Uganda seeks new funding for oil refinery after consortium deal lapses

An oil refinery. (Image: File/provided by Uganda National Oil Company)

Uganda is seeking new funders for its planned crude oil refinery after negotiations with a consortium of American and Italian firms expired on June 30, 2023.

Mr Solomon Muyita, the Spokesperson for the Ministry of Energy and Mineral Development, says the government had registered achievements on the refinery project with the Albertine Graben Energy Consortium (AGEC) but the latter failed to raise capital.

The project achievements had been on the completion of the Refinery Configuration or Front-End Loading 2 (FEL-2) and the Front-End Engineering Design (FEED) which defines the technical design of the oil refinery, the project Environmental and Social Impact Assessment (ESIA) study, logistics study and commercial and marketing study.

However, Mr Muyita says there are a number of outstanding aspects for the 60,000 barrels per day refinery that is planned to be constructed at Kabaale village in Kabaale sub-county, Hoima district in Bunyoro region, mid-western Uganda costing an estimated $3b to $4b and assist the country to process its crude reserves that it hopes to start producing in 2025.

“There are, however, a number of outstanding aspects, including mobilisation of financing for the project and the Government of Uganda is now open to receiving offers from public sector capital providers to participate in this nationally and regionally strategic project. The government of Uganda is now open to receiving offers from public sector capital providers to participate in this nationally and regionally strategic project,” he says.

The AGEC consortium which comprises American companies Yaatra Africa and Lionworks Group Ltd both from Mauritius, Baker Hughes (part of General Electric) and Italian firm Saipem SPA, had in 2018 committed to making a Final Investment Decision by June 2023 which did not materialise.

GE, YAATRA and Saipem did not respond immediately to requests for comment. Contact details for Lionworks were not immediately available.

In 2018, the government and consortium signed a project framework agreement by which the consortium committed to designing, financing and developing the refinery project.

That agreement expired on June 30 without the consortium securing necessary financing for the project.

“We are being alive to the timeline within which we need this project executed. We expected the Final Investment Decision by end of June, which did not happen. That greatly hampers the timelines,” Mr Muyita says.

Adding: “So far they’ve not confirmed that they have financing. So, for the consortium, when they get financing, they can still get back to us, but in the meantime, we are open to any other developer.”


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