The construction of Uganda’s oil refinery is set to be a game-changer for the country’s economy, with a macro-economic study by Stanbic Bank revealing that it will add over US$3.3 billion (about Shs 12.53 trillion) to the country’s gross domestic product (GDP) per annum and US$8.2 billion (about Shs29.9 trillion) to the national capital formation.
The refinery is to be constructed in Kabaale, Hoima District, following the signing of an agreement between the government of Uganda and UAE-based Alpha MBM Investments, which will claim a stake of 60%, while the Uganda National Oil Company (UNOC) will claim a 40% stake.
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.
It will produce key petroleum products like petrol, diesel, kerosene, and other refined products, saving Uganda from importing its petroleum through the port of Mombasa in Kenya, which makes fuel prices unstable and subject to manipulation by opportunists.
The refinery will enable Uganda to process its own crude, reducing reliance on foreign refined oil, which will in turn stabilise prices and create fuel security in the country.
According to a macroeconomic study by Stanbic Bank in consultation with the Uganda National Oil Company (UNOC), the refinery will improve Uganda’s balance of payments by USD591 million (about Shs2.16 trillion).
In terms of protecting the environment, the refinery will produce 658 metric tonnes of LPG per day, which will reduce carbon emissions from hundreds of trucks which ferry petroleum products daily into Uganda from Mombasa and Dar-Es-Salaam.
“The refinery will be a significant contributor to Uganda’s economic growth and development,” says Tony Otoa, the Chief Corporate Affairs Officer at the Uganda National Oil Company (UNOC) adding that, “The refinery, which is 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 demands for fuel products.”
Economic Benefits
Besides adding over USD$3.3 billion to Uganda’s GDP and contributing US$8.2 billion to the national capital formation, the refinery is expected to have a significant impact on the country’s economy, with the macro-economic study revealing that it will create 32,000 jobs, including: 1,200 direct jobs, 16,900 indirect jobs and over 13,900 induced jobs
“The refinery will create thousands of jobs, develop local expertise, and serve as a springboard for industries such as petrochemicals and fertiliser production,” Hon. Ruth Nankabirwa, the Minister for Energy and Mineral Development, said during the signing of the agreement between the government of Uganda and Alpha MBM Investments at State House in March this year.
“It will also attract Ugandan businesses to participate in the supply of goods and services, boosting local enterprise development,” she added.
Boost to the Economy
Nankabirwa also noted that the construction of the refinery is expected to have a ripple effect on the economy, with many sectors benefiting from the increased economic activity.
She said the refinery will be a catalyst for economic growth and development in Uganda, and soon the country will witness he positive impact it will have on the economy.
The construction of Uganda’s oil refinery is a significant milestone for the country’s economy, and it is expected to have a lasting impact on the country’s economic growth and development.
With its potential to add billions of dollars to the country’s GDP and create thousands of jobs, the refinery is a game-changer for Uganda’s economy.