Parliament’s accountability committee has ordered the Uganda National Oil Company (UNOC) to provide the full terms of its US$2 billion financing facility with oil trader Vitol after MPs questioned what the company pledged as security for the borrowing.
The Committee on Commissions, Statutory Authorities and State Enterprises (COSASE) wants to establish the assets and contractual commitments backing the facility, the conditions attached to the financing and how UNOC will repay the money.
The demand followed a heated exchange between MPs and UNOC management during an interface on the company’s financial statements and investments in Uganda’s petroleum sector.
Buyaga East County MP Stephen Twesige Rulekere said the borrowing was intended to finance Uganda’s contribution to the planned oil refinery.
UNOC Chief Executive Officer Proscovia Nabbanja confirmed that the company had secured a financing facility of up to US$2 billion from Vitol to support investments in several petroleum projects. She said UNOC had already drawn part of the facility to finance its investment in the Kenya Pipeline Company and the Kampala Storage Terminal.
However, MPs pressed UNOC management to explain the security for the facility after learning that one of its conditions involved extending UNOC’s petroleum supply agreement with Vitol. “Specific terms, what is the security for the two billion? What did you pledge to get the two billion?” Twesigye asked.
Nabbanja rejected suggestions that Uganda had pledged its crude reserves as collateral but confirmed that the security arrangements included extending UNOC’s petroleum supply contract with Vitol by an additional five years, bringing the agreement to 15 years.
The clarification prompted MPs to demand the actual financing agreement to establish the precise obligations rather than rely on verbal explanations. COSASE Chairperson Muwada Nkunyingi directed UNOC to submit the agreement to Parliament by Monday for scrutiny.
The committee’s concerns come as UNOC takes on major financial commitments ahead of Uganda’s expected first oil production, raising questions about whether the investments will generate sufficient returns for taxpayers.MPs also questioned UNOC about the status of oil wells drilled under the Tilenga and Kingfisher projects, amid public expectations that Uganda should already be benefiting from its petroleum resources.
UNOC said no crude oil has been extracted and sold from the drilled wells, dismissing reports that oil was being transported out of the country by aircraft. “There’s no crude that has been taken,” Nabbanja said, explaining that Uganda’s crude is highly waxy and requires heating to remain fluid.
She said the completed wells cannot produce commercially in isolation because they must first be connected through in-field pipelines to gathering stations, central processing facilities and feeder pipelines before the crude reaches the export hub at the Kabalega Petro-Based Industrial Park. UNOC said the Tilenga Central Processing Facility is about 74 percent complete, while the Kingfisher facility has achieved mechanical completion and is being prepared for pre-commissioning.
The East African Crude Oil Pipeline (EACOP), which will transport Uganda’s crude to Tanga Port in Tanzania, was reported to be about 93 percent complete.COSASE also questioned the ownership and financing of the planned 60,000-barrel-per-day refinery in Hoima.UNOC said it will hold a 40 percent stake in the refinery, while private investor Alpha MBM Investments will hold the remaining 60 percent.
MPs questioned why Kavalega Refinery Company Limited, the company established to manage the project, was incorporated in Dubai rather than Uganda.UNOC officials said Alpha MBM requested the Dubai incorporation to facilitate access to financing from the United Arab Emirates.
They said the arrangement had been cleared by the Attorney General and that the company would comply with Ugandan tax and regulatory requirements.MPs also questioned Alpha MBM’s experience in refinery development. UNOC defended the partnership, saying Alpha MBM had committed between US$30 million and US$40 million towards preparatory activities and was providing equity financing for the estimated US$4 billion refinery project.
UNOC said the refinery is currently undergoing basic engineering and is targeting a Final Investment Decision in February 2027, with commissioning planned for the first quarter of 2030-URN. Give us feedback on this story through our email: kamwokyatimes@gmail.com
