Uganda’s oil industry is moving steadily toward a milestone many have awaited for years.
In the Albertine region, drilling is advancing, major infrastructure is taking shape, and the Tilenga project is edging closer to first oil production. Yet behind the visible signs of progress, dozens of Ugandan businesses say they are facing a financial crisis that threatens to undermine one of the country’s central oil-sector promises: local content.
At the centre of the dispute is approximately $9.7 million in unpaid claims owed to more than 60 Ugandan subcontractors that helped construct the Tilenga Engineering, Procurement and Construction (EPC) camp in Kasenyi, Buliisa District.
The camp, a large-scale facility designed to house thousands of workers involved in the oil project, was built between 2021 and 2023 by contractors operating within the Tilenga supply chain.
The affected companies provided a wide range of services, including electrical installations, air-conditioning systems, plumbing, information technology networks, fire safety equipment, security services, catering and heavy lifting operations.
According to project stakeholders, the work was completed and delivered to the satisfaction of the main contractors. However, several firms say they are still waiting to be paid years after some contracts were concluded.
For many businesses, the issue goes far beyond delayed invoices. To qualify for work in Uganda’s petroleum sector, local companies were required to meet strict international standards on safety, environmental management and operational performance. Achieving those standards requires substantial investment.
Firms borrowed money, purchased specialised equipment, upgraded facilities and trained staff in anticipation of participating in one of the country’s largest-ever industrial projects.
The expectation was that participation in the oil sector would strengthen Ugandan businesses, helping them build expertise and compete for future opportunities. Instead, many now find themselves trapped between unpaid invoices and growing financial obligations.
The consequences are spreading beyond individual companies. Businesses struggling with cash flow say they are finding it increasingly difficult to service bank loans and meet tax obligations.
Some risk losing tax clearance certificates, a requirement for participating in many public and private sector procurement opportunities. That creates a paradox at the heart of Uganda’s local content policy.
Over the past decade, government and industry have invested heavily in developing local suppliers capable of serving the oil and gas sector. The goal was to ensure that Ugandan companies would not merely watch the industry develop from the sidelines but would actively participate in and benefit from it.
Yet some of the very businesses that successfully entered the sector now say their survival is under threat. The problem has attracted the attention of regulators. The Petroleum Authority of Uganda has intervened and facilitated discussions involving the project licensee, the main contractor McDermott and KarmodBeta Joint Venture.
Those efforts reportedly helped reduce a broader dispute that once involved claims of about $31 million. To address the remaining claims, a forensic audit was commissioned and conducted by Deloitte Kenya.
Subcontractors submitted extensive documentation and cooperated with the review process. The report states that local companies believe the audit process has now concluded and are awaiting action based on its findings.
For the affected firms, however, time has become the critical issue. Each month of delay increases pressure on businesses that have already absorbed years of financial uncertainty.
Some fear that prolonged delays could force technically skilled Ugandan firms to exit the sector altogether, weakening the local supplier base that policymakers have spent years trying to build.
The broader question raised by the dispute is not simply whether payments will eventually be made. It is whether Uganda’s local content strategy can succeed if domestic companies lack the financial stability needed to survive after securing major contracts.
As Tilenga moves closer to first oil, the project’s physical infrastructure is nearing completion. For dozens of Ugandan contractors, however, another outcome remains unresolved: whether participation in the country’s flagship oil development will become a launchpad for growth, or a costly lesson in the risks of doing business at the lower tiers of a complex global supply chain.
