Uganda’s new petroleum policy shifts full oil oversight to PAU

Uganda’s petroleum sector has entered a new regulatory phase following the launch of the National Petroleum Policy 2025, a sweeping framework that centralises oversight of the entire oil value chain and positions the country for crude production.

The policy was launched by Deputy Speaker of Parliament Thomas Tayebwa at the sidelines of the convention at Speke Resort Munyonyo, marking the formal transition from the 2008 policy that guided early exploration and development.

Unlike the previous framework, which largely focused on exploration and production, the new policy is anchored on a broader objective of maximising in-country value addition while strengthening environmental safeguards and promoting equitable socio-economic development.

Its stated goal is “to sustainably exploit and utilise Uganda’s petroleum resources in a manner that maximises in-country value addition, fosters equitable socio-economic development, and safeguards the environment.”

Shift in regulatory control

One of the most significant changes under the policy is the expansion of powers for the Petroleum Authority of Uganda (PAU), which has regulated the upstream and midstream segments since its establishment over a decade ago.

Under the new framework, PAU will assume full oversight of the downstream sector, which includes fuel importation, storage, transportation, distribution, retail operations, and petrol stations.

Previously, downstream regulation was handled by the Ministry of Energy and Mineral Development under the Petroleum Supply Act of 1994, in collaboration with the Uganda National Bureau of Standards.

PAU Executive Director Ernest Rubondo had earlier indicated that the policy would unify regulation across the entire petroleum value chain.

“The new oil and gas policy places regulation of the entire petroleum value chain under a single regulator. As a result, PAU will now regulate downstream activities, including petrol stations and related operations,” Rubondo said in December 2025.

Closing long-standing regulatory gaps

Officials involved in drafting the policy say the reform is intended to close oversight gaps that existed in the downstream segment, particularly in fuel transportation and retail operations, which were not comprehensively regulated under the previous regime.

Sources familiar with the process said consolidating regulation under PAU was also seen as necessary ahead of the commissioning of Uganda’s planned refinery in Kabalega, Hoima District.

The refinery is expected to significantly alter the structure of the petroleum market, increasing domestic refining and reducing reliance on imported fuel products.

Institutional restructuring and costs

The expanded mandate is expected to increase PAU’s operational scope and staffing requirements. The authority currently employs about 220 staff, but will need additional technical and regulatory capacity to supervise downstream activities.

Policy implementation is projected to cost more than Shs 9.32 billion over the first five years, with about 90 percent expected to be financed by international oil companies, while the remainder will be covered through domestic resources and supporting mechanisms.

Despite the costs, government projections show strong long-term fiscal returns. The policy estimates a cumulative state cash flow of about Shs 121.975 trillion over the lifetime of Uganda’s petroleum resources.

Officials argue that the projected revenues far outweigh implementation costs, positioning the sector as a major contributor to future national income.

Investment and sector performance

Uganda’s oil sector has already attracted significant investment, including an estimated USD 7.5 billion in upstream and midstream development, and about USD 1.5 billion annually in downstream-related activities.

To date, the sector has recorded major milestones, including the discovery of 6.5 billion barrels of oil in place, with about 1.4 billion barrels deemed recoverable.

More than 15,000 direct jobs have also been created across exploration, infrastructure development, and related services.

Institutional realignment

Permanent Secretary at the Ministry of Energy and Mineral Development, Eng Irene Batebe, said the new policy will take effect in the coming financial year after supporting legal and regulatory amendments are passed by Parliament.

She said the framework is designed to consolidate gains made under the existing regime while strengthening Uganda’s capacity to extract long-term value from its petroleum resources.

The policy also clarifies roles for multiple state institutions, including the Uganda National Oil Company (UNOC), which manages government interests in production licences and is expected to take a more active role as the sector matures.

Other agencies such as the Bank of Uganda, Uganda Revenue Authority, local governments, and civil society organisations are also assigned specific roles in implementation and oversight.

Strategic direction

The National Petroleum Policy 2025 sets out key priorities including strengthening regulation across the entire value chain, increasing local content and national participation, reducing export of unprocessed resources, and improving environmental and safety compliance.

It also aims to streamline licensing processes and enhance efficiency in sector governance as Uganda moves closer to first oil production.

With the new framework, government is betting on a unified regulatory structure to balance commercial development, state revenue expectations, and environmental protection in one of the country’s most strategic emerging industries.