Uganda is developing its oil sector by signing a deal with UAE-based Alpha MBM Investments to build a $4 billion oil refinery in Kabaale, Hoima District.
Under the terms of the deal, Alpha MBM Investments will hold a 60% stake in the refinery, while Uganda’s state-run Uganda National Oil Company (UNOC) will retain the remaining 40%.
The refinery, which will have a capacity of 60,000 barrels per day, is set to play a central role in Uganda’s energy strategy. The agreement follows extensive negotiations that began in January 2024, after Uganda ended talks with a consortium that included a unit of the US firm Baker Hughes due to delays in financing. Energy Minister Ruth Nankabirwa announced that discussions with Alpha MBM Investments began on January 16, 2024, with expectations for the agreement to be finalized within three months.
The decision to proceed with equity financing, with the government taking a 40% share and Alpha MBM contributing 60%, marks a shift from previous attempts to secure financing through international financial markets, which faced challenges.
- Advertisement -
Dr. Michael Nkambo Mugerwa, General Manager of Uganda Refinery Holding Company, highlighted that the refinery is projected to contribute approximately $3.4 billion annually to Uganda’s GDP. When combined with the Kabaale Industrial Park, the total contribution is estimated at $8 billion, or 20-25% of Uganda’s current economy.
In addition to the refinery agreement, Uganda and UAE investors have signed five other agreements across various sectors, reinforcing the growing economic ties between the two countries. These agreements align with the UAE’s broader strategy of increasing investments in Africa.
The refinery is expected to begin operations in 2027, coinciding with Uganda’s plans to start commercial oil production from the Albertine Rift Basin in 2025. This development will meet domestic demand for refined oil products and create jobs, driving economic growth and enhancing energy security for Uganda.
