BULIISA, Uganda — A multiyear, 9.7 million dollar payment gridlock at the Tilenga upstream project has pushed more than 60 domestic subcontractors to the brink of insolvency, threatening to undermine Uganda’s local content policy just weeks before the nation expects its first oil.
An investigation into the project’s supply chain reveals that while the Tilenga engineering, procurement and construction camp stands completed in Kasenyi, the local firms that built the 4,000-person facility have waited up to three years for compensation.
The financial bottleneck involves a complex hierarchy of multinational corporations. The affected Ugandan companies were contracted by KarmodBeta Joint Venture, a tier-two specialist operating under a tier-one consortium led by McDermott and SINOPEC. TotalEnergies EP Uganda serves as the primary licensee and majority shareholder of the overall project, which is currently reported at 63 percent completion.
To qualify for the high-tech development, local firms invested heavily in capital-intensive upgrades, specialized machinery and international safety certifications to meet global standards. However, the prolonged withholding of funds has trapped these businesses in a cycle of debt, leaving them unable to service the commercial bank loans used to finance those initial compliance upgrades.
The cash crunch has triggered a wider economic domino effect, crippling the contractors’ ability to settle tax obligations with the Uganda Revenue Authority. Consequently, these firms have been denied tax clearance certificates, legally disqualifying them from bidding on new commercial contracts outside the oil sector.
Regulatory intervention by the Petroleum Authority of Uganda previously resolved a portion of an initial 31 million dollar dispute among the primary contractors. To settle the remaining 9.7 million dollar claim, the regulator commissioned a forensic audit conducted by Deloitte Kenya.
Project sources confirm the fieldwork and documentation phases of the audit have concluded. Subcontractors have submitted thousands of pages of verified records and are now waiting for TotalEnergies to review the final findings and authorize the release of the withheld funds.
With Tilenga’s central processing facility on track to deliver first oil by July 2026, the local companies maintain that the responsibility to resolve the lower-tier contracting dispute ultimately rests with the global operator. For these domestic firms, an immediate administrative resolution is the only alternative to corporate bankruptcy.
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