An oil refinery will enable Uganda to begin export in 2020. PHOTO | AFP
Ugandans are likely to dig deeper into their pockets to finance
the construction of the country’s $4 billion oil refinery after its East
African Community partners failed to take up their full allocation of
shares in the facility.
Uganda will take up an
additional 11.5 per cent shareholding in the Hoima-based refinery,
bringing its total shareholding to 19.5 per cent. French oil giant Total
SA has taken up a 10 per cent stake.
Uganda, Kenya,
Tanzania, Rwanda and Burundi had been allocated a combined 40 per cent
shareholding in the refinery, translating into an eight per cent stake
for each, with 60 per cent of the shares reserved for private investors.
However, only Tanzania took up its full share of eight per cent. Kenya took up 2.5 per cent.
Rwanda
and Burundi had not expressed interest in the facility by the expiry of
the period set aside for the partner states to take up the
shareholding. The initial deadline was 2014. It was then extended to
June 2016.
Uganda’s Energy Minister Irene Muloni said that Kampala would have to acquire the shares that were not taken up.
“Total is taking 10 per cent, Tanzania eight per cent and Kenya
2.5 per cent. Uganda will take the remaining 19.5 per cent shares if no
other country expresses interest,” she said.
60,000 barrels a day
The
Ugandan government has contracted a consortium led by American
multinational General Electric to build the 60,000 barrel-a-day plant,
which is expected to start producing oil in 2020.
Other partners in the GE-led consortium are Yaatra Ventures LLC, Italy’s Saipem SpA and Kenya-based Fireworks Capital.
The project will be 70 per cent funded through debt, with shareholders expected to inject the remaining 30 per cent.
According
to the World Bank, public–private partnerships can help Uganda raise
the money it needs to invest in its infrastructure. The Bank notes that
budgetary constraints have made alternative options for financing
necessary to supplement government resources.
According
to the Bank, Uganda has a financing gap of about $1.4 billion a year
for infrastructure investment, but the cost of inefficient
infrastructure spending is also high, estimated at $300 million a year,
due mainly to corruption and the sector’s inability to complete projects
within budget and on time.
Uganda’s share of PPP
projects in the sub-Saharan African region is estimated at 8.3 per cent,
with the largest sector being energy.
The project was proposed following a study of regional refineries that was commissioned by the EAC in 2008.
A
taskforce comprising officers from the petroleum sub-sector in the
member countries was created and tasked to undertake the study. The
taskforce advised that a refinery be constructed near the then recently
discovered oil fields in Uganda
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