Uganda has taken a major step toward energy independence by signing a $4 billion deal with UAE-based Alpha MBM Investments to build a 60,000-barrel-per-day oil refinery in Hoima.
The agreement was signed in Kampala on Saturday, with President Yoweri Museveni witnessing the ceremony.
His Highness Sheikh Mohammed bin Maktoum bin Juma Al Maktoum, a member of the Dubai Royal Family, led the UAE delegation.
Three-Year Construction Timeline
The refinery’s construction is expected to take three years, significantly advancing Uganda’s oil and gas sector.
Energy Minister Hon. Ruth Nankabirwa confirmed that negotiations with Alpha MBM Investments began in January 2024, following the expiration of a previous partnership agreement in mid-2023. The UAE firm emerged as the best candidate after several companies expressed interest.
In December 2023, Uganda signed a Memorandum of Understanding (MoU) with Alpha MBM Investments, outlining terms for collaboration.
The project aligns with Uganda’s decision to take a public-sector-led approach after ending its agreement with the Albertine Graben Energy Consortium in 2018.
Key Commercial Agreements Before Construction
Before breaking ground, key commercial agreements must be finalized. These include:
- Host Government Agreement: Defines Uganda’s commitments, security measures, land ownership, and environmental obligations.
- Crude Suppliers Agreement: Ensures the refinery secures 60,000 barrels of crude oil per day. Uganda National Oil Company (UNOC), TotalEnergies E&P Uganda, and China National Offshore Oil Corporation (CNOOC) Uganda Limited are expected suppliers.
- Shareholders’ Agreement: Outlines financial commitments, voting rights, and equity distribution. The project will be funded through a 60:40 debt-to-equity ratio.
A Strategic Oil and Gas Investment
The refinery is one of three cornerstone oil and gas projects in Uganda, alongside the East African Crude Oil Pipeline (EACOP) and upstream developments at Tilenga (Nwoya & Buliisa) and Kingfisher (Kikuube).
With strong financial backing and a strategic approach, Uganda is positioning itself as a key player in the East African energy market.
