KAMPALA (Reuters) - Uganda has begun negotiations with a consortium led by South Korea’s SK Engineering for the building of a crude oil refinery after ending talks with a group led by Russia’s Rostec Global Resources, the energy ministry said on Friday.
Uganda wants to build the $2.5 billion refinery to process some of its crude so it can earn more from its oil resources, which it discovered in 2006. Wrangling over taxes and the viability of the refinery have delayed commercial production, which is now expected to start between 2019-2020.
The Ministry of Energy and Mineral Development said it decided to end talks with Rostec Global after the company made additional demands to a deal reached in May, which it said was due to be signed in June.
“Consequently Government was left with no choice but to halt negotiations and draw the bid bond. Government is now proceeding to invite the Alternate Bidder - SK Engineering & Construction for negotiations,” it said in a statement.
Negotiations between the Ugandan government and the Rostec Global Resources-led consortium have been going on since February 2015 when the consortium was announced as the winner of a long-running procurement process.
Reporting by Elias Biryabarema; Writing by George Obulutsa; Editing by Alexander Smith