Uganda signs $4b re­fin­ery plant deal

The fi­nanc­ing agree­ment sets the stage for oil pro­duc­tion by 2020 when the fa­cil­ity be­comes op­er­a­tional

The East African - - NEWS - By AL­LAN OLINGO The Eastafrican

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 bar­relsper-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.

The de­vel­op­ment of the re­fin­ery will trig­ger a num­ber of other in­vest­ments in the en­ergy-based in­dus­tries.” Josephine Wa­pak­ab­ulo, CEO, Uganda Na­tional Oil Com­pany

Pic­ture: File

An oil re­fin­ery will en­able Uganda to be­gin ex­port in 2020.

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