting its upstream obligations and delivering major projects. The Ministry’s message is clear: UNOC must enhance its financial independence and operational efficiency while preparing for reduced budget reliance.