Uganda begins fresh negotiations for oil refinery

03 July 2016, Kampala -Uganda is back to the negotiation table over the construction of a 60,000 barrels per day refinery following the failure of its agreement with its preferred bidder, Russia-led consortium RT Global Resources.

*Refinery.

*Refinery.

This latest development is likely to affect the general oil production timeline of 2022.

The government will have to negotiate with South Korea’s SK Engineering, which is the alternative bidder. The plan is for the talks to lead to the signing of an implementation framework, project framework and escrow agreements.

Following the signing of the final agreements, the parties will form a refinery company that will take over the engineering and financial aspects of the project.

SK Engineering lost its bid despite being a strong competitor all through because, “They came short of key government requirements including contribution to the private share and operating plan,” said Kaliisa Kabagambe, Permanent Secretary in the Energy and Mineral Development Ministry.

The government started negotiations with RT Global in March 2015, and the final agreement was expected to be signed last month in June.

However, instead of signing the documents, RT Global made additional demands on the government, and sought to reopen and renegotiate issues that had already been agreed on by both parties.

“Consequently, the government was left with no choice but to halt negotiations and withdraw the bid bond… We had 103 issues to negotiate on. They agreed on all the issues, but they returned the documents unsigned,” said Mr Kabagambe.

The RT Global Resources consortium members are: Telconet Capital Ltd Partnership, VTB Capital PLC, Tatnet JSC and GS Engineering and Construction Corporation.

The SK Engineering and Construction consortium members are: SK KBD Global Investment Partnership, Private Equity Fund, China State Construction Engineering Co-operation Ltd, Haldor Topsoe A/S and Maestro Oil and Gas.

  • The East African
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