Uganda Floats Oil Refinery Shares In EAC States

The Government of Uganda is floating shares amongst the East African Community states to generate funds for the construction of the proposed oil refinery.

An oil rig in western Uganda
An oil rig in western Uganda

Irene Batebe, a Petroleum Officer at the ministry of Energy’s Petroleum Exploration and Production Department says that government has already written to the East African Community inviting the member states to buy the shares in the refinery.

She says government proposes to build the oil refinery through a Public Private Partnership where private investors would own 60 percent and the rest of the shares would be shared between government and the public. A Public Private Partnership is an arrangement where government or private business venture is funded and operated through a partnership of government and one or more private sector companies.

Batebe explained that East African Community states could buy part of the 40 percent shares. She however added that government would own the entire 40 percent should the invitation to buy the shares yield no response.

The construction of the oil refinery designed to produce 60,000 barrels of oil each day, is estimated to cost 2 billion US dollars. 1 barrel equals 159 litres. It’s however not yet clear what response the members of East African Community would give towards the idea to buy shares in Uganda’s oil refinery considering that some of them such as Kenya have had similar discoveries.

Lawrence Mujuni, a Director in Uganda’s ministry of East African Community Affairs told Uganda Radio Network that he was not aware about such a business proposal.

In 2008, the East African Community Summit of the Heads of State directed its secretariat to develop a strategy for the development of regional refineries following discoveries of oil in Uganda and gas in Tanzania at the time. In its report, the East African Community said while Africa had 50 of the world’s 689 refineries, only one existed in the East African region at Mombasa.

The study recommended the establishment of a refinery in Uganda as well as the upgrading of the Mombasa refinery. Other recommendations were that additional storage facilities be installed in Uganda, pipeline between Eldoret, Kenya to Kampala, Uganda.

Also recommended were the establishment of port facilities, roads and railway lines within the Community. While there is no clear dateline for the construction of Uganda’s first oil refinery, the government has hired a transaction advisor to help identify an investor to undertake the construction of the refinery. Bateba also said on Tuesday that the refinery could be in place by 2016.

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