Ugandan Oil Firm to Borrow $2Billion for Refinery

State-owned Uganda National Oil Company (UNOC) has revealed plans to borrow $2 billion from a unit of global commodities trader Vitol to fund construction of infrastructure projects, including a crude refinery. According to Reuters, Henry Musasizi, Uganda’s junior finance minister, made this known to lawmakers.

He stated: “UNOC will borrow the money from Vitol Bahrain EC (VBA), and the seven-year tenor loan will have an interest rate of 4.92%.

“Borrowing from Vitol presents an opportunity to access non-traditional financing to implement projects and support the government in developing national infrastructure.”

Vitol Bahrain EC already operates in Uganda as the sole supplier of refined petroleum products to UNOC, which then sells it to retailers across the country.

Musasizi urged lawmakers to approve the credit line, which was later sanctioned after securing a majority vote.

He further stated that in addition to the refinery, the money will also be used to finance the construction of roads, a petroleum products storage terminal, and the extension of a petroleum pipeline from western Kenya to Uganda’s capital Kampala.

Uganda plans to start commercial oil production next year from fields in its west.

Earlier this year, Uganda signed an agreement with UAE-based Alpha MBM Investments to build a $4 billion, 60,000-barrel-per-day domestic crude oil refinery. The UAE firm will have a 60% stake in the facility while UNOC retains 40%.