Uganda and Dubai-based Alpha MBM continue discussions for deal on $4bn refinery project

Talks between Uganda and Dubai-based Alpha MBM Investments have “intensified” over the construction of a $4 billion refinery in the East African country, an oil executive has said.

Alpha MBM was earlier chosen as the preferred bidder to finance the refinery in the oil city of Hoima, with a capacity to process 60,000 barrels daily.

“Those talks are still ongoing, they have intensified,” Gilbert Kamuntu, chief commercial officer at the Uganda National Oil Company, told The National on the sidelines of the World Energy Congress. “We have been in discussions around how to structure the project and how to implement [it] as soon as possible. Our expectation is that we shall announce an investment decision shortly.”

The Hoima refinery, which will be East Africa’s first major crude processing plant, aims to reduce landlocked Uganda’s dependence on imported petroleum and diesel, which currently pass through Tanzania or Kenya.

Uganda forayed into oil and gas exploration after significant crude reserves were discovered in the country’s western region, particularly in the Lake Albert Basin near the border with the Democratic Republic of the Congo.

Production from the Tilenga and Kingfisher projects, which will have a combined output of 230,000 barrels per day, is on track to begin in the first half of 2025, Mr Kamuntu said.

The 1,445km East African Crude Oil Pipeline, connecting those oil and gas projects to the port of Tanga in Tanzania, is set to become operational next year.

Uganda has previously expressed interest in joining the Opec, which accounts for about 27 per cent of the world’s crude supply.

“The decision to join or not to join is something that has to be taken to the highest levels of the [Ugandan] government at the appropriate time,” Mr Kamuntu said.

Last year, Angola, Africa’s second-largest oil producer, announced its departure from Opec following a dispute over production quotas.

The Opec+ alliance is considering the inclusion of Namibia, which aims to start production by the end of the decade, Reuters reported this month.

Both Uganda and Namibia’s entry into crude markets comes amid an oil boom in Guyana.

The discovery of large oil reserves in the Stabroek Block, off the coast of Guyana in the Atlantic Ocean, has transformed the country into the world’s fastest-growing economy, recording the highest real gross domestic product growth rate in 2022 and 2023.

“What we see happening in Guyana is something that we believe we can replicate in Uganda,” Mr Kamuntu said.

“The resource curse that is well discussed has been avoided [in Guyana] at least at this point in time, and [the country] seems to have been able to get it right in terms of the resource helping the economy.”

Uganda’s ambition to become a fossil-fuel exporter feeds into broader discussions about energy transition in Africa, a region where millions still lack access to primary energy sources.

As the world switches to cleaner forms of energy, the continent continues to struggle with lack of financing, infrastructure limitations and technical capacity gaps.

Africa will require $2.8 billion between 2020 and 2030 to achieve its global warming prevention targets, according to the Climate Policy Initiative.

Alpha MBM has been chosen as the preferred bidder to finance the refinery in Hoima city