Uganda's First Oil Production Set to Boost Revenues and Credit Ratings

Uganda's first oil production is expected to bring in significant revenues for the country, which could help improve its taxation, debt, foreign currency reserves, and creditworthiness ratings. The East African Crude Oil Pipeline (Eacop), a 1,445 km pipeline connecting Tanga Port in Tanzania to Hoima district in Uganda, is 92% complete.

The Kingfisher oil project, run by China National Offshore Oil Corporation (CNOOC), is scheduled to start commercial oil production before the end of this year, with an estimated initial output of 25,000 barrels per day. The Tilenga oil project, managed by Total Energies of France, is expected to begin production in the first quarter of 2027.

The debt-to-GDP ratio in Uganda stood at 52% by the end of financial year 2025/26, exceeding the East African Community (EAC) convergence ceiling of 50%. The country's foreign currency reserves increased by $2.4 billion to $6.7 billion during this period, equivalent to 3.7 months of imports.

However, experts caution that oil production revenues cannot fix all economic problems, and issues such as political governance, fiscal accountability, and project execution quality need attention. Dr. Brian Serunjongi, a senior research fellow at the Economic Policy Research Centre, notes that implementation of large transport projects running behind schedule and beyond budget can negatively impact Uganda's credit ratings.