A Kampala-based law firm, Katende, Ssempeebwa and Company Advocates has been awarded a contract to help government establish an oil refinery in the country.
The law firm and ACMIRS partners, an advisory agency based in Kampala are among a team of five companies, which government hired to provide comprehensive transaction advisory services for the development of an oil refinery following confirmation of commercial crude discovery. The others are US-based Taylor DeJongh, an energy and investment banking firm; Eversheds, an international corporate law firm and Jacobs Consultancy.
Available information indicates that, ACRIMS has previously performed other services in Uganda such as the Performance Audit of the 120 Mega Watts Kiira Hydroelectric Power Generation as well as the Finance and Public Private Partnership Advisory for the 600 million dollars Uganda Police Force Infrastructure Project.
The refinery contract, expected to last a year, was awarded in January but the details are just emerging. Bashir Hangi, a Communication Officer of the Refinery Project told Press on Monday that the Ministry of Energy and Mineral Development hired the firms to advise government on structuring the refinery project, developing a feasible project financing structure, planning and securing appropriate investment partners.
Led by Taylor Dejongh, the team is also expected to prepare the necessary legal documents for formation of the Refining Company and further detailed agreements and contracts with crude suppliers and petroleum products off takers. The contract, whose services are paid by the Norwegian ministry of Foreign Affairs, is also expected to help with the selection process of a lead investor to operate the refinery, a project government plans to undertake through a Public Private Partnership.
Irene Batebe, a Petroleum Officer at the Petroleum Exploration and Production Department, says the investor to be identified would design the refinery and later embark on its actual construction.
The latest move to acquire a transaction advisor appears to indicate a firm stance by government to build a refinery, a decision which most of the oil companies operating in Uganda have sought to oppose. Jimmy Mugerwa, Tullow Oil’s General Manager recently explained that the country lacks financial and infrastructural capacity to build a refinery.
He said that the refinery project would cost about 18 to 20 billion dollars and would need 850 tons of raw materials imported through the port of Mombasa, a facility whose capacity he said could not handle such magnitude of transaction within the required time.
Despite the opposition by the oil companies, government has undertaken several initiatives towards building the refinery. Last year, it hired Foster Wheeler Energy Limited, a UK firm to conduct a Feasibility study for the development of the oil refinery. The study reportedly found it was feasible to build a local refinery instead of exporting crude oil through a pipeline to the Indian Ocean coast.