Extractive and Energy

Uganda approves eight companies to fund $4 bn oil refinery establishment in Hoima

The agreement of the core project terms signals the start of negotiations with the consortium on the Project Framework Agreement.

Oil mining in the East Africa sector has experienced a robust growth with the emerging establishment of pipeline to facilitate the refinery industry. Tanzania has been on the peak in the trending situations but Uganda has a similar idea as well in investing in the oil and petroleum industry.

The government of Uganda has already contacted a conglomerate of investors ready to fund the construction of a whooping UGX 14, 000 bn oil refinery in Hoima. Among the consortium of partners include American and Italian firms.

The Albertine Graben Refinery Consortium is made up of General Electric Oil and Gas, YAATRA Ventures LLC, Intracontinent Asset Holdings Ltd, and Saipem SpA.

Stephen Isabalija, the energy ministry permanent secretary, said that government has agreed on the terms with the consortium.

A statement released by the energy ministry said that over 40 companies expressed interest in developing the oil refinery.

“Government’s technical team went through the different proposals and zeroed down on eight companies that were proposing something related to the government plans,” the National Oil Company chief legal and corporate affairs manager, Peter Muliisa, said in an interview.

The eight companies were asked to submit detailed proposals on how they intended to manage the project and their sources of financing. It’s from those that the final four were selected.

The eight are SNC Lavalin of Canada, Yatra Ventures LLC and Apro, both from the USA, and IESCO of Turkey. Others are Chinese firm Guangzhou Dongsong Energy Group, Spain’s Profundo, Bantu Energy, a Canadian and Ugandan consortium, as well as Italy’s Maire Tecnimot.

“The Consortium has proposed to government a financing approach and a path to establish develop and operate a commercially viable refinery company with a strategic benefit to the country and the region,” Mr Isabalija said in the energy ministry statement.

The agreement of the core project terms signals the start of negotiations with the consortium on the Project Framework Agreement.

The PFA will detail the proposed solutions, validation of the solutions, risk mitigation measures, and additional due diligence necessary for accelerating investments and financing for the project.

Mr Isabalija said the project framework agreement is expected to be concluded and signed within the next two months.

The signing of the Project Framework Agreement will, in turn, pave the way for the commencement of pre-Final Investment Decision activities such as Front End Engineering and Design, Project Capital and Investment Costs Estimations, Environmental and Social Impact Assessments, among others.

The decision to turn to the American-led consortium comes two months after the government’s preferred bidder, China Petroleum Engineering & Construction Corporation from China, withdrew from the race.

CPECC was linked to China National Petroleum Corporation, one of the world’s largest oil companies, and had already been appraised as the best bidder.

CPECC was part of the consortium that was controversially awarded a tender to develop the Sukulu Hills phosphate reserves in Tororo district in 2014. The project has however struggled to get off the ground.

Others in the consortium included EXIM Bank of China, and Industrial and Commercial Bank of China, Guangzhou Silk Road, East China Design and Engineering Institute, and China Africa Fund for Industrial Cooperation.

The consortium, however, fell apart after CPECC exited due to disagreements, according to insiders.

Most Popular

To Top