SFG: Ugandan Economy May Grow 6.6% as Tullow Oil Boosts Income
May 30 (Bloomberg) -- Uganda's economy may grow 6.6 percent in the 2011-12 fiscal year, boosted by spending on the country's energy infrastructure, the Finance Ministry said.
Growth may accelerate from 6.4 percent in the current financial year that ends on June 30, the ministry said in a budget document handed to Bloomberg News today in Kampala, the capital. The East African nation's government is scheduled to present its annual budget on June 8.
Uganda, East Africa's third-biggest economy, is on the cusp of an oil boom with Tullow Oil Plc, the U.K.-based energy company, expected to start pumping crude and gas from the Lake Albert Basin in 2012. The country has an estimated 2.5 billion barrels of oil, with about 1 billion barrels in proven reserves, according to Tullow.
Funds from oil flows will help finance the construction of electricity infrastructure, "unlocking one of the key major constraints to development and transformation of Uganda," the ministry said. The budget for the Energy and Mineral Development Ministry will be raised by 15 percent to 1.23 trillion shillings ($513 million) next year, it said.
Uganda will spend 828.6 billion shillings in 2011-12 developing the 650-megawatt Karuma Hydropower project along the Nile River, the ministry said. Construction of the 100-megawatt Isimba Hydropower project on the Nile is also expected to start next financial year, the ministry said. It didn't provide further details.
Oil Refinery
Another key project in the energy industry will be the construction of an oil refinery and an interstate pipeline, it said. The refinery is expected to begin operating within three years, the Energy Ministry said on May 25.
Expenditure on public works and transport will drop by 0.5 percent to 1.03 trillion shillings, according to the budget document.
The country's total budget for 2011-12 may expand to 9.25 trillion shillings from the projected 9.13 trillion in the current year, excluding debt repayments, the ministry said.
Uganda is Africa's second-biggest producer of coffee, after Ethiopia. Robusta accounts for about 85 percent of the country's annual output.
The Ugandan shilling weakened 7 shillings, or 0.3 percent, to 2,400 per U.S. dollar at 4:30 p.m. today in the capital, Kampala. The currency has depreciated by 3.8 percent so far this year, according to Bloomberg data.
--Editors: Paul Richardson, Antony Sguazzin, Karl Maier
