It is unlikely that Uganda will produce oil by 2018, Bank of Uganda has indicated.

In the monetary policy report for April 2015, the central bank says “the global oil price outlook places severe question marks over the speed with which Uganda’s oil resources can now be developed, especially given that the country’s proven oil reserves are waxy, which increases the cost of moving them to the coast.”

The report then goes on to state: “Whereas oil production had been projected to start in 2018, this date could now be pushed out even further, given that the profitability of oil investments could remain depressed in the foreseeable future.”

This is the first time that a top government institution has come out to raise doubt over Uganda’s target of producing its first barrel of oil by 2018. For a long time, the ministry of Energy has set 2018 as the production year for oil even as the process to award production licenses and create the institutions to regulate the industry drags on.

In the budget framework paper for 2015/16, the revenue forecast for the next five years don’t include money from oil. The paper says this is because “the industry is only starting to put in place the infrastructure needed for production.”

Industry watchers had long set the production year anywhere between 2020 and 2022. The year of production is not a mere date. Financiers such as banks, investors targeting the value chain of Uganda’s oil industry, are usually keen on this particular date as it guides their investment decisions.

That a top institution such as Bank of Uganda, where a petroleum fund will be kept, can question the country’s plan to beat the 2018 target could tilt the investment decisions of a number of investors.

Uganda discovered commercial crude reserves in 2006, which government estimates at 6.5bn barrels. About 1.4 billion barrels of this oil is said to be recoverable. The BOU report warns that the failure of Uganda to produce oil by 2018 “has implications on sentiments on the Ugandan economy, with potential effects on depressing economic outlook.”

Global oil prices fell to under $63 a barrel on Monday, according to Reuters. At the beginning of this year, a barrel traded at a five-year low of $50. The drop in global oil prices has forced oil companies such as Tullow Oil and Total to cut back on their expenditures.

At the start of this year, Razia Khan, the head of research for Africa at Standard Chartered bank, said Uganda’s progress in the oil sector could be negatively affected if global oil prices continued to fall.

“In the very near term, Uganda should benefit from a lower import bill… However, with Uganda developing its crude, the country is also likely to experience the negative of a weaker oil price environment,” said Khan, in the Stanchart’s Uganda country briefing report.

BOU says the recent announcement that the Russian group, RT Global Resources, had been chosen as the preferred partner to build Uganda’s $4bn oil refinery means that this part of the project is likely to move ahead along with some of the associated infrastructure.

Toyota Tsusho, a Japenese firm, is already undertaking a study for an oil export pipeline to the Kenyan port of Lamu. The report is expected in June.