By Ibrahim Kasita
Uganda has invited private firms to express their interest in building and operating the proposed oil refinery to promote valuable use of the country’s petroleum resources.
The Uganda Refinery Project will have the capacity to process 60,000 barrels per day and will be located in Hoima.
In a Request for Qualification published on Monday to identify a lead investor/operator for the development of the project, a private sector partnership will be established to encourage investment and technological innovation.
This arrangement is expected to provide the best and most cost-effective solution for the project in which the Government (public) 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 refinery.
According to the development timeline, the selection of the lead investor/operators will be midnext year and it is expected the refinery will be in operation by 2017/18. This date of 2017 coincides with the expected completion timeline of the Kingfisher Field development phase being undertaken by the China’s National Offshore Oil Corporation (CNOOC Uganda).
Uganda awarded the first production licence to CNOOC Uganda last month, and the first production is expected in 2017/18.
“We are committed to a transparent process to develop Uganda’s first oil refinery, Kabagambe Kaliisa, the permanent secretary in the energy ministry, said.
“This project marks the start of Uganda’s energy independence, and the refinery will enhance 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.”
The Uganda Refinery Project has significant higher gross refining margin than international levels due to inland location, the composition of the crude oil used as feedstock and the markets the refinery will serve.
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.
This will be done by meeting Uganda’s growing energy needs for petroleum products and electricity, enhancing energy security by reducing the need to import petroleum products, improve the balance of payments and creating investment opportunities in other sectors.
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 for Ugandans.
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 the refinery 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.