Alpha MBM Investments LLC – an Emirati-based company has entered into negotiations with the government of Uganda over the possibility of investing in the oil refinery project at Kabaale Village in Kabaale Sub-county, Hoima District in Bunyoro Region.
The company which the Minister of Energy and Mineral Development, Dr Ruth Nankabirwa, revealed that is the investment arm of the member of the royal family of the United Arab Emirates, Sheikh Mohammed bin Maktoum bin Juma Al Maktoum, last year visited Uganda as part of the efforts to expand his business empire.
At the time the company visited Uganda, the Project Framework Agreement (PFA) between the government of Uganda and an American-led Albertine Graben Energy Consortium (AGRC) had ended and Uganda had decided not to renew it.
Dr Nankabirwa revealed to the press that a Memorandum of Understanding (MoU) was inked on December 22, 2023, between the government of Uganda and Alpha MBM Investments LLC from the United Arab Emirates, outlining the cooperation and negotiation terms for the oil refinery project in the Albertine graben.
The minister disclosed that negotiations of the key commercial agreements between the government of Uganda and Alpha MBM Investments LLC started on January 16, this year and are expected to be concluded within three months.
Reports indicate that Expressions of Interest (EOIs) had been received from potential investors in the refinery project which was projected to cost around $5b.
Alpha MBM Investments LLC, Africa Economic Aid Limited, Bakertilly Middle East Limited and St. Ignatius Energy are some of the investors who have expressed interest in the oil refinery project.
Albertine Graben Energy Consortium (AGRC) had suggested raising some of the money to construct the refinery at Kabaale village by listing on the stock exchange.
Minister Nankabirwa said Alpha MBM Investments LLC has proved that it has money to move forward with the project that is behind schedule.
Uganda expects commercial oil production before the end of 2025.
The minister said that she is praying that the new partner fast-tracks the process that will lead to the construction of the 60,000 barrels of oil per day (bopd) Greenfield refinery in Hoima district.
The Final Investment Decision (FID) by the American-led consortium should have been taken in June 2023.
The Permanent Secretary at the Ministry of Energy and Mineral Development, Eng Irene Bateebe, said that the design the government of Uganda is taking with Alpha, is expecting that at the time of signing the commercial agreements, a form of FID will be taken.
“Because immediately we sign the agreements, we shall see some works commence. So that is an innovative way, the works commence based on the equity of the two partners.”
The two partners in the project will be the private investor who will hold 60% shareholding and the Uganda National Oil Company (UNOC) with 40% shareholding.
“And for the National Oil Company, we have already begun programming their equity contribution. They have some portion and for the next financial year 2024/2025, we equally programmed some financial contribution. So they should be able to put on table their equity,” Eng Bateebe disclosed.
Alpha MBM Investments LLC becomes the third investor to take part in the refinery project in Uganda.
In February 2015, the government selected a consortium led by Russia’s RT Global Resources LLC and South Korea’s SK Engineering & Construction Co. to build and operate the refinery.
The negotiation about PFA with the Russian-led investors failed leading to a new bidding process that had the American-led AGRC selected as a preferred bidder.
The Front-End Engineering Design (FEED) for the refinery project was completed by AGEC- the then lead investors in August 2021 and approved by the Petroleum Authority of Uganda (PAU) in July 2022 legal framework.
The National Oil and Gas Policy for Uganda 2008 recommends refining the discovered oil in-country to supply the national and regional petroleum product demand before consideration of exportation.
The Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act 2013 provides among others, the legal foundation for the development of a refinery in Uganda and other midstream infrastructure like pipelines and storage facilities.