Vitol to lend $2 billion to Uganda's state oil company

According to an official from the finance ministry, Uganda National Oil Company, owned by the state, plans to borrow 2 billion dollars from a division of global commodities trader Vitol in order to fund infrastructure projects including a crude refinery.

In early this year, the east African nation signed an agreement to build a $4 Billion domestic crude oil refinery. The facility will produce 60,000 barrels of crude oil per day. The UAE company will own 60% of the facility, while UNOC will retain 40%.

Uganda is planning to start commercial oil production in 2019 from fields located in the west.

Henry Musasizi told Ugandan lawmakers that UNOC would borrow money from Vitol EC Bahrain (VBA), and the interest rate on a seven-year loan will be 4.92%.

Vitol Bahrain EC is already operating in Uganda, as the sole supplier to UNOC of refined petroleum products. UNOC then sells them to retailers throughout the country.

Musasizi requested that lawmakers approve the?credit line, and after receiving a majority vote, the loan was sanctioned.

Borrowing money from Vitol is a great way to get non-traditional funding to implement projects. Musasizi stated that the government can use this money to develop national infrastructure and support projects.

He added that the money would also be used to build roads, a storage facility for petroleum products, and extend a pipeline from western Kenya into Uganda's capital Kampala. (Reporting and editing by Elias Biryabarema)

(source: Reuters)