Beyond Fuel: How Uganda’s Refinery Could Power a New Industrial Economy
Uganda’s planned oil refinery could do more than reduce fuel imports. UNOC says it could supply the building blocks for plastics, fertiliser and other industries—but turning that promise into reality will require coordinated investment, infrastructure, skills and predictable regulation.
When Uganda’s planned oil refinery begins operating, its most visible products may be petrol, diesel, jet fuel and liquefied petroleum gas. But the refinery’s greater economic value could lie in products that rarely attract headlines: naphtha, propylene, hydrogen and other industrial feedstocks.
These chemical building blocks could support the local manufacture of plastics, fertilisers and a range of other products that Uganda currently imports.
This was the central argument presented by Sarah Banage, Head of Corporate Affairs at the Uganda National Oil Company (UNOC), during the 4th Annual Editors’ Convention.
In a presentation titled “From Refinery to Plastics: Uganda’s Petrochemical Ripple Effect,” Banage invited editors and journalists to look beyond crude-oil production and fuel supply when reporting on Uganda’s emerging petroleum industry.
The refinery, she explained, could become the foundation of a much wider industrial ecosystem—one linking oil to factories, farms, transport networks, jobs and regional trade.
But the presentation also carried an important qualification: the refinery alone will not automatically create a petrochemical industry. Uganda must deliberately build the industries, skills and infrastructure needed to transform refinery outputs into higher-value products.
An economy dependent on imports
Uganda currently imports most of its petroleum products and many of the industrial inputs required by local manufacturers.
Figures presented by UNOC indicated that the country spends approximately USD 2 billion annually on imported petroleum products, with consumption estimated at between 2.5 billion and 3 billion litres a year.
Uganda also imported plastics and plastic articles worth approximately USD 635.27 million in 2024, according to the presentation. Fertiliser imports were estimated at about USD 54.75 million.
The country currently has no domestic primary fertiliser production or petrochemical-feedstock manufacturing. Manufacturers depend heavily on imported polymer materials such as polyethylene and polypropylene, while farmers rely on imported fertilisers, including urea and NPK.
This dependence leaves Uganda vulnerable to international price fluctuations, supply-chain disruptions and pressure on its foreign-exchange reserves.
A disruption in global transport, a change in international oil prices or the weakening of the Uganda shilling can consequently increase the cost of fuel, agricultural inputs and manufactured goods.
UNOC’s argument is that refining Uganda’s crude oil domestically and developing associated industries could allow the country to retain more value within its economy.
The refinery at the centre
The proposed refinery is planned for Kabaale in Buseruka Sub-county, Hoima District, with a production capacity of 60,000 barrels per day.
According to the presentation, the project will require an estimated investment of approximately USD 4 billion. Alpha MBM Investments of the United Arab Emirates was identified as holding a 60 per cent equity position, while the Final Investment Decision was targeted for the second half of 2026.
Construction is expected to take approximately three years, with commissioning anticipated around 2029 or 2030.
The refinery is expected to produce LPG, jet fuel, diesel and petrochemical feedstocks. Supporting infrastructure is projected to include a 212-kilometre multi-product pipeline, a 320-million-litre storage terminal and water-abstraction facilities.
While these elements are essential for fuel production and distribution, UNOC positioned the refinery as the starting point—not the final destination—of Uganda’s petroleum value chain.
From crude oil to plastics
The transformation envisioned by UNOC begins when crude oil is processed at the refinery to produce feedstocks such as naphtha and propylene.
These feedstocks can be supplied to polymer plants and converted into polyethylene and polypropylene—the raw materials used to manufacture pipes, containers, packaging materials, bags and household products.
Uganda currently imports more than 100,000 tonnes of plastic raw materials annually, according to the presentation. Virgin polymer granules alone were estimated to account for between USD 120 million and USD 150 million in annual imports.
Domestic polymer production could therefore reduce the foreign exchange spent on importing these materials and provide local manufacturers with a more reliable supply of inputs.
UNOC further projected that local production could eventually meet Uganda’s demand and create opportunities to export polymers and plastic products to markets across the Great Lakes region.
The proposed value chain is straightforward:
Crude oil → refinery → naphtha and propylene → polymer plants → plastics manufacturing.
But creating this chain will require investors willing to establish polymer plants and manufacturers capable of converting the resulting materials into market-ready products.
Fertiliser and the future of farming
The refinery could also support domestic fertiliser production.
Using natural gas or hydrogen derived through the petroleum value chain, Uganda could develop an ammonia-urea complex to manufacture fertilisers locally.
UNOC estimated that imported urea costs approximately USD 500 to USD 700 per tonne. Locally produced urea using Kabaale feedstock could have an estimated cash-production cost of between USD 250 and USD 350 per tonne.
