Russian Firm Wins Bid To Construct US$3 Billion Oil Refinery In Uganda

A consortium led by RT Global resources, a subsidiary of Russian state corporation- Rostec is selected as the preferred bidder for Uganda’s oil refinery project, Government of Uganda has announced. 


The decision follows a submission of final offers from two final bidders which were evaluated last month by a team from the government and Taylor DeJongh, government’s transaction advisor.

The SK Engineering and construction led consortium from the Republic of South Korea was the other contender, named the Alternate Preferred Bidder.

Preliminary estimates suggest the cost Uganda’s first oil refinery to be built in Hoima will be around US$3 billion.

According to the tenders, 40 percent of financing will be provided by the Government of Uganda, while the winning bidder will be responsible for the remaining 60 percent.

The Project involves development of a refinery with a capacity of 60,000 barrels per day, development of crude oil and product storage facilities on site, as well as a 250-kilometer product pipeline to a terminal in Buloba, about 15kilometers West of Kampala.

The First phase of the refinery is expected to be in place in 2018.

Energy minister Eng. Irene Muloni says government will proceed with negotiations on the principle agreements with the RT Global Resources Consortium with an aim of reaching an agreement within 60 days.

Other members of the consortium include Telconet capital Ltd partnership, VTB Capital PLC, Tatneft JSC, and GS Engineering and construction Corporation.

“The objective of these negotiations is to conclude the project agreements to the satisfaction of the government and the lead investor.  These include the Project Framework agreements, Shareholder agreements, Implementation agreement and the Escrow agreement,” Mr. Fred Kabagambe Kaliisa, Permanent Secretary in the ministry of Energy says.

Upon execution of the different project contracts, the lead investor and Government will constitute a Refinery Company that will take forward the engineering and finalize the financing aspects for the development of the refinery.

If at the end of the negotiations with RT Global Resources, Government is not satisfied that the major issues in the agreement meet its satisfaction, it may exercise its option to commence negotiations with the Alternate Preferred Bidder, a consortium led by SK Engineering and Construction.

More than 60 companies had in 2013 shown interest as potential investors for refinery. Six of these were shortlisted in 2014, four of which submitted detailed proposals to the Government of Uganda (GOU) for the role of Lead Investor/Operator for the development.

They include consortia led by the China Petroleum Pipeline Bureau (CPPB), Marubeni Corporation from Japan, the subsidiary of Russian state corporation Rostec, RT – Global Resources and SK Group from South Korea.

Uganda’s oil Resources are now estimated at 6.5 billion barrels of oil initially in place from the 21 oil and gas discoveries made in the country to date.

Less than 10% of the Albertine Graben is currently licensed and plans to hold the country’s first competitive licensing round during 2015 are underway.