Uganda sticks with UAE firm on oil refinery project as US-led consortium digs in

The Government of Uganda has reaffirmed its earlier position that it will work with Alpha MBM Investments, a UAE-based firm, as the lead partner to develop Uganda’s oil refinery, and not Albertine Graben Energy Consortium (AGEC).

According to the Ministry of Energy and Mineral Development, AGEC did not meet certain critical deliverables during the discussions with the government, leading to the expiration of the agreement on June 30th, 2023.

In July 2023, the government of Uganda pulled out of talks with Albertine Graben Energy Consortium (AGEC), which is a consortium of American and Italian firms, over delays in raising the needed funding for the oil refinery project.

Uganda then reached an agreement with Alpha MBM Investments LLC, a UAE-based investment house led by Sheikh Mohammed bin Maktoum bin Juma Al Maktoum, a member of the Dubai Royal Family, to undertake the project.

However, Kikubolane understands that AGEC has returned full throttle and is intensely lobbying to secure the multi-billion dollar deal to construct Uganda’s first oil refinery. The company officials have also reportedly President Museveni as they claim to successfully met all milestones outlined in the Project Framework Agreement (PFA) and was on track to achieve the Final Investment Decision (FID).

But the Ministry of Energy said this was not the case. “Contrary to claims, the AGEC failed to complete essential requirements, including; commitment letters from lenders making up at least 100% of the required debt before FID, signed commitment letters from equity investors, the Environmental and Social Impact Assessment (ESIA), submission of a lump sum turnkey price for the project, execution of a Commercial Viability Assessment (CVA), and procurement of a financial advisor, among others,” the ministry said in a statement.

These deficiencies ultimately prevented the attainment of the FID, as outlined in the PFA, it added.

Furthermore, the ministry said assertions regarding the government’s alleged failure to provide land for the refinery infrastructure are unfounded.

“The government fulfilled its obligations by granting AGEC access to project sites throughout the agreement. Land leases were slated to be granted following the FID, in accordance with the terms of the PFA,” the ministry said.

It added that implementation of the agreement with Alpha MBM Investments is underway, signaling progress towards the refinery’s development.

“It is imperative to emphasize that the refinery project remains a top priority for Uganda, given its significant economic benefits, including bolstering domestic fuel supply, reducing import expenditures, generating employment opportunities, and fostering capacity building,” they added.