Refined or crude? Battle for Uganda oil turns murkier

“DR Congo was ahead in the oil programme until the crisis that befell the country. When the Mobutu-Museveni arrangement failed, many multinationals and other entities lost out, and intrigues set in,” said Mr Biraahwa.

Where oil producing companies invest in refineries, they have significant control of downstream companies in sectors like transport and insurance.

Usually, they also have a stake in oil tankers, pipelines and railway entities.

Secondly, financing institutions for big-ticket projects like an oil refinery are the same ones that funded entities which established the existing refineries in the world.

They have a repayment arrangement based on the then global market.

Funding another refinery to serve East Africa and beyond means removing a substantial market share from their current borrowers, and perhaps interrupting the pace of debt repayment.

Sources also say Kenya is informally engaging Uganda in a refinery arrangement, given that it already has a refinery in Mombasa.

Uganda argues that Mombasa refinery is too small to serve the region.

But if such an agreement is made, Kenyan could refurbish and expand the capacity of its refinery and pipeline.

Private pipeline companies like Tamoil are engaged in building an extension of the pipeline from Kenya to Uganda and across to Rwanda.

Should Uganda begin refining its oil, the investment could be compromised by inability to pump oil in reverse.

This could explain why Uganda has not yet announced an ally to pursue its oil programme.

A number of delegations have engaged Uganda on this over the years, including Norwegians, Australians and Americans.

Most recently, President Museveni reached out to oil producing countries like Iran and Turkey.

With more discoveries, the government has most recently ruled out an early production system as “we will be forced to export crude oil, which is against our policy,” said Energy Minister Hilary Onek.