Monday May 28 2012

EA needs one refinery to process its oil, says expert

By Nicholas Kalungi

The Citibank Africa director for economic and market analysis, Mr David Cowan, has said Uganda doesn’t need to construct an inland refinery but offer support to a central one, perhaps in Kenya to hone the region’s oil products.

Last week Mr Cowan told Daily Monitor in an interview that East Africa needs only one big refinery to handle oil from within the region.

He said: “The discovery of oil in Kenya is good for East Africa. Now that three countries have oil including South Sudan. It is not reasonable for Uganda to build its own refinery.

The political questions
He added: “Political questions on where this refinery should be built will definitely arise. But to me, it is more logical for the refinery to be built in Kenya with Uganda and may be South Sudan owning shares in it.”

Contrary to Mr Cowan’s view, the government has shown that it is committed to construct its own inland refinery instead of trading in crude oil.

While reading the 2011/12 budget, the finance minister, Ms Maria Kiwanuka, said the government had allocated Shs14.7 billion for the commencement of preliminary work on the construction of an oil refinery in Hoima.

Far still, AFP reported in February 2012 that Chinese oil giant China National Offshore Oil Corporation (CNOOC), along with Anglo-Irish Tullow Oil and France’s Total wished to invest in the projected $1.5 billion refinery in the Lake Albert rift basin.

Mr Cowan also warned the economy against ‘over expectations from oil revenues’ as oil rarely has drastic impact on an already growing economy.

This view is also shared by Mr Peter Lokeris, the state minister for Minerals, who in a telephone interview said: “Oil may not have much impact on economic growth unless generated revenues is invested in productive sectors such as agriculture and manufacturing.”