Russian firm pulls out of mega oil refinery deal in Uganda

Russian firm pulls out of mega oil refinery deal in Uganda

Mega oil refinery deal in Uganda stalls

RT Global Resources will not oversee construction of the $4 billion greenfield oil refinery deal in  Uganda. The Russian firm has pulled out of the deal under unclear circumstances.

Sources from Ministry of Energy confirmed that the Russian group which had been selected to spearhead the negotiations on the major agreements had “failed to negotiate in good faith” and had “failed to execute” a shareholders’ agreement.

It added that the ministry had paid in a US$2 million bid bond which RT Global Resources consortium had executed with a local commercial bank.

Apparently RT Global Resources consortium was a surprising choice when the announcement was made in February 2015.

A consortium

Rostec, a Russian defence and technology corporation  manufactures weapons such as the AK-47/Kalashnikov rifles. Other partners included Tatnef, a Russian oil producer and VTB Capital, the investment banking unit of Russia’s second-largest lender VTB.

Others partners in the consortium included GS and Telconet Capital Partnership based in South Korea.

The Permanent Secretary in the Ministry of Energy Kabagambe Kaliisa confirmed the new development.

Adding that the government had completed all negotiations with the consortium. He said the consortium had to obtain the required clearance from their respective countries.

A performance bond is a surety bond that is issued by an insurance firm or a bank to guarantee satisfactory completion of a project by a contractor.

Dr Kaliisa however played down allegations that RT Global Resources had paied in their performance bond.

Negotiations between government representatives led by Dr Kaliisa and RT Global started in March last year.

But a year later the negotiations dragged-on over haggling on several agreements. These are: Shareholders’ Agreement , Project Framework Agreement, the Escrow Agreement and Implementation Agreement

The consortium was selected after a bidding process beating three others. They included China’s Petroleum Pipeline Bureau (CPPB), Japan’s Maruben and South Korea’s SK Engineering & Construction Group in the last stage for the multibillion dollar infrastructure project.

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