Uganda seeks investors for US $4.5bn refinery project

Uganda is seeking new investors for its US $4.5bn refinery project. This is follows the expiration of its Project Framework Agreement (PFA) with the consortium of American and Italian firms, called the Albertine Graben Energy Consortium (AGEC).

The Ministry of Energy stated that AGEC made significant progress but failed to secure critical financing for the project, prompting Uganda to seek new capital. While the Yaatra Africa-led consortium, which includes American companies Yaatra Africa, Baker Hughes (part of General Electric), and Italian firm Saipem SPA, did not have its PFA extended or sign an implementation project agreement after the expiration, they still have an opportunity to participate in the new process.

READ:Chad launch tender for pumping and drinking water plants in Kariari

Committing to equity

The financing structure for the refinery involves a debt-equity ratio of 70:30, with the majority of the capital expected to be raised by the private developer. In an effort to secure funding, Uganda signed a memorandum of understanding with Algeria’s state-owned energy firm Sonatrach Petroleum Corporation in March for collaboration in the midstream and downstream development of Uganda’s oil sector, including the refinery.

In addition to seeking new investors, Uganda is considering involving its East African Community (EAC) partner states, such as Kenya, Tanzania, Rwanda, Burundi, South Sudan, and the Democratic Republic of Congo (DRC), to commit to taking up equity in the project. Publicly owned agencies have also been mentioned as potential sources of capital investment.

The refinery project has achieved certain milestones with AGEC, including the completion of the Refinery Configuration or Front-End Loading 2 (FEL-2), the Front-End Engineering Design (FEED), the project Environmental and Social Impact Assessment (ESIA) study, logistics study, and commercial and marketing study.

Uganda discovered commercially viable hydrocarbon deposits in the Albertine region in 2006, with current crude oil reserves estimated to be around 6.5 billion barrels. The refinery is expected to have a processing capacity of 60,000 barrels per day.