By Faridah N Kulumba
Africa-Press – Uganda. The government of Uganda finalised an agreement with UAE-based Alpha MBM Investments LLC to develop a 60,000-barrel-per-day (bpd) crude oil refinery in Kabaale, Hoima District. “The oil refinery is not just about fuel but also about Uganda producing and exporting refined products instead of importing them,” Ugandan President Yoweri Museveni said. “We must stop exporting raw materials and instead add value to everything we produce.”
State-owned Uganda National Oil Corporation (UNOC) concluded a partnership agreement with the private investment firm in March. The requisite commercial agreements were signed on August 16. In January 2024, Uganda’s Minister of Energy revealed that they started holding negotiations with the United Arab Emirates’s Al Maktoum Company to develop the country’s USD 4 billion Oil refinery
The deal
The final negotiations of the agreement started in January last year after Alpha MBM Investments led by a member of Dubai’s royal family was picked by the government of Uganda as the preferred bidder for some of its crude oil. This was after the Albertine Graben Energy Consortium (AGEC) backed out of the deal with Uganda. In 2018, the Government of Uganda (GOU) signed the PFA with Albertine Graben Energy Consortium, which was not renewed upon expiration. Consequently, GOU shifted to public sector-led investment rather than involving private entities. In July 2023 the government of Uganda terminated negotiations with a consortium that included a unit of United States firm Baker Hughes over its failure to mobilize financing in time. Expressions of interest were received from several potential investors and they were evaluated… following which a MoU was signed
Alpha MBM, led by Sheikh Mohammed bin Maktoum of the Dubai royal family, will hold a 60 percent stake, and the Uganda National Oil Company (UNOC) will hold the remaining 40 percent. The USD 4bn facility will be financed through a combination of debt (60 percent) and equity (40 percent), according to earlier reports. Construction is expected to begin this year and the refinery could be operational within three years.The Greenfield Oil Refinery at Kabaale project includes a 211-kilometre multi-product pipeline from the city, Uganda’s second largest, to a storage and distribution terminal in Namwabula, Mpigi District, and a raw water pipeline from Lake Albert to the refinery.
The project’s benefits to Uganda
The refinery forms part of Uganda’s strategy to boost energy security and reduce reliance on fuel imports. According to UNOC, the country consumes about 6.0–6.5mn litres of refined fuel daily, with around 90 percent imported. In 2023, petroleum imports cost approximately USD 2.02bn.A 60,000-bpd refinery could produce about 9.54mn litres per day, meeting local demand and creating surplus for export to regional markets in Africa, a net importer of petroleum products despite exporting crude. Uganda’s says that the oil sector developments are projected to contribute USD 8.6 billion to the country’s Gross Domestic Product (GDP), and have created over 12,000 jobs. According to Uganda’s Energy Ministry, the country is transitioning from strategic planning to practical implementation. They are now advancing four major oil and gas projects: the Tilenga and Kingfisher projects in the Upstream (USD 6-8 Billion) and the East African Crude Oil Pipeline (EACOP) (USD 5 Billion), and the Uganda Refinery (USD 4 Billion) Projects in the Midstream.
Tilenga and Kingfisher are expected to produce respectively 190,000 and 40,000 barrels of crude oil daily at peak production. If all the oil projects are combined with the Government’s investment in supportive infrastructure, signify an investment of approximately USD 20 Billion in Uganda’s economy. Uganda also recently entered into the final 12-month phase of the East African Crude Oil Pipeline (EACOP), with engineers expecting completion by mid-2026. The 1,443-kilometre expected longest pipeline in the world will transport crude from the Albertine Graben to Tanzania’s Tanga port for export, with work advancing on a key 75-kilometre stretch linking the Waiga River to the Kabalega Industrial Park in Hoima.
Alpha MBM Investments in brief
Alpha MBM is a UAE-based investment house led by His Highness Sheikh Mohammed bin Maktoum bin Juma Al Maktoum, the UAE’s Minister of Finance and a senior member of the Dubai Royal Family. Sheikh Mohammed bin Maktoum bin Juma Al Maktoum is the key investor, shareholder, and board member. Alpha MBM is a pioneering investment company and describes Uganda as “an untapped market with the power to create opportunities where none were perceived.
The day Uganda revealed as they picked the UAE’s Al Maktoum Company to develop the country’s oil refinery, Engineer Irene Bateebe, the Permanent Secretary at the Uganda’s Minister of Energy said the design they are taking with Alpha, they expect that at the time of signing the commercial agreements, a form of Final Investment Decision will be taken. “Because immediately we sign the agreements, we shall see some works commence. So that is an innovative way, the works commence based on the equity of the two partners,” she said. Construction is expected to begin by the end of 2025. Commissioning is set for 2028.
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