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Uganda’s Oil Refinery in Serious Danger


Uganda’s Oil Refinery in Serious Danger

even though it now seems to be elusive ” width=”798″ height=”404″ /> A refinery such as this one has been a dream for many in Uganda, even though it now seems to be elusive

Uganda’s ambition of building its first ever oil refinery has suffered another setback after South Koreans pulled out of talks to build the multi-billion dollar facility.

The Sunrise has reliably learned that South Korea’s SK Engineering and Construction indicated recently that it is no longer interested in the project. SK Engineering is a subsidiary of one of the world’s biggest conglomerates SK Holdings.

South Korea’s Ambassador to Uganda Park Jong Dae has confirmed that SK withdrew their interest in building and operating the highly anticipated facility partly because of the decline in global oil prices which affected the company’s financial position.

The withdrawal of SK, which had been selected by the government as the second preferred bidder after Russia’s RT Global Resources, comes as a major blow to Uganda’s plans of maximizing oil proceeds through building a refinery to export the more valuable refined oil as opposed to exporting crude which robes the country of numerous advantages that are associated with the bi-products of oil.

RT which had emerged top of bidders among internationally acclaimed refinery operators, withdrew in July this year, on reports that they had not received sufficient concessions. There were also concerns that UN Security Council sanctions that had been slapped against RT’s parent company Rostec could have dissuaded Ugandan authorities from engaging with the Russian company.

Energy Ministry’s Spokesperson Ibrahim Kasiita while confirming the withdrawal of SK, however told The Sunrise that the ministry has embarked on the process of soliciting for new refinery investors.

But given the scale of needed investment which is estimated at around US$4billion, the largest single investment ever conceived in Uganda’s history, as well as the urgency expressed by the government to have the black gold out of the ground as soon as two years ahead, the withdrawal of SK comes as a killer punch to those plans.

The first phase of pre-qualification for bidders of the refinery took nearly a year. It means as well that a new and serious partner cannot be expected to come easily, or else the country will open itself to making critical errors that could cost the present and future generations heavily.

Kasiita however discounted claims that the withdrawal of SK will deter the government from pursuing the refinery option.

He said: “Uganda wanted a refinery as soon as yesterday. We have now embarked on the process of soliciting for a new developer,” said Kasiita.

The development is however likely to rouse joy among the three licensed oil production companies Tullow, Total and CNOOC which have long expressed opposition to the refinery project. The three companies led by Tullow prefer to export crude and not refined oil.




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