President Yoweri Museveni of Uganda has expressed support for the construction of a mega petroleum refinery in Lamu, Kenya, but stated that Uganda will not invest in the project at present. Museveni disclosed that he had previously discussed the possibility of establishing a refinery in Tanga, Tanzania, with Nigerian businessman Aliko Dangote, Kenyan President William Ruto, and Tanzanian President Samia Suluhu Hassan.
The proposed Tanzanian refinery is part of a larger 20-billion-dollar Tanga Regional Energy Hub, which includes an integrated petroleum and logistics centre, refinery, and storage facilities. This project would be linked to Uganda through the East African Crude Oil Pipeline. Museveni emphasized the importance of establishing more refineries in East Africa to increase refining capacity and reduce dependence on imported petroleum products.
During the groundbreaking ceremony for the Dangote refinery in Lamu, Kenya, Museveni advocated for the development of multiple refineries in the region, suggesting that three refineries could complement rather than compete with one another. He also noted that Uganda's delayed commercialization of its oil resources was partly due to the need for a refinery to ensure that crude oil is processed locally.
Aliko Dangote, addressing Kenyan investors at the Nairobi Securities Exchange, mentioned that the 40-month construction period for the Lamu refinery would enable it to surpass Uganda's 60,000-barrel-per-day refinery project. He also cautioned governments about investors who make promises but fail to deliver, referencing an Emirati company involved in Uganda's refinery project.
Uganda's refinery project has experienced several setbacks, with the government signing agreements with and later dropping different developers and investors due to issues with contractual terms, technical capacity, and financial capability. The current developer, Alpha MBM Investments LLC, is partnering with Uganda National Oil Company to develop the Hoima refinery. Alpha MBM, established in 2021, is a relatively new company in oil and gas infrastructure development.
Kenyan President William Ruto reiterated that the Lamu refinery has long been part of the country's plans under the Lamu Port-South Sudan-Ethiopia Transport Corridor (LAPSSET). Ruto emphasized that the refinery is crucial to the region's industrialization agenda and will help develop and stabilize the petroleum value chain in East Africa. He also warned Kenyan government officials against imposing conditions that could discourage investment.
The Dangote East Africa Refinery, with a planned capacity of 700,000 barrels per day, has raised questions about the capacity of the East African market to sustain two or three large-scale refineries. The project's realization has brought renewed debate over the viability and potential interaction of the proposed or developing refineries in the region, including Uganda's refinery in Hoima and the proposed refinery at Tanga in Tanzania.
Key points
- Uganda has not committed to investing in the Lamu refinery project.
- The proposed Tanzanian refinery is part of a larger 20-billion-dollar Tanga Regional Energy Hub.
- The Lamu refinery has a planned capacity of 700,000 barrels per day.
