Uganda's 'Oil Rush' Town Stuck in the Slow Lane

CRUDE DREAMS

"Oil comes with its own hype. This investment seems to be way ahead of its time," says Stephen Kaboyo, managing director at Alpha Capital Partners, a leading Ugandan fund manager.

"These investors won't find enough business activity to support them right away. We'll have idle capacity."

Officials are now eyeing 2018 as the start of production, but Kaboyo believes this is still too optimistic, pointing to infrastructure delays such as a $4.5 billion, 1,300 km export pipeline to the Kenyan coast that has not yet been started.

The tender to build a $2.5 billion domestic refinery was awarded only early this year, to Russia's RT-Global Resources, and construction is not expected to start before 2016.

Government economists estimate that developing the oil fields will cost $15-22 billion, against $50 billion that Tullow says the country could earn from crude sales during the lifetime of the Lake Albert fields.

Such sums are exciting investors around Hoima, where a new tarmac highway shimmers westwards through marshes and forests before plunging over an escarpment to the Albertine basin and the border with Democratic Republic of Congo.