Process Toward Construction  of Uganda’s Hoima Oil Refinery  Enters Second Stage

Financing and construction companies of the $3 billion project describe refinery as of great value to all of East Africa.

Sample oil refinery (Illustration Internet Photo)

By TZ Business News Staff and Agencies.


The process toward construction of Uganda’s oil refinery for processing crude oil from the Albertine Graben oilfield along Uganda’s western border with the Democratic Republic of Congo (DRC) moved  a step forward this last week of April 2018,  when the consortium selected to finance and build the refinery confirmed their selection.

Following a favorable evaluation of a private sector-led offer by the Uganda Government, the Albertine Graben Refinery Consortium (AGRC) comprising of YAATRA Ventures, Baker Hughes (a GE company), LionWorks Group and Saipem  signed a Project Framework Agreement (PFA) confirming their selection for the realization of a 60,000 barrels per day capacity refinery with a project estimated value of around $3 billion, the Africa Press Organization (APO) reported on Wednesday, April 25, 2018.

Confirmation of  their selection follows an earlier stage in which the Uganda Government first accepted the core project terms submitted by the AGRC for development of the greenfield oil Refinery. Acceptance of the terms followed a thorough review process in 2017 of over 40 companies which had expressed interest to develop the oil refinery.

The refinery to be located in Hoima district will process crude oil from fields developed by Total, Tullow and China’s CNOOC and future upstream operators.  The Ugandan government has included in the project scope a refined-product pipeline to Kampala for transporting finished products from the facility as well as the distribution of the refined products.

“The Ugandan Government’s commitment to fully realize its oil and gas sector and acceptance of the innovative solution provided by AGRC is driven by its strategic goals, leading to achieving middle income status. We look forward to the execution phase and delivering a world class facility that represents a unique opportunity for investors.

“The Project will deliver a broad, significant economic development impact for Uganda and the East Africa region.” Rajakumari Jandhyala, President & CEO, YAATRA Ventures, said. “The Government’s selection of our Consortium as preferred bidder is a testament to the collaborative efforts of these best-in-class enterprises leveraging each other’s strengths to produce a solutions-focused proposal”.

When executed, this will help develop the industry infrastructure and provide livelihood for the Ugandan people and, by extension, other East African countries said Ado Oseragbaje, BHGE’s Vice President, Sub-Saharan Africa.

Ronald Mincy, CEO & Managing Partner of LionWorks, commented “This is a unique opportunity to work with Uganda on a transformational project that will provide jobs and skills to the country through improved access to substantially cleaner refined products for Uganda and the East Africa region.”

Maurizio Coratella, Saipem E&C Onshore Division Chief Operating Officer said, “The selection of AGRC will allow the development of a robust proposal leveraging both financial capabilities of YAATRA Africa and LionWorks and the technical resources and expertise of Saipem and BHGE, addressing the Government’s expectations for the growth of the energy sector. We are pleased to have been selected to help Uganda delivering this Project.”

The announcement follows the formal announcement of the Ministry of Energy regarding the conclusion of the PFA agreement. The Albertine Graben Refinery Consortium will have each member undertake a specific role during Pre-Final Investment Decision (Pre-FID) Activities and Engineering, Procurement and Construction (EPC) of the refinery.

YAATRA Africa is an infrastructure development and financing company which provides innovative infrastructure solutions on the continent. LionWorks is a private equity company focused exclusively on pan-African infrastructure opportunities.

Other companies involved are Saipem, a global leader in engineering, procurement, construction and installation, as well as drilling, in the oil and gas market that will act as services provider to the project investors, and BHGE, the only global Fullstream company, which will provide a comprehensive portfolio of equipment, technical and financial services.

Dr. Stephen Robert Isabalija

A statement released in 2017 by the then Permanent Secretary in Uganda’s Ministry of Energy and Mineral Development, Dr. Stephen Robert Isabalija, said the AGRC Consortium had proposed to Government a financing approach and a path to establish, develop and operate a commercially viable refinery company with a strategic benefit to the country and the region.

Agreement of the core project terms signalled the start of Government discussions and negotiations with the Consortium on the Project Framework Agreement (PFA). The PFA was set to detail the proposed solutions, validation of the solutions, risk mitigation measures, and additional due diligence necessary for accelerating investments and financing for the project.

Signing of the PFA paves the way for commencement of pre-Final Investment Decision (FID) activities such as Front End Engineering and Design (FEED), Project Capital and Investment Costs Estimations (PCE), Environmental and Social Impact Assessments (ESIA), among others.

The oil refinery is expected to spur growth of petro-chemical and other related industries in Uganda.