Oil & Gas

Commodity trading giant Vitol has agreed to provide $2 billion in loans to the Ugandan government to support energy infrastructure development, according to a Reuters report citing a government official. A significant portion of the funding will be directed toward Uganda’s long-planned oil refinery, a project central to the country’s ambition to commercialize its crude oil resources. The financing marks a shift toward non-traditional funding sources after Uganda faced challenges accessing international capital markets.

The proposed 60,000-barrel-per-day refinery is a critical component of infrastructure linked to the East Africa Crude Oil Pipeline (EACOP), which will transport Ugandan crude to Tanzania’s coastline. After failing to raise the full $4 billion needed through conventional markets, Uganda partnered with Alpha MBM Investments of the UAE as a strategic investor. The refinery financing structure will consist of 60% debt and 40% equity, reflecting a blended funding approach.

Under the agreed ownership structure, Alpha MBM Investments will hold a 60% stake in the refinery, while the remaining 40% will be owned by the Uganda National Oil Company. Vitol’s loan will have a seven-year tenure with an interest rate of 4.92%, junior finance minister Henry Musasizi said. He emphasized that the deal opens access to alternative financing to support national infrastructure development.

Beyond the refinery, part of Vitol’s funding will be allocated to roads, a fuel storage terminal, and pipeline extensions, including infrastructure linking western Kenya to Kampala. The broader EACOP project involves a 1,443-kilometer pipeline designed to transport up to 246,000 barrels of crude oil per day from Uganda’s Lake Albert oilfields to Tanzania’s Tanga port. Major shareholders include TotalEnergies, Uganda National Oil Company, Tanzania Petroleum Development Corporation, and China’s CNOOC, underscoring the project’s international significance.