The government of Uganda has allayed doubts about its commitment to building a $4 billion refinery for its yet-to-take off oil industry by signing a deal with Albertine Graben Refinery, a consortium of like-minded companies, led by General Electric. The refinery will be located in the Hoima District, Albertina Region of Uganda
Minister of Energy and Mineral Development, Irene Muloni, signed the contract on behalf of the government, after more than five years of futilely looking for a credible investor for the Hoima refinery project, a Ugandan publication, The Observer, reported.
Under the terms of the public-private partnership that has been thrashed out, Albertine Graben will have 60% shareholding, while the government of Uganda will retain the 40%, which will be sold to other East African states.
The Albertine Graben Refinery consortium is made up of General Electric, Saipem from Italy, Yaatra Ventures from the United States of America and Intra-continent Asset Holdings.
According to The Observer, investors had not been keen to come on board due to questions about the project’s viability, not least after the oil prices plummeted globally.
Observers are under no illusions about the work that lies ahead. The biggest challenge is securing the required finance to kick-start construction.
Under the terms of the provisional project framework agreement (PFA) with the consortium signed in August between the government and the consortium, up to 70% of the financing of the refinery will be through debt with the other 30% coming in as equity from the project partners. In August, the government announced it had “agreed core project terms” for the refinery project.