In a landmark development for Uganda’s energy sector, the Ugandan government has signed an Implementation Agreement with UAE investment firm Alpha MBM Investments LLC, marking a decisive step toward the construction of a long-stalled 60,000-barrel-per-day crude oil refinery. The agreement, inked at State House in Entebbe on March 29, 2025, in the presence of President Yoweri Museveni, brings fresh momentum to a project that has been under negotiation for over 15 months and repositions Uganda in the regional energy landscape.

A New Chapter in Uganda’s Energy Journey

The journey toward realizing Uganda’s domestic refining capacity began when commercially significant crude oil reserves were discovered in the late 2000s in the Albertine Graben region. Since then, the vision to build a refinery capable of processing 60,000 barrels per day has been championed as a critical initiative to transform the nation’s oil sector. The recently signed Implementation Agreement represents the culmination of intense negotiations that started on January 16, 2024, with the updated Memorandum of Understanding (MoU) signed on December 22, 2023, setting the stage for a partnership that aims to boost national economic growth and regional energy security.

President Museveni expressed his gratitude at the signing ceremony, stating, “I want to thank His Highness Sheikh Mohammed Bin Maktoum and our friends from the UAE for their commitment to investing in Uganda.” This statement not only underscored the Emirati commitment but also highlighted the broader strategic partnership between Uganda and the United Arab Emirates in advancing energy infrastructure and economic development.

Key Components of the Agreement

The signed agreement delineates a clear division of stakes between the partners: the Uganda National Oil Company (UNOC) will hold a 40% stake in the refinery project, while Alpha MBM Investments LLC will secure 60%. This structure is expected to bring in both local expertise and international investment acumen, creating a robust foundation for the project’s eventual success.

The project is slated to kick off its construction phase before the fourth quarter of 2025, providing renewed optimism for an industry long hampered by delays and uncertainty. The new investor, Alpha MBM Investments LLC, has effectively replaced the previous strategic investor, the Albertine Graben Energy Consortium (AGEC), whose Project Framework Agreement (PFA) expired in June 2023 due to a lack of urgency. Following President Museveni’s directive, the Ministry of Energy and Mineral Development re-initiated the search for a new lead investor, leading to the selection of Alpha MBM among four interested investment groups.

Project Infrastructure and Operational Vision

The refinery is to be constructed in Kabaale, located in the Hoima District, a region already known for its rich oil reserves and strategic importance. Beyond the refinery itself, the project’s infrastructure plans include several critical components designed to ensure operational efficiency and sustainability:

• Modern Storage Terminal: The project will incorporate a state-of-the-art storage terminal in Namwabula, Mpigi District. This facility is engineered to ensure that Uganda maintains adequate fuel reserves for national consumption, thus reducing the country’s reliance on imported petroleum products.
  
• 212-Kilometre Multi-Product Pipeline: A crucial component of the project is the pipeline that will stretch over 212 kilometres, linking the refinery to the storage terminal. This pipeline is designed to facilitate the seamless transportation of refined products, not only within Uganda but also to neighbouring regions, thereby enhancing regional energy security and trade.
  
• Mbegu Water Abstraction Facility: To support the extensive operational needs of the refinery, an advanced water abstraction facility will be constructed. Equipped with a cutting-edge water pipeline system, this facility will ensure that the refinery has a sustainable water supply, an essential factor for continuous and efficient operations.
  

Broader Economic and Social Impacts

The construction of the refinery is expected to have a transformative impact on Uganda’s economy. With the nation grappling with a persistent refining gap, this project is seen as a long-overdue initiative that could pave the way for significant economic benefits. The refinery will not only enhance national fuel security but also create a multitude of jobs during and after its construction. Local communities in Hoima, Mpigi, and surrounding districts are anticipated to benefit from increased employment opportunities, technology transfer, and improved infrastructure.

Moreover, the project is poised to attract further foreign direct investment (FDI) into Uganda’s oil and gas sector. Historically, major infrastructure projects have served as catalysts for broader economic growth, leading to improvements in ancillary sectors such as transportation, construction, and services. The close involvement of Alpha MBM Investments LLC, a prominent Emirati firm, signals strong confidence in Uganda’s potential as an energy hub in East Africa.

Regional Implications and the African Energy Landscape

Uganda’s renewed commitment to building domestic refining capacity is not occurring in isolation. Across Africa, several nations are working to reduce their dependence on imported refined petroleum products. Many countries in the region have faced challenges related to high import costs, fluctuating global oil prices, and supply chain disruptions. In this context, Uganda’s move to construct its own refinery is a strategic effort to bridge the refining gap and assert its position within the competitive African energy market.

In recent years, nations such as Nigeria and Angola have also undertaken initiatives to modernize their refining capacities. However, Uganda’s approach—characterized by strong governmental backing and strategic international partnerships—sets it apart as a forward-thinking player in the region. Analysts believe that if successful, Uganda’s project could serve as a model for other emerging economies looking to leverage their natural resources and secure greater control over their energy supply chains.

The Role of International Partnerships in Economic Development

The decision to partner with Alpha MBM Investments LLC reflects a broader trend of leveraging international expertise to accelerate domestic development projects. The Emirati investment firm brings a wealth of experience in large-scale infrastructure projects and a deep understanding of the global energy market. Their involvement is expected to not only provide the necessary capital but also introduce advanced technologies and management practices that can drive efficiency and sustainability.

International partnerships such as this often yield significant benefits beyond immediate financial returns. They facilitate technology transfer, enhance managerial know-how, and foster an environment of cross-cultural collaboration. In Uganda’s case, the collaboration with Alpha MBM Investments LLC is anticipated to create a ripple effect, inspiring further partnerships and encouraging other international investors to explore opportunities in the East African region.

