Uganda has signed an agreement with a consortium of American and Italian firms to finance, construct and operate its $4 billion refinery in Hoima district.
About eight months ago, Uganda started discussions with the Albertine Graben Refinery Consortium, which is composed of General Electric Oil and Gas, YAATRA Ventures LLC, Intracontinental Asset Holdings Ltd and Saipem SpA, seeking their support to finance the project.
The four firms were picked after a review of more than 40 companies that had expressed interest in the project.
“This agreement is a key step towards the construction of the oil refinery in Hoima District, since it ensures development, design, financing, construction, operation and maintenance of the 60,000 barrel-a-day facility. This deal would contribute to making Africa a huge powerhouse in terms of business,” President Yoweri Museveni said.
Last year, the consortium made a financing proposal that would see them establish, develop and operate a commercially viable refinery company, which would benefit not only Uganda but the East African region, the Energy Ministry said.
The financing agreement, done with the support of African Legal Support Facility (ALSF), a subsidiary of African Development Bank (AfDB), establishes critical terms and conditions for the oil refinery’s development.
This means that the refinery’s front-end engineering and design (FEED), project capital and investment costs, estimation environmental and social impact assessments can now begin, setting the ball rolling for the project that has faced numerous hiccups.
“Following an emergency request made by Uganda in June 2017, the ALSF responded by providing capacity building and training support in the area of contract negotiation to the Uganda National Oil Company. The Facility also supported the Ugandan government by making available an international legal firm to provide advisory services for their ongoing negotiations,” ALSF said in a statement.
Josephine Wapakabulo, chief executive officer of the Uganda National Oil Company, said the financing deals will now be “a game changer” for the country setting the stage for the actualisation of the project.
“The development of the refinery will trigger a number of other investments in the energy-based industries,” Ms Wapakabulo said.
She signed the financing deal on behalf of Uganda while Rajakumari Jandhyala, Yaatra Ventures chief executive officer, signed on behalf of the Albertine Graben Consortium.
The current reserves of crude oil in Uganda’s Albertine region are estimated to be approximately 6.5 billion barrels.
The oil refinery is expected to have a 60,000 barrels-per-day processing capacity, and is expected to intensify production shortly after the facility’s inauguration. The commercially viable hydrocarbon deposits were discovered in Uganda in 2006.
The project will be a joint venture with the Uganda Energy Ministry and the Uganda National Oil Company, a limited liability oil company owned by the Ugandan government.