Kenya acquires Shs177 billion stake in Uganda’s oil refinery

A newly-erected oil rig on the shores of Lake Albert. Kenya has purchased a 2.5 per cent stake in the oil refinery as part of the country’s commitment to the regional integration process. FILE PHOTO

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Motive. The move is seen as part of the neighbouring country’s commitment to regional integration

Kampala. Kenya and Uganda have struck a deal in the establishment of oil refinery with the latter agreeing to acquire a 2.5 per cent stake in the refinery for an estimated KSh5.6 billion (about Shs177 billion).
Ms Gloria Sebikari, the communications officer at Petroleum Exploration and Production Department in the Ministry of Energy and Mineral Development, said the development came about after the ministry invited other East Africa countries to partner with Uganda in oil refinery establishment.
She was however, noncommittal on the prospects of other regional countries participation in the refinery saying she needs time to cross check.
Kenya’s commitment came as the deadline for the two consortia to submit final bids for the oil refinery lapsed on Monday, paving the way for the selection of a lead investor for the project by next month.
“We invited all other countries to participate but actualisation had not happened,” she said declining to comment further.
Kenya’s Energy and Petroleum permanent secretary, Mr Joseph Njoroge, was quoted in Business Daily yesterday as saying: “In line with the spirit of regional integration, we committed to support each other in key infrastructure projects and we shall lend support to the Ugandan one. We shall take up a minimal 2.5 per cent stake in the refinery project.”
The refinery is slated to process 60,000 barrels of oil daily and much of Uganda’s projected crude output is expected to be exported via a pipeline through Kenya, which is yet to be built.
President Museveni, while appearing on a radio station talk show in Kampala recently, said although the world is currently faced with low prices of oil, the country will continue with its earlier plans of establishing the first ever oil refinery in the region.
Currently, South Korea’s SK Energy Co. and Russia’s RT-Global Resources are both bidding for the refinery and the winner will take up a 60 per cent stake in the project as well as develop and operate it.
Uganda’s reserves are estimated at 6.5 billion barrels and the first phase of the refinery is expected to be ready in 2018.

negotiations with the bidders
The Ugandan government last week said it held preliminary negotiations with the bidders: SK Energy Co. and RT-Global Resources between August and September 2014 and issued with a Request for Final Offer (RFFO) with a submission deadline of Monday.
“Following the negotiations and issuance of the RFFO, the bidders will prepare and submit their refined technical, financial, commercial and legal offers,” Energy ministry permanent secretary Kabagambe Kaliisa was quoted by the Business Daily on Monday as saying.

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