(Ecofin Agency) - Following the desertion of the construction of Uganda’s $4 billion oil refinery in June 2016, RT Global Resources, a Russian consortium, has decided to establish new terms for its contribution in the project.

RT Global Resources, which is the highest bidder for the financing and construction of the refinery in Hoima, abandoned the deal after the Ugandan government failed to assure their investment.

Talks between the Ugandan government technocrats and RT Global began in March 2015, but sources with knowledge of the deal revealed that negotiations persisted over several agreements including Project Framework Agreement, Shareholders’ Agreement, Implementation Agreement and the Escrow Agreement.

According to the new Russian envoy, Alexander Dmitrievich Polyakov, it is expensive to construct a big refinery that needs high technology.

He suggested a more compact, ready, visible solution as opposed to a huge refinery with a capacity of 60,000 barrels per day, adding that a refinery with capacity of between 7,000 and 8,000 barrels per day can be constructed within a short period of seven to eight months.

“There was failure in designing, building and operating new oil refinery in Uganda. But if there is failure, there is no one side to blame. We have Russian potential investors in Uganda’s oil refinery. What we are suggesting is not a huge refinery with a capacity of 60,000 barrels per day but more compact, ready, visible solution. Let us say one with a capacity of 7,000 to 8,000 barrels per day. This can be built in a short period of seven to eight months. It can first use imported crude oil as progress of production is enlarged,” he said.

The Ugandan refinery had been estimated to begin initial production of 30,000 barrels per day in 2018, and later increase to 60,000, but the plans will now have to be reviewed, Daily Monitor reports.

“There is a danger that the refinery (60,000 barrels per day) would be constructed by the year 2020, but due to unforeseen reasons, production of crude oil in Uganda may not reach the necessary levels for normal operation of refinery. The issue of oil pipeline (from Hoima to Indian Ocean coastline) is also still bad. However, it is not up to us, the Uganda government has to decide; we just advise. Nevertheless, we’re ready to propose a more productive solution to the oil refinery,” Polyakov added.

Anita Fatunji