By PHILIP MWAKIO
Uganda has invited its four East African Community (EAC) partner states to buy stakes in the proposed Uganda oil refinery.
A 40 per cent shareholding will be reserved for the public sector. All the EAC members must confirm participation in the project by October 15.
The multi-billion dollar refinery will be developed on a public-private partnership basis, where the public owns 40 per cent shares while the private sector takes 60 per cent.
Kenya, the economic powerhouse of the EAC bloc has the only operating refinery that is currently facing several challenges at the moment owing to its ageing condition.
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Interest in project
Robert Kasande, the team leader of the Uganda Oil Refinery project, said the public shares will be offered to the East African Community partner states of Uganda, Kenya, Tanzania, Rwanda and Burundi.
“We have extended the invitation for the public to own a stake to our regional partner states. They will have 10 per cent,” he said in a statement to the media.
Several potential investors have expressed interest in the lucrative refinery project. The petroleum exploration and production department stated that a US energy investment firm, Taylor DeJongh, was contracted as transaction advisor for the project.
The firm is supporting the Government in sourcing for the lead investor and financing for the refinery. The Ugandan Ministry of Energy and Mineral Development is in the process of acquiring 29 square kilometres of land for the refinery.
The land will host staff quarters, a health facility, an aerodrome with a runway the same size of Entebbe International Airport, waste management facilities and petrochemical industries.
A consultant was contracted to undertake a Resettlement Action Plan for the required land.
The objective of the plan was to develop a framework for managing the loss of economic activities and livelihoods through compensation or relocation of the affected people.
Regulatory framework
After confirmation of commercial oil reserves in 2006,Uganda initiated a national oil and gas policy in 2008 to address the entire spectrum of oil exploration, development, production and valuable utilisation of the country’s oil and gas resources.
The Ministry of Energy and Mineral Development later formulated a refinery development programme to guide the development of a refinery.
The programme is in line with the East African regional refineries development strategy that was adopted by the EAC partner states in 2008.
It recommended that a second refinery in East Africa be developed in Uganda. Subsequently, the Uganda government contracted a UK energy firm, Foster Wheeler Energy Ltd to conduct a feasibility study on building a refinery in Uganda in 2010.
Key impact
The feasibility study recommended that a refinery was a more commercially viable option with a net present value of $3.2 billion at a 10 per cent discount rate and an internal rate of return of 33 per cent.
The Uganda government plans to develop a refinery with an input capacity of 60,000 barrels per day (bpd); starting with a capacity of 30,000 barrels per day by 2018 which will be increased to 60,000 barrels per day before 2020.
The planned refinery will produce liquefied petroleum gas, diesel, petrol, kerosene, jet fuel and heavy fuel oil. Uganda’s petroleum products consumption is at 27,000 bpd and growing at an annual rate of about seven per cent.
