Russian firm pulls out of Uganda’s oil refinery deal

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The Ministry of Energy and Mineral Development (MEMD) has announced that government has suspended negotiations with Russian firm- Rostec Global Resources (RTGR) Consortium for the role of Lead Investor for the Uganda Refinery Project.

The Government had shortlisted two bidders namely RTGR which was ranked as number one and the Preferred Bidder and the other led by SK Engineering of South Korea ranked as second and Alternate Bidder.

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The Government of Uganda has been in negotiations with the RT-Global Resources Consortium for the last 14 months.

“Final agreement was reached in principle in May this year. However, just prior to the expected signature date at the beginning of June 2016, the RT-Global Resources Consortium made additional demands from the Government, seeking to reopen and renegotiate issues that had already been agreed between the parties. Consequently Government was left with no choice but to halt negotiations and draw the bid bond,”’ reads a statement from MEMD.

It said the ministry had cashed in about $2 million bid bond which RT Global Resources consortium had executed with a local bank.

Government says it is now proceeding to invite the Alternate Bidder – SK Engineering & Construction for negotiations. SK Engineering & Construction is a South Korean company. South Korea’s President Park Geun-Hye was in Kampala in May and held discussions with President Museveni.

More than 70 companies expressed interested in developing the refinery. However, only eight submitted when it came to the final submission.

Last year, the former US ambassador Scott DeLisi described the refinery deal as “not a done deal” and warned that it could be problematic for Uganda because Rostec’s chief executive Sergei Chemezov was subject to United States sanctions since 2014.

Mr Chemezov is a former officer in the Russian spy agency KGB and close ally of President Vladimir Putin. Washington barred US companies from dealings with him as well as freezing his since April 2014 in response to Russia’s annexation and military occupation of eastern Ukraine.

It is not clear whether the sanctions played a part in the RT’s decision to walk away.

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