Uganda recently announced a major change regarding the financing of its oil refinery project, a strategic investment to reduce fuel imports. The Government of Uganda, through the Minister of Energy, Ruth Nankabirwarevealed that the construction of the planned infrastructure in Kabaale, Hoima district, will now be financed entirely with own funds, to the tune of $4 billion.
This surprising turn contrasts with the initial financial model, which provided for a distribution of 60% debt and 40% equity in partnership with Alpha MBM Investmentsan Emirati investor. The difficulty in raising funds on international markets, increased by the challenges faced by other oil projects, such as the pipeline EACOPforced the Ugandan state to review its strategy.
The refinery project, capable of processing 60,000 barrels of crude oil per day, aims to support Uganda's ambition to monetize its oil reserves. This project is part of a broader policy to reduce dependence on imported gasoline and diesel. However, the search for financing for the refinery has faced significant financial obstacles. The Ugandan government faced the same challenges encountered during the implementation of the pipeline project EACOPa project also linked to the exploitation of the country's oil resources.
Despite this financing from equity, the question of fundraising remains crucial. Last June, the Ugandan government doubled its budget for the oil and gas sector for the 2024-2025 financial year, bringing it to $246 million. This budget is intended to supporting several initiatives, including the development of the EACOP pipeline project, as well as the provision of liquefied petroleum gas to encourage cleaner cooking practices. Part of this sum is also allocated to the creation of a petroleum geosciences laboratory and to the contribution to the capital of the refinery.
