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The government has shortlisted six bidders to build an oil refinery on the shores of Lake Albert. According to the Ministry for Energy and Mineral Development, following a request for qualification launched in early October, the government received responses from 75 interested parties. Eight companies or consortia submitted detailed qualification statements, and of the six to be shortlisted, the winner will be selected in H1 2014. Prequalified bidders include a Russian consortium led by RT – Global Resources, a subsidiary of high-technology product producer and exporter Rostec, along with financial services company VTB Capital, which is keen to expand in Africa, and oil company Tatneft. Rostec, which signed a memorandum of understanding on wider energy co-operation with the ministry in November, said in a statement that the refinery project included a 205km products pipeline to Kampala.

The World Bank’s International Development Agency is considering a $100m loan for the Uganda Energy for Rural Transformation III (ERT-3) project. This aims to support investments in on- and off-grid projects and provide technical assistance. The government will provide $10m of financing, and an $8.9m grant from the Global Environment Facility is on the cards. ERT-3 will go to the World Bank board in July 2014, following the completion of appraisal in February.Faced with significant challenges in bringing grid power to small rural communities, Uganda failed to meet a government target of raising the rural electrification rate to 10% by 2010 from 1% in 2001.

The World Bank’s International Finance Corporation is to provide $70m in loans as part of a $190m long-term financing package to the Umeme electricity distribution utility. Stanbic and Standard Chartered Bank also participated in the financing, which aims to help the company meet increasing demand for power, while controlling costs and improving operational efficiency. “This financing is a milestone for the energy sector, which has never had anything like this level of investment in the distribution network,” said Umeme chairman Patrick Bitature.

On 31 October, the government and the Agence Française de Développement (AFD) signed a $23m loan agreement for the construction of a new substation in Hoima, the extension of the Nkenda substation, and new terminal points and interfaces at the Fort Portal substation. The work is part of a larger project to better connect Hoima and Nkenda, improve supply and reduce losses in western Uganda. Norway is cofinancing the project by supporting power generation from mini-hydro plants, and the AFD will also finance a rural electrification programme in the Hoima-Nkenda region.

Human Rights Watch (HRW) on 21 October released a 63-page report, ‘Letting the Big Fish Swim’, which details how the Ugandan government has failed to hold to account senior officials implicated in the theft and diversion of public funds. 
According to the report, no high-ranking government official, minister or political appointee has ever served a prison sentence, despite investigations into numerous corruption scandals over the years. This is despite repeated official pledges to eradicate corruption and an array of anti-corruption institutions. 


President Yoweri Museveni has launched construction of the 183MW Isimba hydro project on the River Nile. China International Water & Electric Corporation is building the dam with financing from the Export-Import Bank of China under an agreement reached between Uganda and China in July.

The Ugandan government has invited expressions of interest from investors to develop its 30,000 b/d refinery on the shores of Lake Albert. Successful bidders will be announced in April. Mineral resources minister Peter Lokeris told the CWC East Africa Oil and Gas Summit on 8 October the government had allocated a 29km2 area of land for the project, which would be developed as a public-private partnership. In September, the government awarded a production licence to China’s CNOOC for the Kingfisher field. Lokeris said Tullow Oil and Total, the two other stakeholders in the project, would soon be awarded similar permits: “There are a number of issues which we have to agree with them. By the end of this month, we will award them the licences,” he said.

As Kenya announces that geothermal power will contribute some 1,646MW to the country’s planned 5,000MW injection of generation capacity, neighbouring Tanzania and Uganda are keen to take advantage of their own Rift Valley steam potential, but both face substantial challenges in terms of financing and technical capacity. In May 2013, US developer Ormat Technologies announced the commercial operation of Plant 2 in the Olkaria III complex in Naivasha, and the company plans to bring a third plant on line during 2014, taking Olkaria III’s total capacity to 100MW. The site also has 150MW of generation from two plants developed by Kenya Electricity Generation Company (KenGen), and the state Geothermal Development Company (GDC) estimates Olkaria’s total potential capacity to be as high as 1,000MW.

