Absa Bank Uganda has urged Small and Medium Enterprises (SMEs), Local and multi-International companies to have bankable proportions to access financing to invest in the oil and gas sector in the country.
Recently, Uganda and Tanzania signed a final oil deal that will see the construction of a US$3.55 billion-crude export pipeline that would pump Ugandan oil for export. Uganda’s oil is expected in 2025.
The 1,445 km-project will run from Uganda’s western oil rich district of Hoima, where crude reserves were discovered in 2006, to Indian Ocean seaport of Tanga in Tanzania. The East African Crude Oil Pipeline (EACOP) will create over 15,000 direct jobs and temporary ones will peak to 30,000.
Mrs. Irene Mutyaba Kabira, the Corporate Banking Director at Absa Bank said the biggest challenge that most of the companies face is collateral. However the banking system has since evolved and the financial sector is putting forward a number of structured conditions that can be able to address some of the pertinent issues that have been raised.
Speaking during the 6th edition of the Uganda International Oil and Gas Summit held under the theme: Driving the final steps in commercialization and production, Mrs Kabira said sector players can now access financing from a number of financial service providers including Absa Bank for putting up Silos, farm equipment, vehicles.
“In order to benefit from the Oil and gas sector, manufacturing companies need to have capacity to produce, supply to meet demand. The real winner in the oil and gas sector will be those companies that have taken time to prepare how best they would like to get over it,” she said.
In tandem, she urged companies to create a corporate governance system that will drive data decision entities in order to be able to get money that they need to invest in their projects.
“Companies should look at joint ventures. When you look at the magnitude of the contract running the sector, companies need to step back and think of other entities where they can bring the muscle together and win bigger contracts,” she said.
“There are a lot of Private Equity Funds in the market at the moment. We need to try and find out more information on how we can benefit from some of them and prepare ourselves to produce to scale in terms of the oil and gas sector,” she said.