In Summary

Similarly, when President Museveni suggested Uganda would construct an oil refinery for Uganda’s oil, there was a concern it would be an unprofitable venture. Mr Museveni argued that there was no need to export crude oil yet the domestic market has the capacity to consume refined products.

Kampala.

As Uganda draws plans for the construction of an oil refinery in Kabaale, Hoima District, President Museveni and ministry of Energy officials have been in Chad to pick some lessons.

In 2011, Chad started refining oil at the Djarmaya Oil Refinery after several countries had refused to finance the project, arguing that it was unprofitable. It was not until a Chinese company, Chinese National Petroleum Company Incorporation (CNPCI), brought in 60 per cent investment that construction for the refinery went ahead.

The Chadian government contributed 40 per cent of the investment. Chad is Africa’s seventh largest oil producer at 180,000 barrels per day. The refinery capacity is 20,000 barrels per day, enough to meet the country’s domestic consumption.

Similarly, when President Museveni suggested Uganda would construct an oil refinery for Uganda’s oil, there was a concern it would be an unprofitable venture. Mr Museveni argued that there was no need to export crude oil yet the domestic market has the capacity to consume refined products.

According to a statement issued by the State House, President Museveni, while on a two-day visit to Chad, noted that Uganda was seeking to break away from the African slogan of “producing what it does not consume and consuming what it does not produce” by exploiting its rich natural resources for its own people.
“I congratulate President Idriss Deby for his foresight of building this refinery. Some countries produce petroleum but don’t refine it. Now Chad produces oil and consumes it. In Uganda, we have some oil wells and that is the route we are taking,” he said during the tour of the Djarmaya Oil Refinery.

The President was accompanied by a team of engineers from the ministry of Energy led by Ms Irene Batebe and Mr Benjamin Ariho. The President, according to the statement, said Uganda hopes to start with a refinery producing 30,000 barrels per day and later increase the capacity to 60,000 barrels per day.
Government is currently negotiating with a conglomerate led by a South Korean Firm, SK Energy, with the expectation the latter would bring in at least 60 per cent of the funding.

The Djarmaya Oil Refinery was constructed at a cost of $758m. One of the other lessons to pick from Chad is that it operates both refinery and crude oil pipeline. The Uganda government is planning for both with the oil companies financing the crude oil pipeline. There have also been several disputes between the Chad government and CNPC over pricing of products from the refinery. The refinery was shut down twice between 2011 and 2013 over the pricing dispute.