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Postponed. Government will hire the investor in February next year instead of this year as earlier announced.
Kampala. Government will hire the lead investor who will develop the 60,000 barrels per day refinery in February 2015, Ms Irene Batebe, a senior petroleum officer at Petroleum Exploration and Production department has said.
This pushes the process date futher as government had announced that it would select the lead investor by the end of this year.
This was shortly after shortlisting the bidders in the tendering process from four to two consortia; SK Group from South Korea and RT – Global Resources from Russia.
“We did not anticipate that the preliminary negotiations would take long. The investors asked for an incentive package which called for consultations with line ministries like the Ministry of Finance, Ministry of Justice and Uganda Revenue Authority before taking a decision. This explains the delay,” Ms Batebe said last week
She was speaking on the sidelines of the Ministry of Energy’s 4th joint sector review held last week at Speke Resort Munyonyo under the theme ‘Harnessing energy and mineral resource sustainability for development’.
A regional refineries development strategy, put up in 2008 by the East African partner states, recommended the development of a new refinery in Uganda to boost the region’s refining capacity.
The refinery, which is expected to cost between $3.5b and $b4 billion, will be developed on a private – public partnership basis with a proposed 40 per cent to be shared among the five EAC partner states (each taking eight per cent) and 60 per cent to be owned by the private investor.
Twenty nine square kilometres of land in Kabaale Buseruka Sub-county, Hoima District was demarcated to house the refinery. It will be developed in two phases starting with 30,000 barrels per day.
“So far, we have concluded the first round of negotiations. The investors are currently preparing their final offers which will be submitted on January 19th,” Ms Bateba said.
She also told the conference that pre – final investment decision activities for the refinery development such as engineering studies and Environment Impact Assessment will commence next year.
The refinery is projected to be commissioned in 2018.
Kenya undecided on taking refinery stake
Kenya is still undecided on taking up its stake in the refinery, a Kenyan newspaper has reported. According to The Standard, Mr Henry Rotich, the National Treasury Cabinet secretary, said the government of Kenya is still reviewing the investment before making a final decision. “We are waiting for a legal opinion on the deed of settlement from the Attorney General. As soon as we get it, we will go ahead to complete the transaction,” Rotich was quoted as saying..
Kenya closed down its ageing Changamwe-based oil refinery last year citing inefficiencies that made locally refined fuel more costly than imported finished products.
The Changamwe-based facility was built to handle murban crude oil from the Middle East. As a result, regional leaders have been considering various pipeline and refinery options for when the oil finds come online.
Govt asks for expert advice
Meanwhile, Taylor Dejongh, a US-based transaction adviser, is guiding the government in evaluating the two bidders. The advisor was hired in January 2013 to help it in the procurement of the lead investor, structuring the project as well as sourcing for finance.