State-owned Uganda National Oil Company 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 a finance ministry official.
Early this year the east African country signed an agreement with UAE-based Alpha MBM Investments to build a $4 billion, 60,000 barrels per day domestic crude oil refinery. The UAE firm will have a 60% stake in facility while UNOC retains 40%.
Uganda plans to start commercial oil production next year from fields in its west.
UNOC will borrow the money from Vitol Bahrain EC (VBA) and the seven-year tenor loan will have an interest rate of 4.92%, Henry Musasizi, Uganda’s junior finance minister, told lawmakers late on Tuesday.
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 asked lawmakers to approve the credit line and the loan was sanctioned after obtaining majority votes.
Borrowing from Vitol “presents an opportunity to access non-traditional financing to implement. ..projects and support the government in developing national infrastructure,” Musasizi said.
In addition to the refinery, the money will also be used to finance construction of roads, a petroleum products storage terminal and extension of a petroleum pipeline from western Kenya to Uganda’s capital Kampala, he added.
