Tanzania has taken up an 8 per cent stake in the Uganda oil refinery project while Kenya will maintain a modest 2.5 per cent stake.
The EastAfrican has learnt that Rwanda, Burundi and South Sudan, the other members of the EAC invited to take a stake of public shares are yet to respond.
The new move represents a shift from a 2013 position in which Kampala offered a 10 per cent stake to member states in the community.
Offering shares in the refinery was intended to secure the regional market for a planned 60,000 barrel refinery in Kibaale, Hoima district in the Albertine grabben. The refinery is to be phased, with an initial production of 30,000 barrels.
“Government of Uganda is planning the development of a 60,000 bopd greenfield in Kibaale, Hoima district. The project includes a 201 km refined products pipeline from the refinery to Buloba near Kampala. The greenfield oil refinery will be developed in two modules of 30,000 bpd each, with the first expected to be complete in 2020 and the second train to come on board two year later,” said Energy Minister Irene Muloni, in a brief to Parliament.
The shareholding countries had been waiting for the Front End Engineering Design report to give total costs of the project before making decisions. The project is currently estimated to cost $4 billion.
Tanzania’s move to take the biggest share by far is a surprise because in the past it was the reluctant party, where Burundi, Kenya and Rwanda confirmed in writing in December 2013 and February 2014, their interest to participate in the refinery.
Instead, Tanzania wrote asking for feasibility study of the refinery that was done by Foster Wheel in 2011 and generally shows the commercial viability of the project.
Things seemed to change dramatically after Tanzania negotiated to divert a planned crude export pipeline from Hoima to Lamu port to route it through Tanzania to the port of Tanga. The deal left Kenya in the cold.
Pushing the refinery project delivery date to 2020 is yet another set back the project has encountered. In May, preferred bidder, Russian led consortium RT Global Resources, opened renegotiations on already concluded matters prompting the government to call off the negotiations.
Negotiations with alternate bidder South Korean SK Engineering also failed.
Uganda has 6.5 billion bopd in place, between 1.2 billion and 1.7 billion of which is recoverable. The resource also contains 350 cubic feet of gas.