The selection of a consortium led by Russia’s RT Global Resources to construct a regional oil refinery in Uganda is likely to trigger tension with the West over its CEO’s links with conflict in Ukraine.
Russia-owned Rostec holds a 100 per cent stake in RT Global Resources which was created to carry out projects involving raw materials and infrastructure development in the country and abroad.
Rostec’s chief executive Sergei Chemezov, who is a close ally of President Vladimir Putin, has been under US and EU sanctions since 2014 in response to Russia’s military involvement in eastern Ukraine.
The US in April 2014 blocked Chemezov’s assets and prohibited US companies from dealing with him in retaliation over Russia’s military incursion in Ukraine.
Uganda, which is preparing to close a deal with RT Global Resources to build and operate a $2.5 billion oil refinery in which Kenya and Rwanda have agreed to buy stakes, is however not obligated to comply with the EU and US sanction against Mr Chemezon, a former KGB officer.
Uganda has previously bought fighter jets from arms exporter Rosoborone, a subsidiary of Rostec.
Uganda’s Energy and Mineral Development minister Irene Muloni said on Tuesday negotiations for project agreements with the consortium would commence next month and end by May, paving the way for possible implementation.
“The process of selecting a lead investor in Uganda’s refinery project has been highly competitive. We are pleased that the two bidders responded to the Request for Final Offers, from which RT Global Resources emerged as the Selected Preferred Bidder. We have confidence that we will execute project agreements and go ahead to develop Uganda’s refinery project” she said.
Members of this consortium include Telconet Capital Ltd Partnership, VTB Capital PLC, Tatneft JSC and GS Engineering & Construction Corporation.
Preferred bidder
The facility, to be developed in phases, is expected to have final output capacity of 60,000 barrels per day, but will start with 30,000 barrels per day capacity.
Britain’s Tullow Oil, French oil major Total and China National Offshore Oil Corporation (CNOOC) are developing Uganda’s fields. The first phase of the refinery is expected to be in place by 2018.
Uganda said that if it is not comfortable with the RT Global Resources deal, it might commence negotiations with the second preferred bidder, the SK Engineering and Construction-led consortium.
