Commodity trading giant Vitol has agreed to provide $2 billion in financing to Uganda for critical energy infrastructure projects, including the country’s long-delayed oil refinery and a stake in Kenya’s national pipeline company.
According to a finance ministry brief submitted to Uganda’s parliament, the government plans to use a portion of the Vitol-backed loan to acquire equity in the Kenya Pipeline Company as Kenya prepares to divest up to 60% of the state-owned operator through an initial public offering. Kenyan President William Ruto recently confirmed the privatization drive, which aims to raise approximately 60 billion Kenyan shillings while maintaining strategic government interest.
Junior finance minister Henry Musasizi revealed that the seven-year loan carries an interest rate of 4.92% and represents an opportunity to access non-traditional financing for national infrastructure development. The funds will support multiple projects beyond the KPC acquisition, including fuel storage expansion, pipeline infrastructure upgrades, and the ambitious 60,000-barrel-per-day refinery project.
The refinery, initially estimated at $4 billion, is a key component of infrastructure supporting the East Africa Crude Oil Pipeline. After unsuccessful attempts to secure funding on international financial markets, Uganda partnered with Emirati firm Alpha MBM Investments, which will hold a 60% stake in the facility alongside the Uganda National Oil Company’s 40% share. The project will be financed through a 60:40 debt-to-equity ratio.
Additional loan proceeds will fund road construction, a fuel storage terminal, and an extension to an oil pipeline carrying crude from western Kenya to Uganda’s capital, Kampala. The state-owned Uganda National Oil Company will undertake the borrowing, with repayments secured against revenues from fuel sales and upcoming oil production.
KPC operates over 1,700 miles of pipeline connecting Mombasa port to Nairobi and western Kenya, handling roughly 90% of Uganda’s petroleum imports. President Ruto has encouraged East African participation in the IPO, calling the pipeline a regional facility and inviting Ugandans and other East Africans to invest.
The 1,443-kilometer EACOP pipeline is designed to transport 216,000 barrels of crude oil daily from Uganda’s Lake Albert project to Tanzania’s Tanga port, with capacity to ramp up to 246,000 barrels per day. Current shareholders include TotalEnergies with 62%, Uganda National Oil Company with 15%, Tanzania Petroleum Development Corporation with 15%, and CNOOC with 8%.
Sources: pipeline-journal.net, Oilprice.com