Government wants the Uganda National Oil Company to find new ways to fund itself as the country inches closer to first oil, with the Ministry of Finance pressing the company to cut reliance on budget support.
Finance Minister Henry Musasizi, flanked by State Ministers Amos Lugoloobi and Cissy Mulondo, tasked the UNOC Board during a performance review to explore innovative and sustainable financing options. The directive comes at a time when capital demands across the oil and gas value chain are rising and the Treasury is under pressure to prioritize spending in health, education and infrastructure.
Musasizi commended UNOC for keeping the country’s petroleum supply stable despite global geopolitical tensions and conflicts in major oil-producing regions. He said the fact that fuel has remained available at relatively stable prices shows the value of having a national oil company actively involved in the market.
But he also questioned why consumers continue to pay very different prices depending on where they buy fuel. Citing pump prices in Kabale, Masaka, Mbarara and Kampala, the minister asked UNOC to explain the wide variations and propose measures to narrow the gap.
‘Stability is good, but equity matters too,’ Musasizi said. ‘A Ugandan in Kabale should not feel penalized compared to one in Kampala simply because of logistics.’
UNOC officials told the meeting that upstream projects are advancing steadily. By the end of June 2026, the East African Crude Oil Pipeline had reached 89.4 percent completion. The Kingfisher Development Area was at 79.36 percent, while Tilenga stood at 74.2 percent.
With first oil expected soon, the company said it faces about US$72 million in cash-call obligations to meet its share of joint venture costs. Those obligations, UNOC noted, will increase as field development accelerates.
On the downstream side, UNOC reported strong growth from its role as sole importer. Volumes increased by 39 percent year on year, and the company is now supplying 36 Oil Marketing Companies across the country. That expansion has translated into better revenues. Gross margins rose from Shs387 billion to Shs540 billion in the 2025/2026 financial year.
The company is leveraging a US$2 billion financing facility with Vitol Bahrain to support imports. To date, US$150 million has been drawn down under the facility. UNOC also said it had transferred Shs536 billion to the Ministry of Finance from its operations, underlining its contribution to public coffers.
Beyond trading, UNOC is building infrastructure meant to cut import costs and improve storage. The flagship projects include a 320-million-litre Kampala Storage Terminal, a 110-million-litre terminal in Mombasa to secure product before it enters Uganda, and plans for a 60,000-barrel-per-day refinery.
At Kabalega Industrial Park in Hoima, Phase One infrastructure works are progressing after Shs37.96 billion was secured. Government sees the park as the hub for refinery, storage and other midstream investments.
To reduce dependence on the budget, UNOC has proposed a sustainable self-financing model. Officials said the sole-importation business alone generates about US$3 million every month in administrative charges, money that can be reinvested into operations and infrastructure.
However, the company cautioned that government’s continued commitment to capitalize UNOC remains critical. Without that equity support, it said, the company will struggle to meet its obligations in joint ventures and to deliver large projects on time.
The engagement underscores a broader government strategy to position UNOC as a commercially viable entity capable of delivering value from Uganda’s petroleum resources. With first oil on the horizon, the focus is shifting from project development to how Uganda will manage revenues, ensure energy security, and use the sector to drive industrialization.
For now, the message from the Finance Ministry is clear. UNOC must innovate on financing, improve efficiency in distribution, and prepare to operate with less direct budget support, while still delivering on national energy goals.