Energy, Natural Resources and Extractives sectors

1. Theres renewed focus by the regulators and the government to advance the conversation on the linkage between the Mining industry and the Energy Transition with a focus on optimally utilizing strategic minerals for socio-economic transformation.
2. Government of Uganda commissioned the Karuma Hydropower Plant with an installed capacity of 600MW. The project was financed by the Government of Uganda and the People’s Republic of China, through a loan from the Exim Bank of China contributing up to 85% (US$1.435 billion) of the Engineering, Procurement and Construction (EPC) cost, while Government of Uganda contributed 15%( US$253.26 million) bringing the total to US $1,688,380,000. This development comes amidst the constant need for investments in the energy sector to reduce of power for industrialization. The government is keen on offering support to private investments in the energy sector.
3. Following the landmark Final Investment Decision announced in 2022 by the joint venture partners—TotalEnergies E&P Uganda, China National Offshore Oil Company (CNOOC) Uganda Ltd, and Uganda National Oil Company (UNOC)—Uganda’s vision to develop its oil and gas sector continues to grow. The key projects include the Tilenga and Kingfisher projects in the Upstream sector, with investments upwards of US $6 billion, alongside the East African Crude Oil Pipeline (EACOP) valued at US $5 billion, and the Uganda Refinery project, estimated at US $4 billion, both in the Midstream sector. Many companies continue to pay keen attention to the oil and gas sector of Uganda due to the increased opportunities brought about by the FID for the East African Crude Oil Pipeline Project and the Uganda Refinery Project.  In December 2023, the Government signed a Memorandum of Understanding (MOU) with Alpha MBM Investments LLC from the UAE for the development of Uganda’s refinery. Negotiations for the key commercial agreements, including the Implementation, Crude Oil Supply, and Shareholders Agreements between the Government and Alpha MBM Investments LLC began in January 2024 and are currently ongoing. Once these agreements are finalised, the consortium is expected to promptly begin the project implementation.
4. The Engineering, Procurement, Construction Management and Commissioning (EPCMC) activities for the East African Crude Oil Pipeline project are ongoing in London, and Dar es Salaam. Worley is undertaking this work with its subcontractors – ICS Engineering in Uganda and Norplan in Tanzania. The overall progress of the EPCMC activities is at 39.2%; the engineering phase at 81.1%, procurement at 54.5%, and construction and commissioning at 15.4%. Detailed engineering, being carried out by Worley, at 89.1%. China Petroleum Pipeline Engineering Ltd (CPP), the pipeline construction contractor, has begun civil works at the Pump Stations (PS) and Main Camp and Pipe Yard (MCPY) sites in both Uganda and Tanzania.
5. The Government continues efforts to make new discoveries to enhance current petroleum resources, which stand at 6.5 billion barrels (with 1.5 billion recoverable). In February and May 2023, additional exploration licenses were granted to Uganda National Oil Company and DGR Energy Turaco Uganda SMC Limited for the Kasuruban and Turaco contract areas, respectively. These licenses concluded the Second Competitive Licensing Round, which began in 2019. Both companies are now conducting technical studies and gathering data in preparation for exploration drilling. The Ministry is also conducting preliminary petroleum exploration studies in the Moroto-Kadam Basin to assess its oil and gas potential.
6. Similar surveys have started in the Kyoga Basin, with plans to initiate studies in the Hoima Basin soon. Early results suggest the potential for commercial oil and gas in the Moroto-Kadam Basin. These exploration efforts are expected to increase Uganda’s petroleum reserves. In January 2023, TotalEnergies E&P applied for certificates of surrender for the Jobi-East and Mpyo discoveries, followed by the Lyec discovery in December 2023. Field assessments were conducted to evaluate site conditions and address compliance issues, with the goal of finalizing these handovers. The process is expected to be completed by the end of 2024.

