'Oil refinery deal a game-changer for Uganda’

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Uganda is set to transform its energy landscape and boost its economic future with the signing of a landmark deal to construct an oil refinery.

The agreement with UAE-based Alpha MBM Investments will see the firm take a 60% stake in a new crude oil refinery located in Kabaale, Hoima district. The remaining 40% stake will be held by Uganda’s state-run Uganda National Oil Company (UNOC).

This partnership signals a major milestone for Uganda, positioning the country to significantly reduce its dependence on imported fuel and add value to its domestic oil production.

The refinery, with a capacity of 60,000 barrels per day, is a cornerstone of Uganda’s broader strategy to develop its oil sector and create a more resilient economy.

Energy minister Ruth Nankabirwa emphasised the transformative potential of the project, calling it “a game-changer” for Uganda’s economy.

The refinery will produce key petroleum products such as petrol, diesel, kerosene, and other refined products, providing the country with greater fuel security and stabilising fuel prices.

Currently, Uganda imports most of its petroleum through the port of Mombasa in Kenya, making fuel prices susceptible to international price fluctuations. The new refinery will enable Uganda to process its own crude, reducing reliance on foreign refined oil.

Value addition

President Yoweri Museveni, who was present at the signing on Saturday, 29 March 2025, hailed the deal as a crucial step in the country’s development.

“The refinery is not just about fuel; it’s about Uganda producing and exporting refined products instead of importing them,” Museveni stated.

“We must stop exporting raw materials and instead add value to everything we produce.”

The refinery deal comes after Uganda's previous attempts to develop an oil refinery with a consortium led by the US-based Albertine Graben Refinery Consortium (AGRC).

Delays in financing and investment decisions led the government to shift strategies, ultimately choosing Alpha MBM Investments as a partner.

This new partnership with the UAE firm brings fresh momentum to the project, which is expected to process crude oil from Uganda's oil fields in the Albertine region.

Economic and industrial benefits

The development of the refinery aligns with Uganda’s broader economic goals, including industrialisation and job creation.

The project is not only about energy but also about creating opportunities in the downstream oil industry, offering employment prospects and attracting further investment.

The government has also emphasised that refining the country’s oil resources will help integrate oil refining with industrialisation, further strengthening the country’s economy.

The deal with Alpha MBM Investments reflects Uganda’s growing ties with the UAE. In addition to the refinery agreement, Uganda entered five other deals with UAE investors covering areas such as aviation, logistics, digital land management, cargo storage, and government digital payments.

These agreements are set to deepen economic collaboration between the two nations, positioning Uganda as a key partner in infrastructure and investment opportunities.

Financing and construction

The refinery project is expected to revolutionise Uganda’s energy sector once it’s operational, reducing the country’s dependency on imports and laying the foundation for a more self-sufficient and stable economy.

With the project now moving toward implementation, the focus will shift to securing financing and finalising construction timelines to ensure the refinery delivers on its promises of economic transformation and energy security.

Tony Otoa, chief corporate affairs officer of UNOC, said: “The refinery, set to be East Africa’s first major crude processing facility, aims to significantly reduce Uganda’s reliance on imported petroleum products. It is designed to meet both local and regional demand for fuel products.

The commercialisation of Uganda’s oil and gas resources includes not only the refinery but also the East African Crude Oil Pipeline (EACOP), with EACOP this week announcing notable progress in securing project financing.”

With the refinery project now gaining momentum, attention will shift toward finalising financing arrangements and establishing construction timelines. Once operational, the refinery is poised to revolutionise Uganda’s energy landscape, enhancing fuel security and diminishing the country’s dependence on imported refined oil.