Government pushes oil refinery project to 2023

Energy Minister Irene Muloni

What you need to know:

  • The refinery project tagged to a cost of $3b (Shs11trillion) will be financed through a Public Private Partnership arrangement; AGRC is expected to take a 60 per cent stake, and UHRC 40 perc ent.

Kampala. The consortium of Italian and American investors contracted to design, finance, construct and operate Uganda’s proposed 60,000 barrels per day oil refinery have completed and submitted the facility’s initial designs to government, with Energy Minister Irene Muloni saying they are “happy” with the latest configuration.

A government delegation led by Ms Muloni and the Uganda Refinery Holdings Company (UHRC) general manager Michael Mugerwa was in Milan, Italy last week for discussions with the Albertine Graben Refinery Consortium (AGRC) to review the designs.
UHRC is a subsidiary of the Uganda National Oil Company (UNOC), which is mandated to manage the country’s commercial interests in the oil sector.

According to a statement issued by the UNOC’s legal and corporate affairs manager Peter Muliisa, AGRC through Italy’s Saipem—the Engineering, Procurement and Construction (EPC) contractor in the consortium—presented the final refinery configuration plan to the government which is part of the contractual obligations contained in the Project Framework Agreement (PFA), at the Milan meeting last Friday.
“In the PFA, it was agreed that AGRC will “develop and propose a final refinery configuration that would provide the best technical and economic results for government’s approval,” the statement read in part.

The government and AGRC last April signed the PFA binding the two parties on the project.
The PFA details the technical work stream which includes the configuration, market, logistics and technical Front End Engineering studies which are expected to be completed by end of the year, and financial work stream which includes the equity financing: UHRC’s equity, in-kind equity, cash, pre-finance, debt finance, lenders and the debt structure, which will lead to Final Investment Decision and subsequently EPC by 2023.

Ms Muloni, according to the statement, commended the consortium for “reaching this milestone in the time scheduled under the PFA and encouraged them to meet all the remaining activities on schedule to ensure the refinery project is completed in the time agreed.”

AGRC is a special purpose vehicle comprised of two Mauritius based firms YAATRA Africa LLC and Lionworks Group Ltd, America’s Baker Hughes—General Electric’s subsidiary, and Italy’s Saipem.
Yaatra’s chief executive, Ms Rajakumari Jandhyala, said: “We are fully committed to ensuring completion of all commercially viable pre-Final Investment Studies activities as scheduled in the PFA.”
The refinery is one the projects agreed upon by government of Uganda and the oil companies—Total E&P, Cnooc, and Tullowels.