Uganda and Alpha MBM Invest in Future with Crude Refinery Deal

Uganda has taken a significant step towards energy independence and industrial development with the signing of an oil refinery agreement with UAE-based Alpha MBM Investments. The deal, announced on March 29, 2025, grants Alpha MBM a 60% stake in a 60,000-barrel-per-day refinery in Kabaale, Hoima District, while the Uganda National Oil Company retains the remaining 40%. This partnership is not just about fuel; it's about transforming Uganda's economy by producing and exporting refined products instead of importing them.

The refinery is a cornerstone of Uganda's emerging hydrocarbons industry, playing a vital role in the country's energy strategy. Uganda holds 2,500,000,000 barrels of proven oil reserves, ranking #32 in the world and accounting for about 0.15% of the world’s total oil reserves. However, the country currently consumes 32,001 barrels per day and does not import or export any oil. This refinery will change that dynamic, enhancing energy security and stabilizing fuel prices.

The project aligns with Uganda's broader plan to maximize benefits from its oil resources discovered in 2006. Initially, the government had engaged a consortium led by the US-based Albertine Graben Refinery Consortium (AGRC) for the refinery’s development. However, challenges related to financing and final investment decisions caused delays, leading to a shift in approach. The new deal with Alpha MBM Investments signals fresh momentum for the project, which is expected to process crude from Uganda’s oil fields in the Albertine region.

"This is transformative for our economy, our people, and our future," said Minister Ruth Nankabirwa. The refinery will produce petrol, diesel, kerosene, and other petroleum products, reducing Uganda’s dependence on imports. It aligns with the government’s strategy to integrate oil refining with industrialization, creating a value-added petroleum sector rather than merely exporting crude.

The signing also saw Uganda enter five additional agreements with UAE investors in various sectors, including aviation, logistics, digital land management, cargo storage, and a government digital payment system. These deals reflect Uganda’s growing economic ties with the UAE, which has emerged as a key partner in infrastructure development.

With the oil refinery now moving toward implementation, attention will turn to securing financing and finalizing construction timelines. Once operational, the facility is projected to transform Uganda’s energy landscape and reduce reliance on foreign refined fuel supplies. The project is expected to generate employment opportunities and attract further investment in the downstream oil industry, further boosting the country's economic growth.

However, the project is not without risks. Securing financing and finalizing construction timelines are critical challenges. Previous delays with the Albertine Graben Refinery Consortium (AGRC) highlight the risks associated with financing and final investment decisions. The global oil market is subject to volatility, which could affect the profitability of the refinery. Uganda’s current oil consumption is relatively low, and the country does not import or export any oil as of 2016. This low consumption and lack of export activity could limit the market for refined products, posing a risk to the project’s financial viability.

In conclusion, the partnership between Uganda and Alpha MBM Investments presents significant economic benefits and risks. The successful implementation of the refinery project could transform Uganda’s energy landscape, enhance energy security, and attract further investment in the region. However, overcoming challenges related to financing, construction delays, and market volatility will be critical to the project’s success and its impact on investment decisions in the region.