EAPCE 2023 Exposes Financing Opportunities For Oil & Gas Sector

By UCMP Editorial Team

Whereas some financial sector players have expressed their pessimism about the future of Uganda’s oil and gas sector fortunes and hinted at plans not to finance the sector, participants at the recently concluded 10th East African Petroleum and Exhibition Conference (EAPCE 2023) received good news instead.

Banks that attended the conference and participated on different panels were positive about the sector and promised to avail the required credit support to sector borrowers in line with Bank of Uganda’s regulations.

Ms. Agnes N. Mayanja, the Executive Director for Kenya Commercial Bank Uganda said, “Banks are ready to finance the sector but the intricacies and complexities of credit access and extension remain.” She was responding to a question regarding some financial institutions hinting at not financing oil and gas projects that are linked to environmental ‘destruction’.???

Mr. Paul Muganwa, the Head of Consumer and Investment Banking at Stanbic Bank Uganda, said they are prioritizing green financing about the oil and gas sector. He however said sector borrowers have to be well-positioned and structured in terms of corporate governance, liquid in terms of cash flow, and business ethos to be able to meaningfully collaborate with banks in the oil and gas sector.??

Mr. Andrew Philip Wabulya, the executive director for the Petroleum Investment Fund at the Bank of Uganda said lenders have been urged to increase their capital base and do syndicated borrowing amongst themselves to be able to meet sector demands – a view that Stanbic’s Muganwa and KCB’s Mayanja seconded at a panel discussion.

Wabulya also said, there is a need for regulators, bankers, government, and contractors to be fair to private sector players in the oil and gas sector whenever they need support.

For instance, he said, banks need to finance companies that have no collateral for as long as they have a contract to supply goods and services to the sector.

The TotalEnergies Uganda General Manager Mr. Philippe Groueix said during a panel discussion that access to international financing is becoming ‘difficult’ but not ‘impossible’ for petroleum sector players – emphasizing that African Bank financing should be the alternative.

The Minister of Energy and Mineral Development Hon. Ruth Nankabirwa said it is not fair for financing institutions to pull out of “our projects when you financed the exploration...we may not have enough finances but we are not poor...Africa is to start looking for alternative sources of financing.”

Nankabirwa said, “We are watching financing institutions that are burying their heads in the sand at a time when Africa is fighting energy poverty.?I can assure you we shall get the funding needed for the EACOP.”

Uganda made significant discoveries of crude oil in the Albertine Graben totaling 6.5 billion barrels and it expects its first oil in 2025. The Final Investment Decision (FID) was reached in February 2022 paving the way for US$ 15 billion worth of investment into the sector, with three massive projects - Tilenga, Kingfisher, and EACOP together with a refinery and a petrochemical-based industrial park – being lined up.