The Government of Uganda has signed an Implementation Agreement with Alpha MBM Investments, a UAE firm, to commence the design, construction and operation of the 60,000 barrels per day oil and gas refinery in Hoima.

Construction is expected to span three years. Officials of Alpha MBM Investments, led by His Highness Sheikh Mohammed bin Maktoum bin Juma Al Maktoum, a member of the Dubai Royal Family, signed the agreement on Saturday in Kampala together with Ministry of Energy officials where President Museveni was the witness.

Project Factsheet

Location: Kabaale, Buseruka Sub-County, Hoima District, Uganda.

Capacity:

• Planned for 60,000 barrels of oil per day (bopd).
• Proposed development in two phases of 30,000 bopd.

Financials:

• Estimated project cost: approximately $4 billion.
• As of late 2024, Uganda has chosen to fully finance the refinery through equity.

Key points to note:

• The refinery is planned to process crude oil from Uganda’s Albertine Graben region, which holds significant oil reserves.
• The project has included land aquisition, and a Resettlement Action Plan(RAP) for affected people.
• The project has gone through feasibility studies, and Front-End Engineering Design (FEED) approvals.
• The refinery will be a Residue Fluid Catalytic Cracker (RFCC) type.

The UAE firm announced as the key partner for the refinery project in December 2023 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, 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 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.