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Uganda, AGRC Consortium Agree on Oil Refinery Development Terms

Oil refinery plant of petroleum or petrochemical industry produc

The Government of Uganda has agreed core project terms for the Uganda Refinery Project with the Albertine Graben Refinery Consortium (AGRC) for the development of a Greenfield oil Refinery to be located in the southwestern district of Hoima in Uganda.

The initiative follows a “thorough review process” of 4 investors who were shortlisted for the development of the much anticipated oil refinery in Uganda of the over 40 companies that had expressed interest.

The above came after negotiations with the selected Refinery Development Lead Investor, price RT Global Resources, a unit of Rostec State Corp. of Russia, collapsed in 2016.

The Minister of Energy and Mineral Development (MEMD), Irene Muloni, commenting on the issue, said RT Global had set “new impossible conditions which were unfavorable to our government” hence the termination of the talks.

The Permanent Secretary of MEMD, Dr. Stephen Robert Isabalija, in a statement noted that “The AGRC consortium is made up of General Electric (GE) Oil and Gas, YAATRA Ventures LLC, Intracontinent Asset Holdings Ltd (IA) and Saipem SpA, in the role of Engineering, Procurement and Construction partner (EPC).”

The Consortium, Dr Isabashaija writes, has proposed to government a financing approach and a path to establish, develop and operate a commercially viable refinery company with a strategic benefit to the country and the region.

The planned 60,000-barrel-a-day refinery will receive supplies from oil fields in the Albertine region.

Government expects to begin exploitation of the entire 6.5 billion barrels of crude resources by 2020.

The agreement of the core project terms, according to the statement, signals the start of government discussions and negotiations with the Consortium on the Project Framework Agreement (PFA).

“The PFA will detail the proposed solutions, validation of the solutions, risk mitigation measures, and additional due diligence necessary for accelerating investments and financing for the project,” states Dr Isabashaija.

The PFA, the permanent secretary says, is expected to conclude and be signed within the next 2 months.

The statement also indicates that “the signing of the Project Framework Agreement will in turn pave the way for commencement of pre-Final Investment Decision (FID) activities such as Front End Engineering and Design (FEED), Project Capital and Investment Costs Estimations (PCE), Environmental and Social Impact Assessments (ESIA), among others.”

When the agreement is signed, “the Consortium will be granted the rights and licenses to develop and manage the refinery as lead investor in a joint venture partnership with Government.”

Muloni, a few months ago, communicated that the government will participate in the refinery project through the Uganda Refinery Holding Company (URHC), a subsidiary of the Uganda National Oil Company (UNOC).

It is through the URHC that the confirmed interests of the East African Partner States will be held, she said.

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