Uganda’s Greenfield oil refinery will cost at least $2.85b (approx Shs10trillion) of which $1b (Shs3.6trillion) will go back to the United States in export content, the Department of Commerce has revealed.
The ministry of Energy last month signed off the deal to design finance, construct and maintain the refinery to a consortium of America’s General Electric (GE) and Yaatra LLC Venture, Saipem SpA from Italy and Mauritius-based private equity fund Intra-continental Asset Holdings.
The US Secretary of Commerce Wilbur Ross in May 3 congratulatory message to GE and Yaatra said “the deal represents a major win for U.S. commercial interests in Uganda.”
“It embodies what we can achieve when government acts as a facilitator, not just a regulator,” Mr Ross noted.
Government officials however told this website that it is “not entirely true” that $1b will go to US exports maintaining that negotiations on the same are still ongoing.
Other sources said it’s a key clause in the project framework agreement that government signed with the American/Italian firms. GE is expected to marshal the required capital expenditure while Saipem will play the key role in Engineering, Procurement and Construction (EPC).
The Department of Commerce statement further indicated that Secretary Ross, the US ambassador to Uganda Deborah Malac and several US government agencies were involved in swaying the entire government machinery to secure the deal from the Chinese whose firm, Guangzhou DongSong Energy, had won the tender during due diligence.
The statement also indicated that the both the World Bank’s International Finance Corporation and African Development Bank, likely to be the financiers, had blessed the refinery deal.
If it’s confirmed that $1b is the required US export content worth, the refinery project will ultimately come under sharp focus as have other large infrastructure projects the government has undertaken but with little monetary value trickling down into the economy.
With the country leaping to the development and production phases of the oil sector, there is amplified debate on local content—development of local skills, technology transfer, and the use of local manpower and local manufacturing in the industry—with some analysts saying the government is not doing enough for Ugandans to benefit from this binge.
Some oil producing countries like Nigeria and Ghana have standalone legislations on local content and Statutory Regulatory bodies that oversee and enforce the local content provisions but in Uganda’s case, this is far from realisation.