Uganda: Land of Projects

By Liesl Venter

Uganda’s project landscape is undergoing a transformative shift, driven by ambitious developments such as the East African Crude Oil Pipeline and the Rubabo hydropower project. For Issue 4 of Breakbulk Magazine, industry leaders from companies including Fracht Uganda assess the latest opportunities emerging in one of East Africa’s most exciting markets.

(7-minute read)


The East African Crude Oil Pipeline (EACOP), spanning 1,443 kilometers from Kabaale in Uganda’s Hoima district to the Chongoleani Peninsula near Tanzania’s Tanga Port, is set to be one of Africa’s most transformative projects.

With an investment of around US$4 billion, the massive infrastructure endeavor promises significant economic benefits for both Uganda and neighboring Tanzania. However, like many large-scale projects on the continent, it has not been without its share of controversy.

Climate activists in East Africa and abroad have been fighting to stop what will ultimately be the world’s longest-heated crude oil pipeline, arguing that it could have disastrous environmental and social consequences. They claim the megaproject will displace local communities, pollute water resources, destroy wetland ecosystems and endanger animal species. Additionally, critics argue the pipeline will exacerbate the global climate crisis by promoting further fossil fuel extraction.

Nevertheless, Uganda intends to become a leading hub in East Africa and has committed to the project.

Global research firm BMI projects Uganda’s construction sector will grow at an average pace of 5.6% year-on-year between 2024 and 2033. In the first half of its forecast period, oil investments will support construction activity, with a relatively muted public expenditure outlook weighing on transport infrastructure growth. In the long term, oil revenues are set to benefit state-led infrastructure investments.

Duncan Bonnett, a leading African project expert and partner at Africa House, a research consultancy, says that oil is leading the charge, with activity in Uganda’s project sector at an all-time high. "It is important to note that many of these projects have been on the agenda for years and have not always been progressing at a breakneck pace,” he told Breakbulk.

“Oil was discovered in the country about 20 years ago, but progress has been slow. Despite resistance to projects like EACOP, there is no sign of slowing down in the oil and gas sector. The number of projects is rising, and existing projects are seeing more activity than ever.”

Bonnett says that while the world might be transitioning away from fossil fuels, African countries like Uganda, which are new players in the oil and gas sector, are recognizing the opportunity it holds for transforming their economies.

He adds that a project like EACOP is a “major game changer” for countries like Uganda and Tanzania, in particular. “It’s important to recognize that Uganda is not aiming to become a major oil producer, with a target of only around 216,000 barrels a day. However, a project like EACOP immediately introduces another export revenue stream for the country, making a massive difference to the economy.”

Furthermore, the project has catalyzed other developments, spurring ongoing investment in transport and infrastructure. One significant project is a Hoima district refinery capable of processing 60,000 barrels of oil per day. Additionally, the construction of a nearby airport has been critical. Being landlocked and dependent on neighboring countries’ ports, with limited rail access and poor road infrastructure, Uganda faces significant logistical challenges.

The remote location of the oil fields, which requires traversing the Great Rift Valley, made building an airport in Hoima essential to support the growing oil sector and improve project logistics.


Infrastructure ‘Lagging Behind’

As in much of Africa, projects in Uganda are challenging. Rural and remote locations, difficult access and complex logistics create an environment that requires resilience and determination.

The quality of roads in the country remains a significant hindrance, says Philip van Tilburg, managing director of Fracht Uganda. “Many roads are unpaved, which makes them inaccessible during the rainy season and poses difficulties for transportation. Additionally, Uganda’s rail network is underdeveloped and still relies on the outdated meter gauge system, lagging behind more advanced rail infrastructures in other countries.”

He explains that the poor infrastructure contributes to higher fuel prices and increased costs for logistics operations, ultimately impacting the end user. Limited technological infrastructure further elevates costs and hampers efficient logistics. Additionally, volatile currency rates add another layer of uncertainty and financial strain on logistics services.

Gerald Kadapawo, portfolio project manager for Hydropower Development at East African Power (EAP), a renewable energy company, says that over the past decade, Uganda has witnessed significant industrialization, with new factories producing smaller components essential for project development. “This has reduced the need for imports and the transport of components over long distances from the Kenyan and Tanzanian ports. Additionally, cement and steel are now more readily available in the country.”

However, more significant components like turbines and generators require cumbersome transportation over extended road distances. “The logistics challenges underscore the importance of local expertise in Ugandan projects. A deep understanding of local dynamics is critical for success,” he says.


Project Surge

Speak to just about anyone, and they will tell you that most of the challenges can be overcome, and there is far more to be excited about. Overall, positivity surrounds Uganda’s project sector.

Van Tilburg says Fracht is currently involved in several projects, including two largescale road rehabilitation projects and several aimed at improving water and sanitation in various areas of the country. “We are also working on a power project reinforcing the power transmission grid in the Kampala metropolitan area for reliable future electricity supply.”

According to Bonnett, while EACOP has garnered significant attention in the country for developments in the oil and gas industry, the power sector is also increasingly gaining prominence. “The lack of electricity hampers economic growth across African countries, and Uganda is no different. Ugandan authorities are hard at work addressing this, and we are seeing a definite increase in power projects.”

