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Funding is the Challenge for Ugandan Government’s Stake in Refinery

With the conclusion of agreements to launch the upstream and midstream segments of the Lake Albert development project, discussions are shaping up around financing close for the 60,000BOPD. 

The government holds a 40% participating interest in the refinery. The Uganda National Oil Company (UNOC) is taking up the biggest shareholding in the project through one of its subsidiaries, the Uganda Refinery Holding Company (URHC), on behalf of the state. “We have a role together with the refinery consortium in ensuring that the refinery makes a final investment decision in 2022, in accordance with the timelines of the Project Framework Agreement”, says Proscovia Nabbanja, CEO of UNOC.

The Albertine Graben Refinery Consortium, which holds 60% of the project, consists of General Electric (GE), Yaatra Ventures LLC, Intracontinent Asset Holdings and Saipem SPA.

The refinery is expected to come on stream between 2024-2025. “There’s a lot of work being done today, such as the environmental and social impact assessment and the front-end engineering design”, Ms. Nabbaja explains. “We are also working with the Ministry of Finance to secure financing for our equity in the refinery”, she notes. 

But the Ugandan government is stretched thin. In the last five years, it has expended close to $2Billion on infrastructure, to equip the country to handle the oilfield project, which will see over 10 fields in the Hoima district producing 230,000BOPD at peak.

“Without financing you can only do so much”, Nabbanja says.“If you are going to play as a contracting party or partner within the agreements, then you must have the financing”.

She says that Financing is not only for UNOC’s equity participation; “to deliver on your strategy, you must have a good target operating model and you must have resources for it. Internally, we have defined the financing needs for UNOCoperations to make ourselves field-ready and capacitated for that time when we actually get into execution mode for the projects”.

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