Ugandan Government Eyes 40% Stake In Planned Refinery

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Uganda is set to become an oil producer

Reports from Kampala indicates that the Ugandan government aims to take up a 40 percent stake in its planned oil refinery and offer a private investor the remaining 60 percent in accordance to a provisionary shareholding structure.

According to report by reports, Ugandan Junior energy minister Peter Lokeris indicated that several investors had expressed interest in the planned 120,000-barrel per day plant, pending a process to select a developer. Lokeris said: “Before any discussions with investors … we already have our own formulae and we want the government to have 40 percent while a strategic investor takes 60 percent”

The minister also revealed that the government plans to offer 10 percent of the project to countries in the East African Community and reduce its stake to 30 percent. He said:  ”Before any discussions with investors … we already have our own formulae and we want the government to have 40 percent while a strategic investor takes 60 percent.”

Uganda, East Africa’s third-largest economy, plans to build a refinery in Hoima, about 220 kilometres west of its capital Kampala,

Uganda’s Energy minister Irene Muloni, revealed that crude production was slated to start late next year or early 2014.

Muloni estimates the cost of the refinery, which will be developed in phases, at $2 billion. He said the first phase would have a refining capacity of 20,000 bpd and is forecast to be completed by 2015.

The government estimates oil reserves at 2.5 billion barrels; although it is yet to agree with British oil and gas company Tullow Oil on the refinery’s production capacity.

While Tullow advises that the refinery’s capacity should not exceed 60,000 barrels per day to be attractive to investors, the government insists on a facility with 120,000 bpd output. In defence of its stance it says that size is viable and can easily get investors.