Uganda’s $4.27 billion crude oil refinery project has received $20 million lending support from Africa Finance Corporation. The financing deal was signed recently on the side-lines of the Africa Oil Week in South Africa. The multi-billion-dollar project is expected to get support from more institutions like the African Development Bank, Prosper Africa, a Us government initiative and another US-based firm, Trace and Development Agency.
Speaking about the project, Uganda’s Energy Minister Irene Muloni said that Albertine Graben Refinery Consortium (AGRC) and the financiers will work out the modalities of using the funds. AGRC comprises of YAATRA, Saipem SpA, LionWorks Group, and Baker Hughes General Electric.
Construction of the refinery went through several ups and downs in the past. In 2016, a Russian consortium, RT Global Resources pulled out of the deal at the last minute. Later in 2017, South Korea’s SK Engineering developed cold feet and pulled out saying that it could not afford to take a risk of up to 60 percent, being the shares given to a lead contractor. Then the Ugandan government decided to go for a private-public partnership to develop the refinery and AGRC stepped in. A Project Framework Agreement was signed by the consortium in April 2018 in Kampala to undertake all the pre-Final Investments Decision (FID) activities including risk mitigation measures, due diligence, and identification of equipment and components that produce the desired products and by-products. According to the agreement, AGRC is expected 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.
The opening of the refinery is expected to save the country almost $1 billion, it spends on petroleum products imports annually. Diesel, petrol, kerosene, jet fuel, liquefied petroleum gas and heavy fuel oil are to be produced from the refinery.
The Government of Uganda is expected to participate, through Uganda Refinery Holding Company, a subsidiary of Uganda National Oil Company. The Ugandan government, the minister added, will raise its share of the investment through debt and equity. Uganda owns 40 percent equity in the refinery. It has invited EAC states to co-own it. Though there is some initial interest from Kenya and Tanzania, other East African countries are yet to commit to the shares that they will take.