A new company offers the opportunity to invest in hydrocarbons plays in aspiring independent states, which its chief executive says is a rare form of ethical oil and gas investment. Belize-registered Kilimanjaro Capital describes itself as the only publicly listed company focused on the acquisition and development of future contingent natural resource licences (FCLs). The Calgary-based company is concentrating on Biafra, Southern Cameroons and Cabinda. Chief executive Zulfikar Rashid told African Energy in an interview the FCLs assumed that a newly independent state would renegotiate oil and gas contracts on its territory, and that as part of that process a stake would be granted to Kilimanjaro in recognition of its support.

California-based AAE Systems is embroiled in a dispute with Ugandan firm Apex Petroleum over $60m of arrangement fees relating to the $1.2bn 150MW Katwe geothermal project in Kasese, western Uganda. Apex director Ahmed Mutimba claims AAE contracted him as its country representative, charged with identifying projects and partners, and entitled to 5% of project costs as an arrangement fee upon the signing of a power purchase agreement (PPA) (AE 253/8).
Having formed a joint venture with local company Katwe Geothermal earlier this year, AAE signed a PPA with the Uganda Electricity Transmission Company in April 2013.

A third discovery in the South Lokichar Basin raises the possibility that oil from Kenya’s first discoveries could reach the market quicker than Uganda’s, which date back to 2006. Tullow is pushing ahead with exploration and appraisal in Kenya, hoping that it can start to build an export structure into which Uganda can later feed. On the potential scale of the discoveries, Tullow points out that it has interests in 12 East African Tertiary Rift basins. Early success in Uganda’s Lake Albert, and more recently in Kenya’s South Lokichar, substantially derisks the others, though probably not all will deliver success, and exploration will move into further basins next year.

China International Water & Electric Corporation (CWE) has been awarded the contract to build the 188MW Isimba dam, Reuters quoted junior energy minister Simon D’Ujanga as saying. D’Ujanga, who also announced the award of the contract for the 600MW Kindaruma project to Sinohydro earlier this year, said: “We’re looking for cheap money to develop our infrastructure projects and China has that money.” The Isimba contract is reported to be financed with a $500m concessional loan from the Export-Import Bank of China.

Seven years after discovering oil in Uganda, Tullow and its partners have still not agreed a development plan with the government. Talks on the details have dragged on for years, stalling mostly over how big a refinery the development should include, and the parties are still only at the stage of discussing a memorandum of understanding (MoU). Tullow, Total, CNOOC and the government have now agreed on an export pipeline and a refinery sized initially at 30,000 b/d, with the potential to expand to 60,000 b/d. The partnership has completed the concept stage of pipeline studies and discussions with the government on pipeline co-operation are continuing, Tullow said.

London’s Commercial Court has ruled that Heritage must reimburse Tullow Oil for a disputed $313m tax payment, in a case highlighting the complex behind-the-scenes negotiations involved in putting together a major oil deal in Africa. 
The Ugandan Revenue Authority sought the amount as capital gains tax on Heritage Oil after it earned $1.45bn from the January 2010 sale of its assets to Tullow. Heritage disputed the payment, so Tullow paid the tax to enable the sale and subsequent farm-down to go ahead.

The World Bank Group’s International Finance Corporation has announced an agreement with Oesterreichische Entwicklungsbank (OeEB), the Austrian development bank, to increase sustainable energy investment in sub-Saharan Africa, starting with Kenya, Tanzania, Uganda and Rwanda. OeEB agreed to contribute €2m ($2.6m) to support project development, capacity building and assistance to financial institutions under the Africa Sustainable Energy Facility, a joint IFC and European Investment Bank (EIB) programme to increase investments in renewable energy and energy efficiency. Both institutions are contributing equally to the €60m financing facility, while OeEB, alongside EIB, is providing additional funds for a support unit that will identify and facilitate investments.