The government of Uganda signed a long term Project Framework Agreement (PFA) with a foreign consortium, Albertine Graben Refinery Consortium (AGRC), to expedite construction of the country’s 60,000 barrels per day refinery in the western district of Hoima.
The agreement will ensure development, design, financing, construction, operation and maintenance of the oil refinery in Hoima District. Uganda is estimated to have 6.5 billion barrels of oil deposits with an estimate of 1.4-1.7 billion barrels recoverable.
The government of Uganda intends to refine and sell some oil products like kerosene, petrol, diesel and heavy fuel oils locally hence the refinery and export the rest to international market through a crude export pipeline snaking to Tanga port in Tanzania
The signing of the PFA, government said, means pre-Final Investment Decision (FID) activities like Front End Engineering and Design (FEED), Project Capital and Investment Costs Estimation (PCE), Environmental and Social Impact Assessments (ESIA) can commence.
“Under this agreement, AGRC will be responsible for funding the pre-FID activities listed above and will also proceed to construct and operate the refinery,” a statement released by state house where the agreement was signed under the watchful eye of President Yoweri Museveni said.
The consortium, made of companies incorporated in Mauritius – YAATRA Africa and Lionworks Group Limited – and Italy – Nuovo Pignone International SRL (a General Electric Company located in Italy) and SAIPEM SPA (Italy) – has also been tasked to ensure that Ugandans get jobs and skills out of the project.
“The entire project will be implemented by a Special Purpose Company, the Refinery Company, that will be incorporated by the private investors and the Uganda Refinery Holding Company, which is a subsidiary of the Uganda National Oil Company,” the statement added.
The Energy Minister, Eng. Irene Muloni, said the signing ceremony marked the end of the selection process that commenced in January 2017. She said her ministry had done extensive consultations before arriving at who to assign the project, estimated to cost between $3-4 billion.
In her remarks, Dr Josephine Wapakhabulo, the chief executive officer, of the Uganda National Oil Company, which will represent Uganda’s interests in the project, said the development of the refinery will trigger a number of other investments in the energy-based industries, contributing to economic development and attainment of middle income status.
She added that the refinery will grow UNOC's business portfolio and help unlock other planned investments at the Kabaale Industrial Park.
President Museveni has challenged Western companies to take interest in helping Africa explore its resources potential, saying the continent presented immense business opportunities.
While congratulating the parties to the agreement, President Museveni said the composition of the AGRC showed that Western companies were also waking up to realise Africa's potential.
"Africa and the West share a lot of history together and there is a need for them to use these past linkages to further economic business," said the President.