Tullow’s K900 rig
during drilling
operations in
Block EA-1,
Kampala, Uganda — 09 July 2013

The government of Uganda is seeking Chinese companies to finance infrastructure development that can be repaid once the country starts earning revenue from oil and gas production.  

“Our government is concentrating on a few priorities due to insufficient funding, and China is to fund a number of these,” said prime minister Amama Mbabazi. Chinese companies will “take over all contracts for infrastructural projects,” according to the statement quoted by Bloomberg News. It provided no further details.

Mbabazi made the comments at the end of a one-week official visit to China in which he met government leaders and officials from companies including China Machinery Engineering Corporation (1829), a Beijing-based builder, and Huawei Technologies Company.

Ugandan President Yoweri Museveni and his Chinese counterpart Xi Jinping earlier this year agreed on a “framework” to obtain Chinese investment for electricity generation, road construction and other infrastructure projects, according to the government statement. They met at a summit of BRICS nations — Brazil, Russia, India, China and South Africa — in Durban, South Africa in March.

Projects planned for development in East Africa’s third-largest economy include four hydropower plants and the paving of 21 roads, according to the statement.

Uganda discovered oil in 2006. Tullow Oil plc  is developing Ugandan oilfields with China National Offshore Oil Corporation and France’s Total SA  that are estimated to hold 3.5 billion barrels of oil. Output may begin on a small scale as early as next year, according to Tullow.

 Source: Bloomberg News. For more information, click here.