The project faces a substantial logistical challenge in transporting large refinery equipment to the construction site. Mugerwa said some vessels would be more than six metres in diameter and weigh at least 200 tonnes each.The planned US$4 billion oil refinery at Kabaale in Hoima District is targeting a Final Investment Decision (FID) in February 2027, but key agreements, engineering work, and arrangements for transporting heavy equipment remain outstanding.The planned refinery, with capacity to process 60,000 barrels of crude oil per day, is a cornerstone of Uganda’s strategy to become a significant player in the global oil market.Michael Nkambo Mugerwa, General Manager of Uganda Refinery Holding Company, told Parliament’s Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) that negotiations on commercial agreements needed to advance the project were ongoing. At the same time, basic engineering was about 80 percent complete.The agreements include the Host Government Agreement, Shareholders’ Agreement, Crude Suppliers’ Agreement and the tolling agreement.These will establish respective obligations of government, the refinery company, its shareholders and companies supplying crude oil.Mugerwa said the project team was reviewing more than 1,000 engineering drawings and working towards the February 2027 investment decision.If target is met, construction is expected to take three years, with commissioning planned for first quarter of 2030.“Our target is to achieve FID, final investment decision, in February of 2027. And then we have a three-year construction window, and the plan is to commission the refinery in the first quarter of 2030,” Mugerwa told the committee.The February target comes after earlier attempts to secure investors for the refinery failed to reach construction.The current project is being developed through a partnership between government, represented by Uganda National Oil Company (UNOC), and Alpha MBM Investments, a United Arab Emirates-based company.The Host Government Agreement will set out obligations of government and refinery company, including government commitments on security and land ownership and company’s obligations on national content, health, safety and environment.The Shareholders’ Agreement will define financial obligations and rights of partners, including their contributions to project and voting arrangements.The Crude Suppliers’ Agreement is intended to secure 60,000 barrels of crude oil required daily to run refinery. It involves crude owners, including government and UNOC, TotalEnergies and China National Offshore Oil Corporation (CNOOC).Mugerwa told MPs that parties were in detailed negotiations on legal and commercial arrangements.“And now we are in detailed negotiations relating to legal and commercial agreements, tolling agreements that the CEO mentioned earlier, shareholders’ agreement. And also, we have to finalize the crude supply agreement with the licensees. So that’s with Total and CNOOC,” he said.The agreements matter because investment decision requires parties to commit to financing and implementing project.The refinery’s tolling model is intended to allow government to retain ownership of crude supplied and petroleum products produced.UNOC Chief Executive Officer Proscovia Nabanja told committee that project would cost approximately US$4 billion, requiring government side to contribute US$1.6 billion for its 40 percent stake. Alpha MBM is to hold remaining 60 percent.“This is a capital-intensive project. You’re dealing with approximately $4 billion,” Nabanja said.She explained that under tolling arrangement, government would retain ownership of crude and products after processing.“UNOC will own the crude, or the Government of Uganda will own the crude. It goes through this refinery, which is a tolling structure, and whatever comes out still belongs to government,” she said.She compared arrangement to taking coffee beans to a processor while retaining ownership of beans and resulting product. Government’s equity contribution is a major financing challenge.Peter Muliisa, UNOC’s Director Legal and Corporate Affairs, said UNOC had about US$450 million available for refinery and that government had committed to raising US$1.6 billion over three years to meet its 40 percent equity obligation.“UNOC right now has about $450 million available for our investment in the refinery. And the government has committed to generate about $1.6 billion in the next three years to just make sure that we meet our part of equity obligations,” Muliisa said.The US$450 million is part of government’s US$1.6 billion contribution, leaving approximately US$1.15 billion still to be raised, subject to confirmation of actual disbursements and funding schedule.“So the government is very committed. I’ve never seen the government advance an entity close to half a billion dollars per project,” he said.Muliisa said availability of crude had been one of main risks for investors considering a refinery before Uganda’s oil production was assured.“You can’t have a refinery without crude,” he told the committee.He said government had taken on risk in contractual negotiations, agreeing to compensate investors if crude production failed to materialise.The circumstances and terms under which that commitment would apply are governed by relevant contracts.Alpha MBM is expected to contribute remaining 60 percent, equivalent to about US$2.4 billion. Some MPs questioned whether company could raise money, with one saying it had no history of financing a refinery project.Muliisa also said UNOC’s macroeconomic analysis indicated that refining a barrel of crude locally could generate seven times value of exporting it. That figure was his description of company’s analysis and should be read as an estimate rather than independently established outcome.Beyond agreements, project team must determine how to transport large refinery vessels to Kabaale.Mugerwa said some vessels would be more than six metres in diameter and weigh at least 200 tonnes each. Moving them across roads in Tanzania and Uganda presents challenge because of restrictions on heavy loads.“Some of these vessels are over six metres in diameter, so we have a significant logistical challenge to bring such large pieces of equipment, weighing a minimum of 200 tonnes apiece, across Tanzania roads and also Uganda roads,” he said.He said some vessels could weigh between 500 and 600 tonnes when assembled, prompting project team to assess whether they could be transported in sections or fabricated at refinery site.On-site fabrication would still require imported specialist materials, including high-chromium and high-nickel steels.The project also includes water intake at Mbegu on Lake Albert, a pipeline of about 10 kilometres to industrial park and a 211-kilometre multi-products pipeline to storage terminal at Namwabula in Mpigi District.Mugerwa said environmental and social impact assessment was between 85 and 90 percent complete.Scoping report and terms of reference had been submitted to National Environment Management Authority, security risk assessments had been completed, and geotechnical investigations were starting at project sites.These activities are progressing alongside commercial negotiations. Mugerwa said both President and Alpha MBM’s owner were committed to February 2027 target.The current negotiations follow previous efforts to secure a developer for refinery. Earlier arrangement with Russian company RT Global Resources collapsed in 2016.Government selected American-backed Albertine Graben Energy Consortium (AGEC), also referred to as Albertine Graben Refinery Consortium (AGRC). That project did not proceed to construction, and its framework agreement expired in June 2023.Ali Ssekatawa, Director Legal and Corporate Affairs at Petroleum Authority of Uganda, discussed earlier attempts while addressing Ugandan judges about two months ago. He described how government moved from one potential investor to another before agreeing to current partnership.Referring to previous attempts, Ssekatawa said US sanctioned Russian firm that had earlier negotiated with government about project.“They did not give up on their geopolitics. Then we were stuck. We went back to the market. We went to the last one, which was also jumped. It was an American entity. Again, we worked with it up to the point of actual investment. It couldn’t move. And that’s how we are with the third one,” he explained.Ssekatawa also explained why government had decided to take a stake in project rather than fund entire refinery itself. He highlighted scale of investment compared with earlier government projects.“The biggest project we’ve ever done in this country was the Karuma power project. And we contributed 15%. And you remember how long that 15% took to look for $300 million. So we didn’t have the $4 billion. We didn’t have it. That is why we have to look for other partners,” Ssekatawa said while noting financing challenge that has dogged refinery project over years.-URNThe post US$4bn Hoima Refinery Eyes Final Investment Decision in February 2027 But Key Deals Still Pending appeared first on Business Focus.