Kadapawo agrees, saying there has been a definite uptick, particularly in the renewable energy sector. EAC is working on two advanced hydro projects in Uganda, with several more in the pipeline. Construction is set to start within the next few months at Latoro, a project in Northern Uganda that will generate 4.82 megawatts (MW) of power upon completion.

Meanwhile, feasibility studies at the Rubabo hydropower project in Western Uganda are 90% complete. This power plant will generate 3,7 MW. “We anticipate construction to start in the second quarter of 2025, as we will have completed all of the requirements, including the power purchase agreement, by then.”

According to Kadapawo, regulation in the project sector is highly strenuous. “Authorities have consecutively been selected as the best by the African Development Bank for the past five years. While this is positive, it can be challenging regarding the pace at which projects move.”

He says red tape is a significant issue in many African jurisdictions. “In Uganda, regulations are stringent and highly project-specific. Not every rule applies uniformly across all projects, and adherence to correct procedures is crucial to avoid delays.”


Promising Pipeline

Bonnett advises companies across the project sector to keep a close watch on Uganda. The country is making significant strides in infrastructure development that bode well for the sector as a whole.

“With EACOP well underway and the oil and gas projects gaining momentum, extensive exploration is ongoing around Lake Albert both onshore and offshore. The pressing demand for electricity in the country and the region indicates a rise in energy-related projects, especially in renewables like hydro and solar.”

Bonnett says the railway is also gaining traction, with Uganda’s intent to overhaul the country’s meter-gauge railway to improve trade competitiveness, reduce cost, and improve efficiency.

The government is also part of the Standard Gauge Railway (SGR) project with other East African countries to strengthen regional railways. ”And this project is a big deal,” he says. “While each country is primarily involved through their domestic connections, once completed, it will integrate the entire region via rail, with railway lines linking Kenya to Uganda, South Sudan, the Democratic Republic of the Congo, Rwanda and Burundi.”

Jean Biwaga, CCO and assistant Branch Manager of Fracht Uganda, adds that various road construction projects are in the pipeline to enhance internal connectivity, making transporting goods within the country and to neighboring regions easier. “There’s also a plan to revamp water transport routes, connecting Tanzania via Mwanza to Port Bell. This will provide a cos-teffective alternative for goods arriving through the Dar-es-Salaam port.”

In May this year Uganda was recognized at the Annual Investment Meeting (AIM) as the top investment destination in Africa. With the government implementing several strategies to attract more Foreign Direct investment (FDI), the country is poised to increase its project portfolio significantly.

Kadapawo says that with infrastructure improvements and increased interest leading to more investment, project developers like EAP are expanding their presence in Uganda and undertaking more significant projects. “Our focus, in the future, will be on slightly larger projects, and we are considering several hydropower projects of 40 MW and larger. We are also looking into investing in grid networks, which remains a challenge in Uganda, and we anticipate an increase in these projects.”

He says the opportunities in Uganda are only increasing.

“For the longest time, infrastructure projects received little attention, but we have turned a corner. There is now a clearer understanding of the importance of these developments, and the government is making efforts not only to increase the number of projects in the country but also to expedite project delivery.”

Kadapawo says it’s a snowball effect. “If the development of the oil and gas sector continues on its current trajectory, the country will need approximately 300 MW of power solely to support that industry.” Bonnett adds that being landlocked and far from ports, the Uganda government will have no option but to bolster its rail and road projects in response to further energy developments.


Promising Economic Outlook

“The region is experiencing solid economic growth, driving up trade volumes. As a result, there’s a need for better logistics infrastructure and services. Attracting foreign investment into the logistics sector is crucial for sustaining development and taking advantage of advanced technologies,” says Biwaga.

Initiatives to address some of the concerns and challenges are already underway. Reducing red tape has been a particular priority for the government, and there have been positive developments in terms of regulations.

“Implementing the Single Customs Territory (SCT) has streamlined the customs clearance processes. This means fewer delays and a smoother flow of goods within the region. Efforts to harmonize regulations across East African countries are ongoing as well. The goal is simplifying cross-border logistics and making trade more efficient,” says Van Tilburg.

Bonnett says that East Africa continues to thrive as a region. “COVID had a significant impact and indeed set projects back several years. Despite this, the area did not experience negative GDP, although it was slightly lower. This resilience is crucial, especially when contrasted with the global negative GDP experienced globally. It underscores the potential of countries like Uganda.

“Oil will play a pivotal role moving forward, but alongside these major projects, we will also witness numerous smaller projects and developments, particularly around Kampala.”

Van Tilburg concludes: “EACOP will significantly impact the energy sector in Uganda, marking a substantial leap toward the country’s goal of becoming an oil exporter. The success of this project, alongside initiatives like the railways and roads, will drive extensive infrastructure modernization, foster improved regional cooperation and economic ties, and contribute to broader economic integration and development across East Africa.

“Importantly, it will enhance trade efficiency, lower costs and transit times for goods, and enhance Uganda’s competitiveness in the global market.”


Liesl Venter is a transportation journalist based in South Africa.