Rostec-led consortium puts together group of lenders for financing of USD 3bn Uganda’s refinery project

17 Feb 2015 – A consortium led by Rostec‘s subsidiary RT-Global Resources has put together a group of banks, including Russian lenders and Asian export-credit agencies, for the financing of Hoima, Uganda‘s USD 3bn refinery project, two sources from Rostec said.

The consortium, which comprises Telconet Capital Partnership, VTB Capital, Tatneft JSC and GS Engineering & Construction Corporation, has been selected as the preferred bidder for the development of the project, as announced by Uganda’s ministry of energy and mineral development today (17 February). The alternate bidder was an SK-Engineering and Construction-led consortium from South Korea.

The Rostec-led consortium has appointed VTB Capital as financial advisor for the financing, which will be split between debt and equity with a 70/30 ratio, said the sources.

The development of the refinery is divided into two phases, the first one with an estimated cost of just under USD 2bn, the first source said.

The loan will have a maturity of 10 to 15 years and financial close is expected in 18 to 24 months from now, he added.

Sberbank has also expressed interest in the financing and is likely to be involved. Some European banks are also in talks with VTB but nothing has been finalised.

Korea Eximbank, the South Korean export-credit agency K-Sure, and the African Development Bank are also involved in the financing consortium, said the second source.

The South Korean GS Engineering & Construction is likely to be awarded the engineering, procurement and construction (EPC) contract for Hoima, both the sources said.

The project will be developed under a public private partnership (PPP) agreement, with the Ugandan government holding a 40% equity stake. RT-Global Resources is responsible for securing the financing for the entire project, they continued.

The Hoima refinery will have a capacity of 60,000bbl/day. It will be situated near the Lake Albert Basin, which is an USD 1bn oil exploration project under development by Total [NYSE:TOT], Tullow Oil [LNO:TLW] and China National Offshore Oil Corp (CNOOC).

by Davide Barbuscia in Moscow and Katie McQue in London

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