Uganda sets equity in crude oil refinery and pipeline projects at $700m

The government has set its equity share in the proposed crude oil refinery and oil export pipeline at $500m (approx. Shs1.7 trillion) and $200m (Shs710b), respectively.

The two large-scale projects are expected to cost a combined $7.5bn (Shs26 trillion).

Uganda, through the energy ministry, is looking for an investor to design, finance and construct the phased 60,000 barrels per day refinery through a public-private partnership. Uganda will retain a 40% stake in the refinery.

Discussions are ongoing with two consortiums, the Intra-continental Asset Holdings venture that includes Yaatra Ventures LLC and General Electric (GE) Africa from America and Saipem SpA from Italy, and the DongSong venture from China, to get a “suitable” investor the refinery.

The pipeline modalities, on the other hand, are being worked out through the National Pipeline Company (NPC), a subsidiary of the Uganda National Oil Company (Unoc), which is charged with managing the government’s commercial interests in the petroleum sector.

The energy and finance ministries, Unoc’s shareholders with a 51% and 49% stake, respectively, approved the $700m equity in the two projects, according to information available to this website.

The 1,445km pipeline, running from Hoima in western Uganda to Tanga port at the Indian Ocean in Tanzania, is being fast-tracked by French oil company Total E&P.

The final investment decision on the pipeline is expected in the first quarter of 2018, while the engineering, procurement and construction contract will most likely be awarded in late 2018 or early 2019.

The transactional advisors of the pipeline are presently said to be “sounding out the market appetite” for the project. The NPC general manager Bosco Habumugisha described the response as “positive” so far.

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The pipeline, according to ministry of energy documents, could also potentially deliver crude oil from neighbouring DR Congo and South Sudan.

Uganda’s equity share in the pipeline is said to be aligned to the equity in the upstream projects (oil fields) also carried through Unoc. The Production Sharing Agreements signed with the joint venture partner provide for government’s participation through a carried interest of up to 15% in each of the licenses.