Uganda: Vitol Set To Provide $2 Billion Loan Facility For Uganda’s Refinery, Other Projects

Global commodity trading firm Vitol is set to provide the Ugandan government with a $2 billion loan facility to support the development of the country’s energy infrastructure projects, including the 60,000-barrel-per-day oil refinery, Reuters has reported, citing Ugandan officials.

The funding from Vitol will not only support the refinery project but will also be used to construct roads, develop a fuel storage terminal, and extend an oil pipeline to transport crude from western Uganda to the capital, Kampala.

Initially, the Ugandan government sought financing for the $4 billion refinery project on international financial markets.

After failing to secure funding, it turned to individual investors, including Emirati firm Alpha MBM Investments, which subsequently became a partner in the refinery project.

Funding for the refinery will comprise a mix of debt and equity at a ratio of 60:40, meaning 60 per cent of the financing will be debt, while 40 per cent will be equity, according to previous estimates by the Ugandan government.

Alpha MBM Investments will hold a 60 per cent stake in the refinery, with the remaining 40 per cent owned by the state-run Uganda National Oil Company (UNOC).

The loan facility from Vitol will have a seven-year tenor and attract an interest rate of 4.92 per cent, Junior Finance Minister Henry Musasizi said, as quoted by Reuters.

According to Musasizi, the arrangement “presents an opportunity to access non-traditional financing to implement projects and support the government in developing national infrastructure.”

Meanwhile, the East African Crude Oil Pipeline (EACOP) project involves the construction of a 1,443-kilometre (897-mile) pipeline linking landlocked Uganda to the port of Tanga in Tanzania.

The pipeline is expected to transport crude oil from Uganda’s Lake Albert oilfields to international markets. It is designed to carry 216,000 barrels of crude per day, with a planned ramp-up capacity of up to 246,000 barrels per day, according to Ugandan authorities.

EACOP shareholders include France’s TotalEnergies, which holds a 62 per cent stake; the Uganda National Oil Company and Tanzania Petroleum Development Corporation, each with 15 per cent; and China’s state-owned oil company CNOOC, which holds the remaining 8 per cent.