By John Odyek
Two consortia from Russia and South Korea have emerged as the final bidders of Uganda's $2.5 billion refinery after two others from China and Japan were knocked out of the bidding process, the Ministry of Energy said on Tuesday.
The ministry said in statement that a consortium led by South Korea's SK Energy Co. and another led by Russia's RT-Global Resources had been selected to proceed to the final phase of the bidding process.
Uganda wants to add value to its crude output to maximise earnings from its hydrocarbon reserves in the Albertine Basin in Western Uganda.
Government geologists estimate reserves at 3.5 billion barrels with 1.7 m barrels recoverable.
The refinery is expected to be set up in Hoima district.
Early this month the two companies together with China's state-owned China Petroleum Pipeline Bureau (CPPB) and Japan's Marubeni Corporation were invited to submit bids from an initial shortlist of six firms.
Marubeni Corporation’s proposal was not evaluated because it lacked a bid bond while CPPB's proposal did not adequately satisfy all the requirements of tender, the statement said.
“Government will commence negotiations with the two preferred bidders.
The two consortia will be expected to submit their respective best and final offers by the end of August 2014,” the statement said.
Officials have said a final winner, who is expected to take up a 60 percent stake in project as well as developing and operating it, will be announced by the end of the fourth quarter this year.
The facility is planned to process 60,000 bpd and much of Uganda’s projected crude output is expected to be exported via a pipeline through Kenya, which has yet to be built.
Oil production is expected to begin in 2017 with maximum output seen at 200,000 barrels.