Oil pipeline-related splurge raises Uganda real estate industry spirits

Tuesday May 04 2021
Samia Suluhu and Yoweri Museveni.

Uganda President Yoweri Museveni and Tanzania President Samia Suluhu during her one day visit to Uganda. PHOTO | PPU | AFP


Commercial activity surrounding the recent signing of key agreements related to the 1,445km East African Crude Oil Pipeline Project (EACOP) and a surge in oil explorers’ procurement budgets have increased hopes of recovery in the country’s real estate industry that has been hit hard by the coronavirus pandemic.

Whereas procurement budgets managed by oil exploration firms operating in Uganda declined between 2017 and 2020, a surge in spending captured during the first three months of this year points to strong recovery opportunities for real estate sector.

The industry has struggled with low occupancy rates, widespread tenant defaults and bank foreclosures since the pandemic broke out last year

Figures compiled by the Petroleum Authority of Uganda (PAU) show that the total value of procurement contracts issued by oil and gas industry players dropped from $60 million in 2017 to $43 million in 2018.

The total value of industry contracts fell to $21 million in 2019, a pattern attributed to prolonged days tied to the announcement of the Final Investment Decision (FID) for Uganda’s commercial oil production programme, as well as drawn out income tax disputes between the Uganda Revenue Authority and international oil companies amid shrinking global crude oil prices.

International crude oil prices fell from an average $65 per barrel to historic lows of less than $40 per barrel during 2015 and 2016. This triggered cuts in industry spending and suspension of new projects.


The total value of industry contracts awarded in 2020 amounted to $13 million, a modest figure blamed on harsh effects of the Covid-19 pandemic that drove US crude oil prices to unprecedented negative levels.

However, the total value of oil and gas industry contracts awarded during the first quarter of 2021 jumped to $300 million while the value of contracts anticipated after announcement of the FID scheduled for end of June is estimated at $2.8 billion, according to the oil and gas industry regulator.

Major project implementation agreements including the tariff and transport agreement and route passage agreements between Uganda and Tanzania and the EACOP Company were signed at State House Entebbe on April 11, 2021, by President Yoweri Museveni of Uganda and President Samia Suluhu of Tanzania.

Besides the $4.5 billion EACOP that connects Hoima district in Uganda and Tanga port in Tanzania, other critical planned projects in Uganda’s commercial oil production programme include the oil refinery and supporting oil field drilling facilities. Major international oil exploration companies that have invested in Uganda include Total E&P of France and China National Offshore Oil Corporation while small players include Armor Energy of Australia and Oranto Petroleum of Nigeria.

But latest PAU data reveals the number of local housing units taken up by oil and gas industry players increased from 40 last year to 200 by end of March 2021; a sign of renewed housing demand, business opportunities for property owners and better returns on investment.

Details on average monthly rental fees charged against oil and gas exploration companies, choice of housing unit designs and favourite locations could not be established by the time of going to press.

“Real estate prices have remained stable during the pandemic though some distressed property owners stuck with huge bank debts have been discounting their sale prices quite heavily in order to clear their loans. But I do not know much about oil and gas industry clients,” noted Timothy Muyingo, a Kampala-based real estate broker.