The refinery will be built in Jomoro, a southwestern city, and will be funded by a consortium including Touchstone Capital Group Holdings, UIC Energy Ghana, China Wuhan Engineering Co., and China Construction Third Engineering Bureau Co., as announced on state-owned Ghana Television (GTV).

Since discovering oil in 2010, Ghana’s production has reached approximately 132,000 barrels per day of crude oil and 325 million standard cubic feet per day of natural gas. West Africa’s current oil consumption stands at about 800,000 barrels per day, with nearly 90% of this being imported. The new petroleum hub aims to meet the region’s refining needs by 2036, as outlined in a 2018 agreement.

Despite the ambitious goals, the project has sparked controversy. Bright Simons, vice president of Accra-based think tank IMANI Africa, has criticized the consortium, alleging it lacks a solid business plan and is merely speculating on land acquisition.

Local opposition has also emerged, with some residents of the proposed 20,000-acre site protesting and calling for the project’s footprint to be reduced to 5,000 acres. Oliver Barker-Vormawor, a senior partner at the law firm representing affected farmers, argues that the government’s approach disregards valid concerns about the project’s social and environmental impacts, including the displacement of farmers and issues of land rights.

The government has largely dismissed these concerns, highlighting support from other community members who back the development.

Nj Ayuk, the chamber’s executive chairman, told Tradeque that by refusing to bankroll Africa’s oil and gas projects, with a direct bearing on the continent’s transitioning from energy poverty, lenders from the global north are engaging in financial apartheid that has nearly crippled the industry.

Mr Ayuk did not discuss their legal strategy, but suggested the lobby was mooting a legal challenge. He said African energy lobbies, governments and project sponsors are working together on a joint lawsuit, whose details “we will update soon.”

A spokesperson for the Total Energies-led East African Crude Oil Pipeline (Eacop) – which several lenders have declined to support – said the AEC had not yet approached the developers to discuss a potential joint lawsuit.

Citing environmental risk and oil-related climate backlash, European and American banks have heeded activist campaigns and declined to finance fossil fuel projects in Africa, the top of which is the Eacop, whose total cost is $5 billion.

Despite Umeme’s efforts to negotiate, the government, through the Ministry of Energy and Mineral Development and Uganda Electricity Distribution Company Limited (UEDCL), is reclaiming control. UEDCL has assured that it is well-prepared for this transition, distinguishing itself from the defunct Uganda Electricity Board (UEB) that preceded the sector’s liberalization.

In February, UEDCL Managing Director Paul Mwesigwa expressed confidence: “Our staff, the board, and management are fully prepared for the responsibilities that lie ahead.” UEB’s poor investment and management in the past contributed to its failure, leading to the urgent privatization and unbundling of the sector, which critics argued favored Umeme.

Umeme’s latest financial report indicates a commitment to facilitating a smooth transfer of assets and settlement of the buyout amount, set to finalize in March 2025. This is the first instance where the government is buying a profitable entity, as opposed to rescuing a failing one. The company can sell assets back to the government at 105% of book value, with full payment due by April 2025.

As the buyout date nears, stakeholders are closely watching the transition. Some view it as a relief, including President Yoweri Museveni, who has long criticized high electricity tariffs. Despite Umeme’s significant investments and profit generation, the President’s focus remains on reducing tariffs to support industrial competitiveness.

The Uganda Manufacturers Association has highlighted the need for more favorable electricity tariffs to stay competitive. However, a recent study suggested that low tariffs alone might not significantly boost industrial consumption.

Umeme has played a crucial role in transforming Uganda’s electricity sector, with investments exceeding $800 million since 2005. The company’s Yaka system has improved cost management and revenue, though recent financial results show a decrease in profit due to amortization and winding down activities.

As Uganda transitions from a model of privatization to renationalization, the process will bring significant changes for customers, employees, contractors, and investors. The shift from a private enterprise to a parastatal may introduce new challenges and political dynamics. The efficiency of service delivery and job security for Umeme employees are key concerns.

Contractors and suppliers face uncertainty about their ongoing relationships with UEDCL, while shareholders, especially international investors, are concerned about the buyout price. The government has yet to finalize the budget for the buyout, with recent clarifications indicating the need for thorough verification before allocating funds.

Efforts to ensure a smooth transition and continued high-quality service are critical. There are also rumors of potential Chinese investment, which could influence the process.

For the buyout to be successful, it must avoid controversies such as influence peddling and favoritism. Ultimately, the goal is to complete the transition in the public interest, maintaining investor confidence and ensuring a seamless handover.