Uganda has selected a consortium led by RT Global Resources, a subsidiary of Russia’s state-owned hi-tech corporation Rostec, to build and operate its first crude oil refinery, estimated to cost some $2.5bn, Daily Monitor, the country’s largest independent daily, reported, quoting sources from the energy ministry. The ministry is expected to make an official announcement later today.

The Rostec-consortium includes also Russian oil and gas company Tatneft, VTB Capital, the investment banking unit of sanctions-hit Russian state-controlled VTB Bank, and South Korean conglomerate GS Group. The only other bidder that reached the final stage of negotiations was a consortium led by SK Energy, part of South Korea’s conglomerate SK Group.

The winning consortium will finance 60% of the project costs, which include also the construction of a 205km product pipeline to Uganda’s capital Kampala and the necessary infrastructure, while the government will provide the balance. Hence, the predominantly Russian consortium will own 60% of the refinery, which is planned to be launched with a capacity of 30,000 barrels per day (bpd) by 2018. The capacity is set to be increased to 60,000bpd before 2020. The refinery will produce liquefied petroleum gas, diesel, petrol, kerosene, jet fuel, and heavy fuel oil.

Uganda’s petroleum products consumption stands currently at around 27,000bpd and is growing at an annual rate of about 7%. In East Africa, there is only one oil refinery, based in Kenya’s port Mombasa, which exports fuel to the region’s land-locked countries.

Uganda’s first oil field was discovered in 2006 and the country has estimated oil reserves of some 6.5bn barrels. Commercial production is expected to start in 2017 or 2018. The fields are developed by Tullow Oil, Total and China National Offshore Oil Corporation (CNOOC).