A United Arab Emirates-based company has become the lead partner in Uganda's oil refinery project, a pivotal undertaking for the country.
Alpha MBM Investments, led by His Highness Sheikh Mohammed bin Maktoum bin Juma Al Maktoum, a member of the Dubai Royal Family, was announced as the key partner by the Minister of Energy and Mineral Development, Hon. Ruth Nankabirwa.
According to Hon. Nankabirwa, after the expiration of a project framework agreement (PFA) with the previous partners in June 2023, several entities expressed interest, with Alpha MBM Investments emerging as the top choice.
In 2018, the Government of Uganda (GOU) signed the PFA with Albertine Graben Energy Consortium, which was not renewed upon expiration. Consequently, GOU shifted to public sector-led investment rather than involving private entities.
"A Memorandum of Understanding (MoU) was signed on December 22, 2023, between the government and Alpha MBM Investments LLC from the United Arab Emirates, outlining cooperation and negotiation terms for the Refinery Project," she stated.
Negotiations on key commercial agreements with Alpha MBM Investments commenced on January 16, 2024, with their conclusion paving the way for the construction phase.
"We are pleased to have a partner with financial strength and a solid reputation. Work will commence immediately after negotiations to recover the lost time," Hon. Nankabirwa informed the media in Kampala.
A substantial investment of at least US$4 billion is earmarked for the project, one of three crucial oil and gas initiatives alongside the East African Crude Oil Pipeline (EACOP) and the Upstream projects, namely Tilenga in Nwoya and Buliisa, and Kingfisher in Kikuube.
Key commercial agreements are set to be signed before the Final Investment Decision (FID), encompassing the Host Government Agreement, Crude Supplier’s Agreement, and the Shareholders’ Agreement.
The Host Government Agreement, like EACOP’s, will be executed between the government and the refinery company, yet to be established. It outlines commitments and obligations, including security and land ownership for the Government of Uganda, and issues related to National Content and Health Safety and Environment by the refinery company.
The Crude Suppliers Agreement is designed to secure the necessary feedstock of 60,000 barrels of crude oil per day required for the refinery and will be signed between the crude oil owners and the refinery company.
The crude oil owners include the Government of Uganda, represented by UNOC, TotalEnergies E&P Uganda, and China National Offshore Oil Corporation (CNOOC) Uganda Limited.
The Shareholders’ Agreement, to be signed by shareholders of the refinery company, details financial obligations, such as cash calls, defaults, and stipulates voting rights.
The project's funding will consist of debt and equity at a ratio of 60:40, implying that 60% of the funding will be debt, while 40% will be equity. END