The government of Uganda has signed an Implementation Agreement with Alpha MBM Investments LLC from the UAE for the construction of a $4 billion oil refinery in Hoima District.
This project aims to enhance Uganda’s energy independence and reduce reliance on imported fuels.
Key Takeaways
- Investment: $4 billion agreement signed with Alpha MBM Investments.
- Capacity: The refinery will process 60,000 barrels of oil per day.
- Timeline: Construction expected to take three years, with first output projected for 2028.
- Regional Impact: The refinery will serve not only Uganda but also neighboring countries.
Overview of the Agreement
The signing ceremony took place at State House Entebbe, attended by President Yoweri Museveni and key government officials. President Museveni expressed gratitude to the UAE for their commitment to investing in Uganda, emphasizing the importance of the refinery in transforming the country’s energy landscape.
The agreement marks a pivotal step in Uganda’s strategy to utilize its estimated 6.5 billion barrels of crude oil reserves discovered in the Albertine Graben region. The refinery is expected to produce various petroleum products, including gasoline, diesel, and jet fuel, thereby reducing the country’s dependence on imported refined fuels.
Project Details
- Location: Kabaale, Buseruka Sub-County, Hoima District.
- Capacity: 60,000 barrels per day, with plans for phased development.
- Infrastructure: Includes a multi-product pipeline and storage facilities.
- Environmental Focus: The project will prioritize environmental protection and community development.
Strategic Importance
The Hoima Oil Refinery is not just about fuel production; it represents a shift towards value addition in Uganda’s oil sector. By refining its crude oil domestically, Uganda aims to stabilize fuel prices and enhance national energy security.
The project is also expected to create thousands of jobs and stimulate local economies.
Challenges and Future Outlook
The refinery project has faced numerous delays since its inception over a decade ago, primarily due to financing issues and changing investor interests. Previous partnerships with international firms have not materialized as expected, leading to the selection of Alpha MBM as the new partner after a thorough evaluation process.
The government is now focused on expediting the project, with ambitious timelines set for negotiating key commercial agreements. The first commercial output from the refinery is anticipated around 2028, coinciding with the start of oil production from the Tilenga and Kingfisher fields operated by TotalEnergies and CNOOC.
Conclusion
The signing of the Implementation Agreement with Alpha MBM Investments marks a renewed commitment to advancing Uganda’s oil sector.
As the country moves forward with this ambitious project, it aims to position itself as a regional hub for petroleum refining and distribution, ultimately enhancing its energy independence and economic growth.