Kenya wants shares in Uganda's oil refinery

By David Lumu & David Lukiiza

Kenya is interested in Uganda’s $2.5b (sh7.5 trillion) crude oil refinery project that is to be built and operated by RT Global Resources, a Russian firm.

Henry Okello-Oryem, the state minister for foreign affairs, revealed that Kenya had already bought a 2.5% equity stake in the oil refinery.

The oil refinery, which will be built in Kibaale, Hoima, is based on a public-privatepartnership where the investor has a 60% stake and the Government, 40%.

The investment of member states will be hinged on the 40% Government shares.

Oryem said the Government expects Rwanda, South Sudan, Tanzania and Burundi to buy shares in the oil refinery project because “this is a regional project that will benefit the East African Community”.

According to the minister, the Kenya government bought the shares during the recently concluded 9th Northern Corridor Integration Projects Summit in Kigali, Rwanda. The summit took place on March 7.

“The Government invited neighbouring countries to buy shares into our petroleum projects. The other countries are also considering the investment,” he said.

Oryem, who was flanked by Ambassador Emmanuel Hatega, the national coordinator of the Northern Corridor Integration Project, revealed that the Government had started negotiations with Russian officials from the RT Global Resources firm.

“Within two weeks, the Government, through the Ministry of Energy, will announce the final decision from these negotiations on the refinery,” he said.

The firm owned by Russia’s defence conglomerate, Rostec, beat South Korea’s SK Engineering and Construction Company to get the contract. Both firms made their final offers in January this year.

During the summit, Oryem said presidents Yoweri Museveni, Uhuru Kenyatta (Kenya), Paul Kagame (Rwanda) and Salva Kiir (South Sudan) agreed to waive permit fees for professionals seeking job opportunities within the member states.

“It was also agreed that Uganda, Kenya and Rwanda professionals could now work within the member states freely. However, one should be a professional. If you are a riffraff, cleaner, sweeper, office messenger or serving tea, we do not want you in Uganda. This waiver only applies to professionals,” Oryem emphasised.

He described the attendance of Jakaya Kikwete, the president of Tanzania, as “a positive gesture” that has reenergised the development of the East African Community.

“A bee only goes to a beautiful flower. That is why President Kikwete attended. This was the first time he was attending and it is a positive gesture. I would also like to state that during the Kigali summit, Burundi joined the Northern Corridor Integration Project initiative,” he said.

The next summit will take place in Kampala in May.

The integration projects include the standard gauge railway, ICT, oil refinery development, pipeline projects, power generation, political federation, single customs, East African Community tourism visas, defence and security co-operation and road infrastructure projects.

Oryem also noted that Toyota-Tsucho, a Japanese firm, had been endorsed by member states to “do studies for both crude and refined oils from Uganda to Rwanda and Uganda to Kenya”.

On the construction of the Ugandan standard gauge railway network, Oryem said a Government team is in China to negotiate the financing of the project with the Exim Bank of China.

The over $8b (sh20 trillion) standard gauge railway deal was given to China Harbour Engineering Corporation (CHEC).

   Oil refinery timeline   

June 6, 2013: While delivering his State of the Nation address, President Yoweri Museveni reveals that the Government and oil companies had agreed to construct both a crude oil refinery and an export pipeline.

December 6, 2013: Government commences with the compensation of 7,118 residents in the proposed refinery area, giving them a three-month ultimatum to vacate the land.

December 13, 2013: Six firms are shortlisted to build the refinery in Kibaale, Hoima district.

January 10, 2014: RT Global Resources and South Korea’s SK Engineering and Construction Company make final offers to build the refinery.

February 16, 2014: Government announces that a consortium led by Russia’s RT Global Resources had won the contract to build and operate the refinery pending negotiations on the fulfillment of other salient tenets of the contract.

March 12, 2014: Negotiations between the Government and RT Global Resources commence.