The Independent Uganda: You get the Truth we Pay the Price
Kampala, Uganda | THE INDEPENDENT | Ugandans seeking employment in the oil refinery in the Albertine Graben need to be patient as the negotiations go on.
State Minister for Energy, Okasaai Opolot says Ugandans will get jobs during and after the construction of the refinery.
The government of Uganda plans to develop 60,000 barrels of oil per day refinery at Kabaale, Buseruka Sub-County in Hoima District.
The refinery project is part of the efforts by the government to build a petrochemical industry from Uganda’s oil and gas resources. The refinery will produce refined petroleum products for in country.
The Ministry of Energy in January began negotiations with Alpha MBM Investments; an investment firm from the United Arab Emirates (UAE) to build the oil refinery project.
The new partner came in after Albertine Graben Energy Consortium (AGEC) dropped out of the deal in which it was to Build and operate the Greenfield Oil Refinery estimated to cost US$ 4 billion (15.2 Trillion)
The Private sector group, which comprised YAATRA Africa, Italian Nuovo Pignone International Srl, LionWorks Group Limited from Mauritius, and Saipem p.A.
While other key projects for the commercialization of oil from the fields in Kikuube, Bulisa, and Nwoya are going on, it is now evident proceeding the refinery will not be up and running when oil production begins most likely during the fourth quarter of 2025.
While the Minister confirmed that the negotiations with the new developer were ongoing, he was hesitant to put timelines on when the investor is expected to announce the Final Investment Decision (FID) for the project. Dr. Okasaai did not also reveal what agreement is pending for an FID to be taken.
“We would like to have a refinery that is forward-looking to deliver the expectations of not only Ugandans. But the delivery of standards that fit the global trend. That is the type of refinery we would wish to have,” said Okasaai Opolot.
“We have signed the various agreements, and the configuration of the refinery is being improved as we go forward”
The final refinery configuration study was completed and approved by the government in 2019. The study was to determine the final refinery as a Residue Fluid Catalytic Cracker (RFCC) type of refinery.
Details of the new configuration remain secret between the government and the new investor. Okasaai Opolot revealed that the government had intended that the refinery should be operating by 2027.
“And we have not changed that target. Give or take one year, is what we are looking forward to. The latest we expect it is 2028. The earlier the better,”
The Minister of Energy and Minerals Development, Ruth Nankbirwa in January told journalists at the Ministry’s headquarters that the negotiations of the key commercial agreements with Alpha MBM Investments were to be concluded within three months.
However, according to Okasaai, the negotiations are ongoing. “We are discussing. And the discussions will take time. We are doing a lot of configuration. A better question would be will the information be availed to us,” Okasaai Opolot insisted when asked about the configurations and when an FID is expected.
Going by the process leading to an FID for the Lake Albert Development comprising of the Kingfisher, Tilenga, and the East African Crude Oil Pipeline (EACOP), it appears like the negotiation of the key agreements for the refinery will equally take some time.
According to information obtained from Uganda National Oil Company, several agreements have to be signed before the investor gets his boots on the ground.
The agreements include the Crude Suppliers Agreement intended to put the needed feedstock of 60,000 barrels of crude oil per day needed for the refinery. This agreement has to be between the crude oil owners and the refinery company.
In this case, the crude oil owners are the Government of Uganda and Uganda National Oil Company, TotalEnergies E&P Uganda, and China National Offshore Oil Corporation (CNOOC) Uganda Limited. In addition, a shareholders’ Agreement will be signed by shareholders of the refinery company.
Those include Uganda Refinery Holding Company; a subsidiary of the UNOC will hold a participating interest of up to 40% in the Refinery Company on behalf of UNOC and the Government of Uganda.
The shareholders’ agreement lays out the financial obligations of each part such as cash calls, and defaults, and stipulates the voting rights. The offtakers Agreement or Product Sales Agreement is intended to demonstrate that there are buyers of the finished products.
The decision to have the Offtakers Agreement will be determined by potential lenders and financiers. The refinery project is planned to have a debt-to-equity ratio of 60: 40 respectively, implying that 60% of funding to the oil refinery will be a debt whereas 40% will be equity. These will also include the Host Government Agreement and the Offtakers Agreement.
As the government negotiates the agreements, expectations are high in Kyakaboga where the refinery is to be located. Young people whose homes were displaced to pave the way to the refinery are eager to witness and participate in its construction. One such person is Christopher Opio, who resides in Kyakaboga resettlement.
“I was displaced by the oil refinery project. If there are people who are opposed to the crude oil pipeline, why are you not investing money in the refinery that displaced me? When is that refinery going to be built so that we export our refined oil than the crude one and miss on the petrochemical industry?” Opio asks.
Dr. Opolot Okasaai said he is happy that the people in Kyakaboga are showing interest and eager to see the refinery constructed. He affirmed that the local communities expected to benefit as per the local content requirements.
“I would expect the people who were displaced from that area to be looking at the jobs that are coming in that area. And what can you do? I would wish to see them and their children working in the refinery,” he said.
Dr. Joseph Kobusheshe, the Director For Environment, Health, and Safety at the Petroleum Authority of Uganda (PAU) said the plans for the 60,000 barrel-per-day refinery are in place and that the government has already acquired the land.
“The front-end engineering design was completed; the environment and social impact assessment was completed. So the plans are on, maybe a little bit behind the other projects flagship projects,” said Kobusheshe. The planned refinery will have several benefits for the country, including for its security of fuel supply and balance of payments.
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