Economy

Uganda picks Russian firm RT Global for oil refinery

Uganda’s refinery project is to be developed under a public private partnership arrangement with the host government holding 40 per cent equity. PHOTO | FILE
Uganda’s refinery project is to be developed under a public private partnership arrangement with the host government holding 40 per cent equity. PHOTO | FILE 

A consortium led by Russian firm RT Global Resources has been picked to build and operate the East African oil refinery in Uganda. Kenya and Rwanda are expected to buy stakes in the facility.

Uganda’s Energy and Mineral Development minister Irene Muloni said on Tuesday negotiations for project agreements with the consortium would commence next month and end by May, paving the way for possible implementation.

“The process of selecting a lead investor for Uganda’s refinery project has been highly competitive. We are pleased that the two bidders responded to the request for final offers, from which RT Global Resources emerged as the selected preferred bidder,” she said.

“We have confidence that we will execute the project agreements and go ahead to develop Uganda’s refinery project.”

Members of this consortium include Telconet Capital Ltd Partnership, VTB Capital PLC, Tatneft JSC and GS Engineering & Construction Corporation.

The facility, to be developed in phases, is expected to have final output capacity of 60,000 barrels a day, but will start with 30,000 barrels a day.

Britain’s Tullow Oil, French oil major Total and China National Offshore Oil Corporation are developing Uganda’s fields.

Kenya has agreed to acquire a 2.5 per cent stake in the planned Uganda oil refinery for an estimated Sh5.6 billion.

Energy PS Joseph Njoroge said last month Kenya would take up the stake as part of a commitment among East African Community member states to close ranks on projects that benefit the bloc.

“In line with the spirit of regional integration we committed to support each other in key infrastructure projects and we shall lend support to the Ugandan one,” he told the Business Daily.

“We shall take up a minimal 2.5 per cent stake in the refinery project.”

Much of Uganda’s projected crude output is expected to be exported via a pipeline through Kenya, which is yet to be built. The first phase of the refinery is expected to be in place by 2018.

Uganda’s project is to be developed under a public private partnership arrangement with the host government holding 40 per cent equity. Uganda discovered oil reserves estimated at 6.5 billion barrels.

Uganda said if it is not satisfied at the end of the negotiations with RT Global Resources, it may exercise its option to commence talks with the alternate preferred bidder, SK Engineering and Construction led Consortium.