Chinese quit Museveni’s refinery deal

The Company, Burj Petroleum, had offered to invest 100 percent in the refinery, retain a stake of 80 percent and offer government 20 percent free of charge. This raised major concerns in the sector and the company was later dropped.

This time, since the Dongsong consortium emerged the best and had the money, it had expressed concerns about having an alternate bidder.

But even before they could conclude negotiations, the pull-out by their major contractor—CPECC—appears to be scattering what was seen as a solid deal.

With such disappointments, critics say government might have no choice but source funding for the project itself or revise its original stance that the refinery would reserve the right of first call on oil produced.  This stance essentially meant that there would be no oil production without a refinery.

But with no cash to implement the project and investors jumping out of the deal at the last minute, opponents of the refinery say it is time for Museveni to ditch the whole project. This group has always said that a refinery will become another worthless but expensive liability on the government.

But proponents of the oil refinery, insist that apart from creating jobs, the refinery would save Uganda a yearly petroleum products import bill between US$ 1 billion (2.5 trillion) and benefit from regional demand of petroleum products, which continues to grow at over 7 percent. The problem is that with no capable investor on the table, the figures can only remain figments of imagination by the projects’ proponents.

Timeline

2010 AUGUST

Foster Wheeler feasibility study is completed, shows that the refinery project is economically viable

2013, DECEMBER

Six firms are shortlisted to build the refinery in Kabaale Parish, Hoima district.

2013, DECEMBER

Government commences the compensation of residents in the proposed refinery area, gives them a three-month ultimatum to vacate the land.

2014, JUNE

Selection for refinery contractor narrows down to two companies, a Consortium led by South Korea’s SK Group and another Consortium led by RT Global Resources from Russia.

2015, FEBRUARY

Russia’s RT-Global Resources-led consortium is announced winner of the bid to build the oil refinery. South Korea’s SK Group comes second.

2016, JULY

RT Global Resources, a consortium led by Russia, pulls out of negotiations with government as a lead investor for the oil refinery.

2016, SEPTEMBER

SK is no longer interested in any negotiations. Government commences new process of calling and reviewing interested investors

2017, FEBRUARY

Energy Minister Irene Muloni says government hopes to announce the potential investors for the refinery in March.

2017, MAY

Four consortia are announced as the new contenders for refinery deal

2017, JUNE

The Dongsong Energy Group-led consortium beats the competition. America’s Yaatra comes second. The same month Dongsong’s consortium loses major contractor—CPECC.

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