Race For Uganda Oil Refinery Down To Two

Only two consortia are in the running to secure a deal for the construction of Uganda’s oil refinery, the ministry of energy has announced.

Initially, six consortia were targeting the deal before the number came down to four. And now SK Energy from South Korea and RT Resources from Russia are the only ones competing for the construction of 60,000 barrels-per-day refinery in Hoima district. In a statement issued by the Ministry of Energy, two firms, China Pipeline Petroleum Bureau and Marubeni Corporation from China are nolonger in the running.

According to the Ministry of Energy statement, “the proposal from Marubeni Corporation was not evaluated due to lack of a bid bond” whereas “China Pipeline Petroleum Bureau’s proposal did not adequately satisfy all the requirements.”

In the first week of June 2014, two consortia, Petrofac and Vitol had pulled out the bidding process for various reasons. PETROFAC opted out to concentrate on their core business in Engineering, Procurement and Construction (EPC) whereas, VITOL SA is said to have had internal disagreements with other members of the consortia. That meant that only four firms remained in the bidding process.

The government had called for a Request for Proposals (RFP) from the four firms that were remaining in the race at the end of May 2014. The proposals were supposed to include detailed technical, financial and commercial plans to develop, finance, build and operate the Project in partnership with the Government of Uganda.

Only two consortia’s RFPs satisfied Government’s Transaction Advisor, Taylor –Dejongh.

Fred Kabagambe Kaliisa, the Permanent Secretary in the Ministry of Energy, says, government will commence negotiations with the two preferred bidders and thereafter issue a request for the Best and Final Offers (“BFO”) document.

By August 2014, the two bidders are expected to have submitted their final offers. Negotiations will then commence with the “highest scoring Preferred Bidder and once executed, take forward the development of the project.

One of these two bidders will have 60percent ownership in the planned refinery, a 250kilometre pipeline from Hoima to Kampala and storage facilities. The first phase of the refinery will be about 20,000 barrels per day and is expected to be complete in 2017/18, according to the Ministry of Energy.

Currently, compensation is going on in Kabale, Buseruka Sub-County, Hoima District where the refinery will be constructed.