Uganda ends search for refinery investor with historic agreement

March 30, 2025 in Business, Companies, Energy, Hydrocarbons by Editor

After a protracted search for a partner to build an oil refinery that included an offer of stakes to her neighbours in the East African Community, Uganda has finally inked an agreement that will see the project kick off in earnest.

The agreement, announced by Uganda’s minister for energy Ms Ruth Nankabirwa, gives UAE-based Alpha MBM Investments a 60pc stake in the oil refinery that will be built on part of the 29 square kilometre Kabaale Industrial Park in Hoima District. Uganda, which had initially offered a 40 percent stake its neighbours in the 60,000-barrel-per-day refinery, will take remaining 40 through its Uganda National Oil Company (UNOC).

“Today’s agreement marks a significant milestone for Uganda and paves way for the design, construction and operation of the 60,000 barrels per day refinery to be undertaken in Kabaale, Hoima,” Nankabirwa said adding that the government was happy “to have a partner with financial strength, and a solid reputation.”

Construction is expected to take three years, with Alpha MBM Investments, overseeing the design, construction and operational aspects of the project.

The project, with an engineers’ estimated price tag of USD 4billion includes an associated 211 km long multi-products pipeline that will deliver refined products from the refinery to a storage terminal at Namwabula in Mpigi District.

The agreement which comes a week after the East African Crude Oil Company (EACOP) consortium announced securing financing for 80 percent of the works; clears the way for a critical part of Uganda’s oil program, which though insisted on by the country’s ruler, President Yoweri Museveni, was unpopular with oil production licensees CNOOC and Total E&P, who were keener on crude exports, that are slated to start in three years’ time.

“Today, I witnessed the signing of a historic oil refinery implementation agreement. The oil refinery is not just about fuel but also about Uganda producing and exporting refined products instead of importing them. We must stop exporting raw materials and instead add value to everything we produce,” President Museveni said soon after the parties appended their signatures to the agreement.

Uganda plans to use part of its share of the crude from the Kingfisher and Tilenga oil concessions, to feed the refinery. Unlike earlier African oil producers such as Nigeria, Uganda opted for a production, rather than revenue sharing agreement.

UNOC, a wholly government owned company is the custodian for the State’s commercial interests in the petroleum sub-sector.

Uganda’s refinery is gamechanger for the region as it shortens the logistics cycle for oil products, translating into significant time and cash savings. With an initial capacity to process 60,000 barrels a day, production will over time be scaled up to reach 200,000 barrels a day.