By Ibrahim Kasita
Over 50 global firms have applied to build and operate the first multi-million dollar oil refinery in Uganda’ Lake Albert basin.
The high interest in the refinery underscores its profitability and a strategic investment project. It has also has also disapproved the critiques who claimed that the project could not attract global interests.
Following the confirmation of commercial oil reserves, government’s intent has been to refine the oil resources in the country as per stated in the National Oil and Gas Policy for Uganda.
And in mid-October, Uganda invited firms to express their interest for the development of the refinery in a public-private partnership arrangement.
However, as at the submission deadline of November 8, over 50 global reputable firms backed by their governments had submitted documents expressing their interest in the refinery project. Russia’s state-owned Rostec Corporation has publicly announced interest in the project.
A high-level delegation from Uganda was invited to Russia’s capital of Moscow to promote the refinery project investments.
The team was headed the minister of energy and mineral development, Irene Muloni and accompanied by the permanent secretary, Fred Kabagambe-Kaliisa, and the technical staff.
“We have returned from Moscow on a mission to carry out investment promotion for the Refinery,” Kaliisa, confirmed.
He said that both the Russian government and Rostec, which is a multi-billion dollar state corporation with over 600 subsidiaries, were highly interested in the project.
“This is good for Uganda. Uganda will not need to borrow the money to invest in the refinery, Kaliisa explained.
“And Rostec will not need to go to the financial market to borrow because the government will support them. We have agreed on our bilateral cooperation.”
Minister Muloni confirmed that the investment promotion in refinery and pipelines development has progressed in various ways.
She mentioned that several promotional meetings were held with prospective firms. They include DAO Group (Kuwait), Haldor Topsoe (Denmark), Chevron (Nigeria), Vitol (UK) GS Engineering & Construction (Korea) and Mamorithi Pty Ltd (South Africa).
Other interested firms are Marubeni Itochu Steel & JFE Steel Europe Ltd (Japan), SAFINAT Group of Companies (Russia), Clyde Union Pumps (UK) Volo Investments Holdings Ltd (British Virgin Islands), and Link Energy (Nigeria).
Also Petrofac (UK) OMK Steel (Russia), Jack’s Holdings (Albania), Samasung Group (South Korea), Hyundai (South Korea) expressed interest for the refinery.
However, the bids are yet to be opened for evaluation.
The Uganda Refinery Project will have the capacity to process 60,000 barrels per day and will be located in Hoima.
The Project will serve a large and growing market for petroleum products in East Africa with opportunities for significant risk-adjusted returns.
There is high demand for petroleum products in Uganda, Rwanda, Burundi, eastern Democratic Republic of Congo, Southern Sudan, Kenya and Tanzania as the East African economies expand.
The refinery project is expected to make use of Uganda’s oil and gas resources to contribute to early poverty eradication and create lasting value to society.
Crude supply will be sourced from the consortium of upstream producers, comprising CNOOC-Total-Tullow partnership and the National Oil Company.
“This Project marks the start of Uganda’s energy independence and the refinery will enhance Uganda’s energy security by unleashing the opportunity of our country’s rich oil resources, which some have described as the largest onshore oil discovery in Africa in the past 20 years,” Kaliisa said.
According to the development timeline, the selection of the lead investor/operators will in mid-next year and it is expected the refinery will be in operation by 2017/18.
During the construction phase, it is estimated that between 4,000 and 6,000 jobs will be created. Once completed it is expected 650 permanent jobs will be created and most of them will be Ugandans.
Uganda has established the legal basis for the Project. Parliament enacted the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act that will provide the framework for the development of the downstream petroleum sector in Uganda, which includes this Project.
The transaction advisory team is led by independent investment banking firm Taylor-DeJongh.
Since 1987, Uganda’s economy has been growing at twice the rate of Sub-Saharan Africa. Uganda is ripe for investment and holds abundant energy resources―approximately 3.5 billion barrels of oil (of which 1.2-1.7 billion is commercially recoverable) and 350 billion cubic feet of gas in the Lake Albert region.
The refinery will be built under a public-private partnership expected to provide the best, brightest and most cost-effective solution for the project.
Government will hold 40% equity. The balance of 60% shares goes to the private sector/s. Already Uganda has invited the four East African partner states to invest in the 40% public shares in the proposed Uganda oil refinery.
50 global firms target Uganda’s oil refinery