The Africa Finance Corporation(AFC) has advanced $20 million funding for the construction of Uganda’s crude oil refinery, paving the way for the start of the $4.27 billion projects.
Africa Finance Corporation signed the financing deal on the sidelines of the Africa Oil Week in South Africa mid this month.
Other financiers expected to put money into the multi-billion-dollar project include the African Development Bank, Prosper Africa, a US government Initiative that unlocks opportunities to do business in Africa and Trace and Development Agency another US-based firm.
AFC managing director Ammadou Wadda, representatives from US-based Prosper Africa Initiative, Trace Development Agency and African Development Bank president Akiwumi Adesinia attended the side event.
The investors also agreed to hold a meeting next year to discuss how to raise funds for the refinery. The refinery’s management is also expected to give details about the project and existing investment opportunities to potential investors.
“AGRC and the financiers will work out the movement of the funds, but as for government we shall raise our share of the investment through debt and equity,” said Irene Muloni, Uganda’s Energy Minister.
Uganda, with 40 per cent ownership equity in the refinery, invited EAC states to co-own it. Tanzania wants eight per cent stake while Kenya has committed to take a 2.5 per cent. Other East African Countries are yet to commit on the shares of the refinery.
Total E&P also increased its stake in the refinery from 10 per cent to 11.5 per cent.
The refinery is expected to produce diesel, jet fuel petrol, kerosene, liquefied petroleum gas and heavy fuel oil. This is expected to save Uganda $1 billion which is the amount it spends on importing petroleum products annually.
Construction of the refinery has suffered several setbacks in the past like In 2016, a Russian consortium, RT Global Resources, which was the government’s preferred bidder, pulled out of the deal at the last minute.
AGRC is also required to build product storage facilities and construct a 205km product pipeline from Hoima to Kampala to serve Burundi, eastern DR Congo, Rwanda, northern Tanzania and western Kenya. There are plans to have a product pipeline going northwards to link with South Sudan.