Uganda in search for new refinery investors to replace Russian firm

Uganda in search for new refinery investors to replace Russian firm

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UGANDA’S plan to become energy independent a few years after the first production of crude is likely to be further delayed. Following the discovery of crude oil, the country had planned to allocate part of the crude produced to its own refinery.

Uganda picked a consortium led by Russia’s RT Global Resources to build the refinery in 2015 ahead of a competing bid from a South Korean consortium. Consequent upon selection of the Russian firm, the two parties were engaged in different negotiations for a period of 14 months. RT Global pulled out of negotiations with the government in July following disagreement over sharing responsibilities.

The Ugandan government had hoped to finance the project with a private public partnership (PPP) model that will see RT Global contribute 60 percent of the cost and own 60 percent of the project. A Korean firm, SK Engineering and Construction, which came second in the bidding process, has refused to enter any negotiation with the government. However, following RT Global’s withdrawal, the Ugandan government is now favouring a state-owned model that will see the country hold a controlling interest in the company.

Other companies that were involved in the bidding process for the project include Japan’s Marubeni and China’s Petroleum Pipeline Bureau CPPB. Uganda currently imports all its petroleum products, mostly through Kenya and Tanzania.

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