Navigating Challenges and Strategic Considerations

Despite the positive outlook, the project is not without its challenges. Uganda, like many other emerging economies, faces a complex set of hurdles in the energy sector. These include regulatory uncertainties, fluctuating global oil prices, and the need to develop adequate infrastructure to support large-scale industrial projects. The transition from a Memorandum of Understanding to a fully-fledged Implementation Agreement signifies that these challenges are being met head-on, with both the government and the private sector working collaboratively to overcome potential obstacles.

One of the critical challenges is ensuring that the project remains economically viable in the face of global market fluctuations. The volatile nature of oil prices means that the project must incorporate robust risk management strategies and flexible operational frameworks. The involvement of experienced investors like Alpha MBM Investments LLC provides reassurance in this regard, as their track record in managing large-scale energy projects is expected to mitigate some of these risks.

Moreover, the project’s success will depend on a well-coordinated approach to infrastructure development. The construction of the pipeline, storage terminal, and water abstraction facility must align with the overall timeline of the refinery’s operations. Close coordination between government agencies, private investors, and construction contractors will be essential to ensure that the project is completed on time and within budget.

Socio-Economic Benefits and Community Engagement

Beyond the industrial and economic metrics, the refinery project carries significant socio-economic implications for Uganda. Local communities stand to benefit enormously from the project through job creation, skills development, and improved infrastructure. The construction phase is expected to create thousands of jobs, directly boosting the livelihoods of those in the Hoima and Mpigi districts, while ancillary industries such as hospitality, logistics, and retail are likely to experience growth.

Furthermore, the project is set to catalyse improvements in local infrastructure, including roads, healthcare, and education. These developments, in turn, can lead to long-term improvements in community welfare, contributing to broader national development goals. The government’s proactive engagement with local communities, through consultations and outreach programs, is expected to ensure that the benefits of the project are widely distributed.

The human element of the project cannot be overstated. As communities witness tangible improvements in their living standards, the refinery project will likely garner strong public support, further strengthening the government’s mandate to pursue such transformative initiatives. By prioritising community engagement and transparent communication, the government aims to build lasting trust between local populations and the broader national vision for energy security and economic development.

Environmental and Sustainability Considerations

In today’s global context, any major industrial project is expected to adhere to stringent environmental and sustainability standards. The refinery project is no exception. Comprehensive environmental impact assessments have been integral to the planning process, ensuring that the project aligns with national and international environmental guidelines.

The inclusion of the Mbegu water abstraction facility, with its advanced water pipeline system, is a testament to the project’s commitment to sustainability. By ensuring a reliable and sustainable water supply, the project not only supports efficient refinery operations but also minimises potential environmental disruptions. Additionally, modern design principles and the use of state-of-the-art technology are expected to reduce the project’s carbon footprint, contributing to Uganda’s broader environmental goals.

Sustainable development is a key priority for both the Ugandan government and its international partners. The collaborative approach to environmental management in this project sets a positive example for future infrastructure initiatives, demonstrating that economic growth and environmental stewardship can go hand in hand.

Strategic Timing and Future Prospects

The timing of the Implementation Agreement is particularly noteworthy. After years of stalled negotiations and shifting investment strategies, the agreement with Alpha MBM Investments LLC comes at a moment when Uganda is poised for rapid industrial transformation. The renewed focus on domestic refining capacity not only addresses the longstanding refining gap but also positions Uganda as a key player in the East African energy market.

Looking ahead, the success of the refinery project could have far-reaching implications. If executed successfully, it may encourage further investments in the country’s oil and gas sector, catalysing additional infrastructure projects and stimulating economic diversification. Moreover, the project’s strategic significance could enhance Uganda’s negotiating power in regional energy discussions, paving the way for improved trade relations and increased energy cooperation with neighbouring countries.

The project is also likely to serve as a catalyst for broader economic reforms in Uganda. As the government demonstrates its ability to secure and implement large-scale international investments, it may pave the way for further structural reforms in the energy sector and beyond. The resulting improvements in infrastructure, technology transfer, and workforce development could stimulate long-term economic growth and elevate Uganda’s status as an emerging industrial powerhouse in Africa.

Conclusion: A Vision for a Prosperous Energy Future

The signing of the Implementation Agreement between the Ugandan government and Alpha MBM Investments LLC is more than just a contractual milestone—it is a vision for a prosperous energy future. By moving forward with the 60,000-barrel-per-day crude oil refinery project, Uganda is not only addressing its refining gap but is also setting the stage for transformative economic and social development.

The project embodies a holistic approach that combines advanced infrastructure, sustainable practices, and strong international partnerships. It represents a strategic response to the challenges of global oil market volatility, regulatory uncertainties, and the need for enhanced national fuel security. More importantly, it is a testament to the power of collaboration between government entities, local communities, and seasoned international investors.

As construction preparations gear up for the fourth quarter of 2025, the eyes of both regional and international stakeholders will be fixed on Uganda. The success of this project could well become a blueprint for other emerging economies in Africa, demonstrating that with the right mix of political will, strategic partnerships, and community engagement, transformative change is within reach.

In an era where energy security, economic diversification, and environmental sustainability are at the forefront of global discussions, Uganda’s move to develop its own refining capacity is both timely and visionary. The refinery project promises not only to boost national economic growth and job creation but also to cement Uganda’s position as a key player in the future of African energy.

With the support of Emirati investment and a clear roadmap for infrastructure development, the refinery project is set to ignite a new era in Uganda’s energy sector—one defined by innovation, resilience, and inclusive growth. As Uganda embarks on this ambitious journey, the nation, along with its international partners and local communities, stands ready to reap the long-term benefits of a modern, efficient, and sustainable energy future.

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Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

1st April, 2025