Uganda’s oil refinery project receives $20m from AFC

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THE Africa Finance Corporation (AFC) has advanced $20 million for the construction of Uganda’s crude oil refinery, paving the way for the start of the $4.27bn project. AFC signed the financing deal on the sidelines of the Africa Oil Week in South Africa.

Other financiers including the African Development Bank (AfDB), Prosper Africa, a US government initiative that unlocks opportunities to do business in Africa and another US-based firm, Trace and Development Agency are also expected to put money into the multi-billion-dollar project.

Stakes in the refinery

Uganda’s Energy Minister Irene Muloni led a team of government officials and officials from Albertine Graben Refinery Consortium (AGRC) to the invite-only meeting in South Africa. AGRC comprises YAATRA, Saipem SpA, LionWorks Group and Baker Hughes General Electric.

Uganda, which owns a 40 percent stake in the refinery, invited EAC states to co-own it. Kenya has committed to take a 2.5 percent stake in the Uganda refinery, while Tanzania wants 8 percent. The other East African countries are yet to commit on the shares that they will take. Total E&P has also increased its stake in the refinery from 10 percent to 11.5 percent.

Construction setbacks

Construction of the refinery has suffered several setbacks in the past. In 2016, a Russian consortium, RT Global Resources, which was the government’s preferred bidder, pulled out of the deal at the last minute. The government then went for the alternate bidder, South Korea’s SK Engineering.

In 2017, the company also pulled out on the grounds that it could not afford to take a risk of up to 60 percent, being the shares given to a lead contractor. After those hiccups, the government opted for a private-public partnership to develop the refinery. AGRC agreed to these terms.

AGRC is also required to build product storage facilities and construct a 205km product pipeline from Hoima to Kampala to serve Burundi, Rwanda, eastern DR Congo, northern Tanzania and western Kenya. There is also a plan to have a product pipeline going northwards to link with South Sudan.

Muloni also confirmed that a 29 square kilometre land for Kampala refinery infrastructure has already been secured. The refinery is expected to produce diesel, petrol, kerosene, jet fuel, liquefied petroleum gas and heavy fuel oil. This is expected to save the country $1bn, the amount it spends on importing petroleum products annually.

 

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