Uganda National Oil Company (UNOC) has agreed to borrow up to $2 billion from a subsidiary of global commodities trading giant Vitol, marking one of the country’s largest energy-sector financing deals as it accelerates investment in domestic petroleum infrastructure.
- Uganda National Oil Company (UNOC) has secured a $2 billion loan from Vitol Bahrain E.C. to fund petroleum infrastructure projects.
- The loan has a seven-year tenure with a 4.9% interest rate and aims to bolster domestic petroleum processing and distribution.
- Uganda’s upcoming crude oil refinery, supported by both Vitol’s loan and a $4 billion investment by Alpha MBM Investments, will produce 60,000 barrels per day.
- The funds will also develop petroleum storage capacity, create new terminals, and establish regional pipeline connectivity.
The loan will be provided by Vitol Bahrain E.C., with a tenure of about seven years and an interest rate of roughly 4.9%, according to Ugandan government officials.
Parliament has already approved the borrowing plan, positioning it as a non-traditional funding option at a time when external sovereign financing has become more expensive for African governments.
The financing will support a range of oil-related infrastructure projects, most notably Uganda’s long-planned domestic crude oil refinery, as well as fuel storage terminals, pipeline links, and transport infrastructure tied to the country’s petroleum supply chain.
Uganda is preparing for commercial oil production from its Lake Albert fields and has repeatedly said domestic processing capacity is critical to reducing reliance on imported refined products.
UNOC currently imports most of Uganda’s fuel needs, with Vitol already acting as the country’s key supplier of refined petroleum products.
The refinery project is expected to complement a previously announced $4 billion deal with UAE-based Alpha MBM Investments, under which a 60,000-barrel-per-day refinery is planned, with UNOC retaining a 40% stake.
The Vitol financing is designed to strengthen the surrounding infrastructure required to make the refinery commercially viable.
Beyond refining, part of the funds will be used to expand petroleum storage capacity, develop new terminals, and support regional pipeline connectivity, including links aimed at improving fuel distribution within Uganda and across East Africa.
Africa’s refinery expansion drive gathers pace
Uganda’s move fits into a broader continental push to expand refining capacity as African countries seek greater energy self-sufficiency.
For decades, Africa exported crude oil only to reimport refined fuels at a premium, leaving economies exposed to global price swings and supply disruptions.
Recent years have seen a shift. Nigeria’s Dangote refinery, Angola’s refinery upgrades, Senegal’s downstream investments, and projects in Uganda and Mozambique all signal growing determination to process crude locally.
Governments argue that refining at home strengthens energy security, cuts foreign exchange pressure, and creates industrial jobs.
While financing challenges and project delays persist, deals like UNOC’s Vitol-backed loan highlight how African energy players are increasingly turning to commodity traders and private capital to bridge funding gaps and reshape the continent’s petroleum landscape.
