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Uganda seeks lead investor for $2.5bn oil refinery

8th October 2013

By: Leandi Kolver

Creamer Media Deputy Editor

  

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Uganda is seeking a lead investor for the construction of a $2.5-billion, 60 000 bl/d oil refinery and its associated infrastructure in Hoima, in western Uganda, Uganda Ministry of Energy and Mineral Development Robert Kasande said on Tuesday. 

He noted that Uganda’s Petroleum Exploration and Production Department had issued a prequalification notice, calling on interested companies to bid for the financing and construction of the refinery.

“Through this call for tenders, Uganda has today made the first step towards becoming an energy independent country,” he said.

The lead private investor would hold 60% of the project, with government owning the balance, Kasande explained, adding that the investor did not have to be a single entity and, therefore, consortiums could also be formed.

“Through the tender process, we are looking for a company with the necessary technical experience and financial capacity,” he said.

He added that the project also included the development of crude oil and product storage facilities at the refining site and the construction of a 205 km pipeline to transport the oil products from the refinery to the main market in Kampala.  

Crude oil for the refinery will be procured from the oilfields under development by the Upstream Consortium, comprising China National Offshore Oil Corporation, Total and Tullow Oil, and the refinery will produce diesel, petrol, kerosene, jet fuel, liquefied petroleum gas and heavy fuel oil.

The project would serve a large and growing market for petroleum products in East Africa with opportunities for significant risk-adjusted returns, Kasande said, adding that countries that would be served included Rwanda, Burundi, eastern Democratic Republic of Congo and parts of northern Tanzania and western Kenya.

“There are significant challenges with regard to getting oil products in this region and, therefore, the government of Uganda, upon the discovery of oil in 2006, made a policy decision that it would add value to this resource. This was followed up by a feasibility study, which found the project feasible and now we have moved on to getting a lead investor,” he explained. 

It was estimated that the project construction would create between 4 000 and 6 000 temporary jobs, with the ongoing operations expected to create around 650 permanent jobs. 

“Further, the project’s second-order effect on the Ugandan economy could also result in 1 500 to 2 100 additional new jobs,” Kasande said.

The closing date for the prequalification was November 8, with the process expected to be concluded by March or April next year, he added.

Construction was expected to begin next year after a lead investor had been identified, with commercial production expected to start in 2017 or 2018.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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