Uganda set to announce winning bid for Hoima refinery in November

Uganda expects to announce a winner in November from four groups of bidders competing for the proposed 60,000 barrel per day (bpd) Hoima oil refinery, according to comments made by Energy Minister Ruth Nankabirwa on October 17.

The selection takes place following the exit in June of Albertine Graben Refinery Consortium (AGRC), comprised of General Electric (US), Yaatra Ventures LLC (US), Intracontinent Asset Holdings Limited (Mauritius) and Saipem SPA (Italy), after the group was unable to meet the deadline required for a final investment decision (FID) due to difficulties in obtaining funding for the project.

Nankabirwa told Reuters during the Africa Energy Week conference in Cape Town that "the refinery is supposed to receive 60,000 barrels of crude oil every day and... come 2025, I hope out of the four that we have one [that] will convince us they will fast-track its development."

Ali Ssekatawa, director of legal and corporate affairs for the Petroleum Authority of Uganda, was quoted as saying in August that there was “a lot of appetite and interest in developing the [Hoima] refinery.”

He also confirmed that the Algerian national oil company Sonatrach was involved, adding: “The preferred option is the Uganda National Oil Company working together with another national oil company to take forward this project.”

Fortunately, AGRC has already completed front-end engineering and design work, as well as environmental impact assessments for the project. The land has also been acquired and cleared to build the refinery and its associated pipelines, according to Ssekatawa.

The Ugandan government’s plan for the new refinery should see it constructed at Kabaale, Buseruka Sub-County in Hoima District. The plan for the refinery includes a 211km-long multi-products pipeline that will evacuate refined products from the refinery to a storage terminal at Namwabula, Mpigi District, the Mbegu Water Intake with water pipeline included and a storage terminal for the refinery’s products located at Namwabula in Mpigi District.

Currently, the design for the refinery has been specified as a Residue Fluid Catalytic Cracker (RFCC), which will process Uganda’s crude oil into liquefied petroleum gas (LPG), jet fuel, premium and regular gasoline, diesel and low-sulphur fuel oil.

Assessments for environmental impact – titled Environmental and Social Impact Assessment (ESIA) studies – have also been completed and are pending review and approval from the National Environment Management Authority. Other steps towards implementation have also progressed and been completed, including the compensation and resettlement of affected people and Front-End Engineering Designs (FEED) for the refinery. Notably, the date expected for the plant’s FID has now been missed, set at June 2023.

The recent halt in progress for Hoima is now the second time that the project has failed to take off. In February 2015, the Ugandan government selected a consortium led by Russian GT Global Resources LLC and South Korea’s SK Engineering & Construction Co. to construct and operate the plant. The inability of the parties to agree on a project framework agreement (PFA) led to a new bidding process that saw AGRC selected as the new investor.

Similarly, on July 3, the Observer wrote that the latest PFA between the government and AGRC had also hit a snag. According to the publication, the PFA had officially ended on June 30 without a conclusion of agreements needed to make the FID. Official communication regarding the issue was sparse, with both the government and AGRC remaining tight lipped despite the agreement grinding to a stop. Seemingly, five years of negotiations had failed to see any tangible results despite various incentives put forward by the Uganda’s president, Yoweri Museveni.

Troubles with EACOP

Nankabirwa additionally informed Reuters that the Ugandan government was concerned about the length of time talks had been taking with Chinese insurance company Sinosure regarding helping finance the 1,445km East African Crude Oil Pipeline (EACOP), mentioning the company was not moving at the pace Uganda needed.

Sinosure has suggested that it would announce its final decision by June next year only, which will likely be too late. "We need just about $3bn to conclude the financing of this crude pipeline and the more we delay, the more expensive the project will become," Nankabirwa noted.