Tuesday February 17 2015

Russian firm wins oil refinery contract

By Isaac Imaka & Mark Muhumuza

Kampala- Russian company RT Global Resources is set to be announced as the winner of the lucrative contract to build Uganda’s first oil refinery.

Although ministry of Energy officials refused to deny or confirm the development, other sources within the ministry said the decision to pick the Russian firm was taken last week.

The ministry permanent secretary, Mr Kabagambe Kaliisa, and the official in charge of refinery development, Mr Robert Kasande, told Daily Monitor to wait for the official communication on the evaluation process.

“You have to wait until a communication is made and then you will come and ask me what that means for the industry and any question,” Mr Kaliisa said.

Through text messages, Mr Kasande said: “We are working on a press release for tomorrow. We are giving a release on the results of the evaluation tomorrow. I suggest you wait for that.”

In 2013, more than 60 companies responded to a government announcement seeking a potential investor to take build the $2.5 billon refinery in Hoima.

Of particular interest then were British-UAE Petrofac, Swiss-Dutch Vitol, Japanese Marubeni and Mitsui, South Korea’s Samsung, and others.

But of those, only two Russian firms led by Rostec and a South Korean consortium led by SK Energy, were invited to participate in the final negotiations with government.

According to preliminary estimates, the cost of the refinery includes expenses for construction of the 205km product pipeline to Kampala and the necessary infrastructure.

Under the terms of the tender, government will foot 40 per cent of the construction bill while the investor incurs 60 per cent.

Company's past deals in Africa

Rostec, also a military hardware manufacturer, is not new to the continent. In 2012, it supplied 12 MI-24 attack helicopters and 6 MI-8 transport helicopters to South Sudan. Tatneft has also been operating in Russia mainly in oil exploration and production. The other peditorial@ug.nationmedia.comartner, VTB Capital Bank is 61 per cent owned by the Russian state.