The Ugandan government has demonstrated its resolve to invest in an oil refinery by contracting an American firm to advise on the implementation of the project.
The East African nation has also moved to secure its vast oil deposits from the control of foreign companies after Parlia-ment passed two of three controversial pieces of legislation aimed at regulating the industry.
But even as mistrust and sus- picions between Ugandan authorities and foreign companies intensify, the Ugandan government has appointed US firm Taylor-DeJongh to advise it on the project, which Uganda views as being critical in ensuring that its citizens are the main beneficiaries of its oil resources.
Taylor-DeJongh is an independent investment banking firm that provides strategic project finance and mergers and acquisitions advisory services for the oil and gas, conventional and renewable power and industrial and infrastructure industries globally.
The firm says that, over the past three decades, it has advised on the development, structuring, financing and negoiations for debt and equity investments of $70-billion in more than 100 countries.
“We have appointed a transaction adviser and we are now ready to move to the next stage,” says Robert Kasande, the refinery devel- opment manager at the Ministry of Energy.
He adds that the transaction adviser will, besides other things, be responsible for the selection of the lead investor for the refinery, sourcing financing and forming a refining company.
The engagement of Taylor-DeJongh to oversee the implementation of the project, estimated to cost $2-billion, comes soon after Uganda’s Parliament passed the second law aimed at giving government a tight grip on the sector, which is largely in the hands of foreign companies.
The two laws that have been passed are the Petroleum (Refin- ing, Gas Processing and Con-version, Transportation and Stor- age) Bill of 2012 and the Petroleum (Exploration, Production and Development) Bill of 2012. Only the Public Finance Bill of 2012, which spells out procedures for petroleum revenue management, remains to be passed.
Investors in the oil industry have criticised the laws on the basis that they will create new levels of bureaucracy and channels for corruption and have also vigorously opposed plans by Uganda to construct a refinery.
Foreign companies, among them the UK’s Tullow Oil, which discovered oil in Uganda, want the crude to be sold on the open market for them to recoup their investments fast enough.
But the Uganda government has been steadfast in its quest to construct a refinery to process the known 3.5-billion barrels of oil.
It plans to develop a 60 000 bl/d refinery, which will later be expanded to 120 000 bbl/d and then 180 000 bbl/d over three years.
The rationale behind building the refinery is to secure reliable supplies of petroleum products at least cost to Ugandans and export the surplus to neighbouring countries.