The Government of Uganda has renegotiated the project framework agreement of the country’s proposed oil refinery to allow the investors enough time to complete the preliminary preparations.

The Environment and Social Impact Assessment (ESIA)  has commenced. The Government has added an extra 17 months for the lead investor of the oil refinery, the Albertine Graben Refinery Consortium, for it to complete the ESIA studies and the Front End Engineering Design (FEED).

According to the renegotiated framework agreement, the Albertine Graben Refinery which is already 70% complete is expected to complete its preliminary FEED which will include the lumpsum turnkey price of the project and to deliver the draft documents of Technical Concept Design to the government by June 2021.

The final FEED and concept design of the project is then expected to be delivered three months later. The government projects the ESIA studies is to be completed by August 2021.

The Government signed a project framework agreement with the consortium on April 10, 2018, with the agreement only becoming effective about 5 months later on September 7, 2018. However, the project has faced several challenges over the years mostly with compensation fees to affected persons.

After the completion of the preparatory studies and designs, the consortium is expected to sign a Final Investment Decision for the refinery which is said to be worth $3 – $4 billion. The consortium consists of Saipem SPA, Nuovo Pignone International SRL (both from Italy), Yaatra Africa, and Lionworks Group Limited (both in Mauritius).

The procurement of the contractor of the refinery and a host of other activities are dependant on how fast the signing of the Final Investment Decision (FID) by the other upstream companies, Total and CNOOC, is done.

The Ugandan Government’s stake in the 60,000 barrels per day refinery is 40%. The Government, through the Ministry of Finance, Planning and Economic Development is already strategising on how to fund its stake. Funds from the Export Credit Agencies and commercial banks are among the options available to the government.

The consortium has the responsibility for sourcing the debt which is expected to account for at least 70%. The refinery is expected to be funded using debt to equity. The cabinet is expected to consider and sign off on these options towards the end of this year.