Government of Uganda through the Ministry of Energy and Minerals Development has clarified that it signed a memorandum of understanding with United Arab Emirates-based firm Alpha MBM Investments LLC to develop the country’s Oil Refinery project.
A statement from the Energy Ministry stated that the previous company that had won the contract Albertine Graben Energy Consortium (AGEC) had not met all milestones outlined in the Project Framework Agreement (PFA) and their agreement expired last June.
The statement also explained that there is no ongoing process to renew the expired PFA with AGEC.
Below is the full statement:
In response to the article published in the New Vision Newspaper on Thursday, March 28th, 2024, titled “MUSEVENI ORDERS RENEWAL OF REFINERY CONTRACT,” the Ministry of Energy and Mineral Development wishes to provide clarification regarding the Uganda Refinery Project as follows:
The article in question purported that the Albertine Graben Energy Consortium (AGEC) had successfully met all milestones outlined in the Project Framework Agreement (PFA) and was on track to achieve the Final Investment Decision (FID).
However, it ought to be noted that certain critical deliverables were not fulfilled by AGEC within the specified timelines, leading to the expiration of the agreement on June 30th, 2023. AGEC was advised to approach the new investor group to discuss the possibility of participating in the project under the new arrangement.
Contrary to claims made in the article, 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. These deficiencies ultimately prevented the attainment of the FID, as outlined in the PFA.
Furthermore, 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.
Following the expiration of the PFA, the Government of Uganda initiated discussions with potential investors to advance the development of the refinery project.
After careful assessment, Alpha MBM Investments LLC emerged as a promising partner, with whom a memorandum of understanding has been signed. Implementation of this agreement 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.
As outlined in the Memorandum of Understanding and enshrined in relevant legislation, the refinery retains the first right to Uganda’s crude oil resources.
It therefore ought to be noted that, there is no ongoing process to renew the expired PFA with AGEC. The government is committed to advancing the refinery project with Alpha MBM Investments LLC, underscoring its dedication to realizing this critical national endeavor.
For further inquiries, the Ministry of Energy and Mineral Development can be contacted for accurate information regarding the Uganda Refinery Project.
