Uganda to Issue New Oil and Gas Exploration Licences in 2025/2026: Boosting Investments and Economic Growth

Uganda is set to open its doors to new oil and gas exploration opportunities in the 2025/2026 fiscal year as part of a broader effort to attract investments and stimulate economic growth. Finance Minister Matia Kasaija outlined this strategic move on Wednesday, emphasizing the importance of accelerating developments in the petroleum sector to boost Uganda’s financial outlook in the coming years.

Expanding Oil Exploration to Drive Growth

Following the completion of Uganda’s last licensing round in 2019, which saw five exploration blocks offered, the country now plans to issue additional exploration licences in the next fiscal year. This decision aims to further explore untapped regions of the Albertine Graben basin, where only 40% of the area has been explored to date. The basin is estimated to hold 6.5 billion barrels of oil, presenting significant opportunities for Uganda to increase its production volumes and capitalize on its natural resources.

“Accelerating investments in oil and gas will be instrumental in contributing to faster growth of Uganda next financial year,” said Kasaija in his speech, laying out the country’s priorities for 2025/2026.

Commercial production from existing fields in the Albertine Graben is expected to commence next year, positioning Uganda to join the ranks of oil-producing nations. Key players in Uganda’s oil sector include France’s TotalEnergies, with a 56.7% stake, China’s CNOOC, and the state-owned Uganda National Oil Company (UNOC). These partnerships highlight the international interest in Uganda’s energy sector, which could see further investments following the issuance of new licences.

Balancing Economic Growth and Debt Sustainability

Despite the excitement surrounding Uganda’s oil sector, the country faces challenges on the financial front. Kasaija acknowledged the recent credit downgrades by ratings agencies but insisted that Uganda’s debt remained “sustainable.” He stressed that the government is committed to keeping the debt-to-GDP ratio below 50%, even as the country seeks new investments.

In late August, Fitch downgraded Uganda’s credit rating to B from B+, citing reduced access to concessional financing, high domestic borrowing costs, and a drop in foreign exchange reserves. Moody’s had made a similar move earlier in the year, cutting Uganda’s rating from B2 to B3 due to concerns about the country’s debt affordability. These downgrades reflect global concerns about Uganda’s financial health, but the government remains confident in its ability to manage the situation while pursuing its oil ambitions.

What This Means for Investors and Uganda’s Future

For potential investors, Uganda’s new exploration licences present an attractive opportunity to tap into one of Africa’s most promising oil basins. With international energy companies like TotalEnergies and CNOOC already established in the region, the country’s oil sector has garnered global attention. The planned expansion of exploration activities and the launch of commercial oil production will not only increase Uganda’s oil output but also boost its economic resilience.

However, investors will need to weigh these opportunities against the challenges posed by Uganda’s economic instability, high borrowing costs, and declining credit ratings. While Uganda’s government insists that its debt is under control, recent downgrades suggest otherwise, and this could impact investor confidence.

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