Uganda suspends negotiations for US$3.5B refinery project

The government of Uganda has suspended negotiations with a Russian consortium, RT Global Resources, for the development of the 60,000 bpd refinery public private partnership (PPP) project. After this announcement RT Global Resources has said that it is still interested and open to talks for the project.

This decision comes after RT Global Resources and the government concluded an agreement reached on 11 May. Telconet Capital Ltd Partnership, VTB Capital PLC, Tatneft JSC and GS Engineering & Construction Corporation are part of the Russian consortium.

According to sources, the Russian consortium has blamed the government for failing to fulfill obligations such as granting production licenses to Total, Tullow and China National Offshore Oil Corporation (Cnooc) to be able to guarantee crude oil in time and granting tax benefits. On the other hand government has claimed the Russians wanted to have access to cash reserves in the Bank of Uganda. Basically, the country's government and RT Global Resources couldn't agree on the terms and conditions of sharing responsibilities.

Uganda’s refinery project is to be established under a public private partnership (PPP) contract with the Government holding up to 40% equity. It involves development of a refinery with a capacity of 60,000 BPD, development of crude oil and product storage facilities on site, as well as a 205-kilometer product pipeline to a terminal near Uganda’s capital city of Kampala.

The total project investment is estimated at UGX12,000 billion (US$3.5 billion). 

In September 2015 we reported that the government of Uganda expected to conclude the negotiations for the 60,000 bpd refinery development PPP project and sign the Final Investment decision by October 2015. At that time, agreement to be signed included:

• The Project Framework agreement between government of Uganda and the lead investor; RT Global Resources,
• The Implementation agreement between government and the Refinery company and
• The Shareholder Agreement to be signed between the National Oil Company (NOC), the Refinery holding company and the lead Investor Special Purpose Vehicle.