An American firm has won the bid to advise the government on the structure of its $1.6bn oil refinery, the most crucial project in the infrastructural development expected to take place in western Uganda.
Robert Kasande, the refinery development manager in the Petroleum Exploration and Production department, said last week that government already contracted Taylor-DeJongh (TDJ), an independent firm, to advise government on the oil refinery. TDJ, Kasande said, will help government in sourcing for a lead investor, sourcing for financing for the refinery and formation of a refining company.
Kasande spoke at the Investment Opportunities in Energy and Infrastructure summit, at Sheraton hotel. The conference was organized by the American Chamber of Commerce in Uganda and Uganda Investment Authority. Parliament last week passed the Petroleum (Refining, Gas Processing and Conversion, Transportation and Storage) Bill 2012, which covers the regulations surrounding the refinery.
“Now that we have the law [awaiting presidential assent] and we have the transaction advisor, we are ready to go,” Kasande said.
The government received a grant from the Norwegian ministry of Foreign Affairs to finance the activities of the transaction advisor.
Kasande used the conference to call on potential investors to come and invest in Uganda’s petroleum industry. “Oil and gas presents Uganda with unique opportunities for investment,” he said.
These opportunities include construction of a crude oil pipeline from the oil fields to the refinery, waste management, engineering and drilling services, freight forwarding, air freight and investment for the refinery, among others.
Already, plans are underway to construct two oil pipelines — the northern and southern - to transport crude from the oil fields to the refinery in Kabale, Hoima district. “Now that we have contracted a transaction advisor, very soon we are going to call for bids for the oil refinery,” Kasande said.
Oil companies want the construction of an optimal refinery to produce 30,000 barrels per day for the local market, together with an export pipeline. However, the government’s strategy is to develop a refinery in a modular manner, starting with a capacity of 20,000 barrels per day, to be upgraded to 60,000, 120,000 and then later 180,000 barrels per day.
The government says it can only consider an export pipeline if the country discovers more than enough oil to meet regional demand.
The export pipeline, oil companies argue, will help the companies secure the much-needed finance to further invest in Uganda’s petroleum industry. “For us to secure the financing, we need an international market. We need an export pipeline,” Jimmy Mugerwa, the General Manager of Tullow Oil, said.
Taylor-DeJongh describes itself as an independent investment firm providing strategic, project finance and mergers and acquisition advisory services for oil and gas, conventional and renewable power, industrial and infrastructure clients globally.
For 30 years, the firm has advised on the development, structuring, negotiations and financing of $70bn worth of debt and equity investments in more than 100 countries. In 2003, Taylor-DeJongh (TDJ) was named ‘Oil and Gas Advisor of the Year’ by the Infrastructure Journal.