The private sector praises the increased budget for the mining industry

However, project implementation delays, limited resources and bureaucracy in contract approval remain major concerns

Kampala, Uganda | JULIUS BUSINGE | Uganda’s private sector has welcomed the government’s decision to significantly increase budgetary resources for the development of the mining and oil and gas sectors, but has expressed concerns about the implementation of these decisions.

In the latest national budget, the government increased the funding envelope by 92% to 961 billion shillings for the 2024/2025 fiscal year to support key projects and capitalise on sector growth.

“The increase in the sector budget demonstrates the government’s commitment to harnessing the value of the mining sector to drive socio-economic transformation,” said Humphrey Asiimwe, CEO of the Uganda Chamber of Mines & Petroleum, a private, not-for-profit industry association established in 2010.

However, the private sector has raised concerns over persistent challenges, including delays in project implementation due to the lack of a legal and regulatory framework, limited resources, bureaucratic red tape related to contract approval and issuance of investment licenses.

They called on the government to set up a National Content Fund to address the high interest rates that make it difficult for investors to participate in the sector.

Oil and gas allocation

The oil and gas sub-sector budget has almost doubled from Shs447 billion in the 2023/2024 financial year to Shs920 billion in the 2024/2025 financial year. This allocation will support the further development of the East Africa Crude Oil Pipeline (EACOP) project, the purchase and distribution of 57,000 liquefied natural gas (LPG) cylinders to promote clean cooking, and the establishment of the Petroleum Science Laboratory. Additionally, funds were allocated to recapitalize the Refinery Project.

On the other hand, the budget allocation for mining development has been reduced from Shs54.4 billion to Shs41 billion. The new allocation will primarily focus on rapid quantification and market research of all minerals to attract investors, operationalization of the National Mining Enterprise, reviewing and strengthening the minerals tax regime, including regulation of artisanal and small-scale miners, and developing e-administration system for mineral production and data bank.

Additional priorities include commencing construction of the Busia and Moroto enrichment sites, strengthening the Ntungamo and Fort Portal sites, and facilitating private sector participation in mineral exploration, extraction and valuation.

The new Mining and Minerals Act 2022, which aims to formalize the activities of artisanal miners and create a mining company representing the interests of the government, will guide the development of the sector. Uganda has large, untapped deposits of mineral resources, including gold, copper, high-grade tin, tungsten, salt, beryllium, cobalt, kaolin, iron ore, glass sand, vermiculite, phosphates, uranium and rare earth elements.

During the last financial year, the government recorded various achievements, including the delivery of 500 km of pipeline to EACOP in Tanzania and the commissioning of a thermal insulation plant in Tabora, Tanzania.

The government also issued two new exploration licenses to Uganda National Oil Company and Australian company DGR. The Upstream Petroleum Project has completed drilling at Kingfisher and Tilenga in preparation for oil and gas production.

In addition, the government undertook full geological mapping using airborne and ground-based geophysical technologies when the National Mining Company was established to manage investment and mineral trade, among other things, on behalf of the government.