Corporate, Banking and Finance

• Uganda Banking Sector launched the ESG framework. The passing of the ESG framework for the Banking and Financial Sector follows a meeting between Uganda Bankers Association and the Bank of Uganda in January 2023 regarding the institutionalization of the ESG agenda in Uganda. The framework mandates of the finance sector to embed ESG within their core strategy and way of doing business, so as to establish a culture of sustainability and responsible banking practices within the banks, Integrate financing strategies/ products such as green loans, financing for businesses from marginalized communities, promoting sustainable practices, financial inclusivity and ensure a holistic risk and resilience approach and strengthening the banks’ existing practices with the inclusion of ESG-specific impact variables
• The High court of Uganda granted an arbitration award premised on London interbank offered Rate (LIBOR). The decision offers support to lenders with similar LIBOR referenced contracts in Uganda. There is no need to novate the affected contracts to reference the new synthetic rates being used post LIBOR.
• The Bank of Uganda projected its external debt servicing to account for about 35% of the GDP in 2024/2025 in lieu of the fact that public debt had increased to 96.1 trillion Uganda shillings(25.3billion US Dollars as of 2024.

TAX MATTERS

• The Convention on Mutual Administrative Assistance in Tax Matters (Implementation) Act, 2023 gives force of law in Uganda to the Convention on Mutual Administrative Assistance in Tax Matters, the Multilateral Competent Authority Agreement on Automatic Exchange of Financial Account Information and the Standard for Automatic Exchange of Financial Account Information in tax and related matters.
• The 2024 Income Tax Amendment Act exempts of certain incomes including the following income, these include incomes derived from a private equity or venture capital funds regulated under the Capital Markets Authority Act of Uganda, incomes derived from the disposal of government securities on the secondary market and those earned by strategic investors manufacturing electric vehicles, batteries, charging equipment and fabricators of electric vehicle bodies.
• The 2024 Income Tax Amendment Act introduced the term a “permanent establishment” to replace ” a branch” and new profit attribution rules to replace the current computation of a branch’s chargeable income in assessing incomes of Multi-National Companies and a 10% withholding tax on commissions paid to payment service providers in lieu of the growth of Psps in Uganda.

GOVERNMENT BUSINESS AND REGULATION

• Uganda National Bureau of Statistics issued guidelines for beauty products/cosmetic products in Uganda Issued on March 19^th, 2024.
• Government is in the process of enacting a law on Human assisted reproductive technology. The bill if enacted will provide a legal framework for registration of IVF facilities, prohibition of use of genetic materials not from human origins and strict data protection and privacy requirements.(Human assisted reproductive technology bill of 2023)
• Rationalization of government agencies tabled in parliament to merge government agencies with line ministries.
• The government in the process of passing the contract farming bill to regulate contract farming ie agreements between buyers and farmers for future produce, block farming(consolidation of small plots for mass production). It is believed that the the law will free up large tracts of land for commercial production.
• The regulations on data protection by the data protection office will be launched in the by January 2025.
• The competition and antitrust law enacted into law in Uganda after several years.
• The latest Africa attractiveness report by Ernst and Young shows Uganda recorded FDI of 10.2 billion Us Dollars the highest in East Africa in 2023.
• Uganda removed from the FAFT grey list.

INFRUSTRUCTURE & PPPS

• The constitutional court ruled in favor of governments commitment towards PPP The decision affirms the powers of government to initiate procurement for PPPs and executive sovereign financial instruments such as promissory notes as commitments to undertake PPPS in Uganda under the Public finance management act.
• Uganda Communications Commission launched a digital audio broadcasting pilot to identify policy, regulatory and operational requirements to harness digital radio alongside FM, internet and satellite radio.

AFRICA TRADE, COUNTRY EXPANSION AND SMES AND TMT

• Uganda National Bureau of Statistics issued guidelines for beauty products/cosmetic products in Uganda Issued on March 19^th
• The regulations on data protection by the data protection office will be launched in the by January 2025.
• The competition and antitrust law enacted into law in Uganda after several years.
• The latest Africa attractiveness report by Ernst and Young shows Uganda in the lead within the East African region.