If these projections are realised and the savings reach farmers, locally manufactured fertiliser could lower farm-gate prices by between 30 and 50 per cent.
More affordable and reliable fertiliser could help farmers increase productivity, improve rural incomes and reduce Uganda’s dependence on imported food.
The potential benefit, however, depends on more than production. Uganda would need an efficient distribution system capable of moving fertiliser from the industrial complex to farmers across the country.
Without adequate storage, transport, affordable financing and reliable dealer networks, locally produced fertiliser could remain out of reach for the smallholder farmers who need it most.
The proposed chain would connect the oil sector directly to agriculture:
Crude oil → refinery feedstock → hydrogen or natural gas → ammonia and urea → fertiliser production → increased agricultural productivity.
Kabalega Industrial Park as the link
At the centre of UNOC’s downstream vision is the proposed Kabalega Industrial Park.
Covering approximately 29.57 square kilometres, the park is intended to host petrochemical, fertiliser, plastics and other manufacturing facilities that use products from the refinery as raw materials.
Locating these industries close to the refinery could lower transportation and logistics costs while creating a ready market for feedstocks such as naphtha and propylene.
Instead of transporting refinery by-products over long distances, manufacturers within the park could process them into higher-value industrial goods.
This co-location could create an integrated production system in which one industry’s output becomes another industry’s input.
Countries such as Saudi Arabia, Malaysia and India were cited as examples of economies that used refinery capacity to build large petrochemical and downstream manufacturing industries.
The lesson for Uganda is that petroleum resources create greater economic value when they support processing and manufacturing rather than being exported primarily as crude oil.
More than USD 1.7 billion in potential savings
Import substitution was presented as one of the most significant potential benefits of the refinery and its associated industries.
UNOC projected annual savings of approximately:
- USD 1.5 billion to USD 1.8 billion from reduced petroleum-fuel imports;
- USD 120 million to USD 150 million from plastic raw materials;
- USD 40 million to USD 50 million from fertilisers; and
- USD 60 million to USD 80 million from organic chemicals.
Together, these areas could generate more than USD 1.7 billion in annual foreign-exchange savings, according to the presentation.
After the refinery begins operating, Uganda’s net import position could improve by an estimated USD 1.7 billion to USD 2 billion annually.
These figures remain projections, dependent on the refinery’s completion, production performance, development of downstream industries and the competitiveness of locally manufactured products.
If realised, however, retaining more expenditure within Uganda could reduce pressure on foreign-exchange reserves and strengthen the country’s trade position.
From construction jobs to specialised careers
The proposed petroleum and petrochemical value chain could also create employment at different levels.
During construction, the refinery and Kabalega Industrial Park are projected to generate tens of thousands of jobs over three to four years.
Once operational, the refinery and petrochemical complex could create approximately 4,000 to 6,000 high-skilled direct jobs. Downstream plastics and fertiliser manufacturing could generate a further 10,000 to 15,000 indirect jobs.
UNOC also projected that cheaper agricultural inputs and improved energy access could support more than 50,000 additional jobs in commercial agriculture, transport and retail.
The opportunities could extend to engineers, technicians, factory workers, logistics providers, farmers, transporters and service companies.
Yet the availability of jobs does not guarantee that Ugandans will be qualified to take them.
Training and certification programmes must begin early enough to prepare workers for specialised roles in refinery operations, petrochemical engineering, manufacturing, safety, maintenance and quality control.
Without deliberate investment in skills, Uganda could construct major industrial facilities while remaining dependent on foreign expertise for many of their most valuable positions.
Potential regional supply hub
Beyond replacing imports, UNOC presented Uganda as a potential exporter of fuel, plastics and fertilisers to neighbouring markets.
The Democratic Republic of Congo, South Sudan, Rwanda and Burundi could provide markets for surplus products from Uganda’s refinery and downstream industries.
Uganda’s central location gives it an opportunity to serve landlocked markets in the Great Lakes region. But becoming a regional supply hub will require competitive prices, reliable production, efficient border systems and transport infrastructure capable of moving goods to neighbouring countries.
Regional export success will therefore depend not only on production capacity but also on Uganda’s ability to compete with established international suppliers.
The promise will require deliberate action
The refinery may supply feedstock, but it cannot by itself guarantee that plastics, fertiliser and petrochemical factories will be established.
UNOC identified several priorities necessary to capture the downstream opportunity.
First, Uganda must market Kabalega Industrial Park to credible international and domestic investors while providing clear and reliable feedstock-supply arrangements.
Second, the country must develop specialised skills before the facilities become operational.
Third, supporting infrastructure—including pipelines, storage facilities, power, water and transport networks—must be completed on time.
Fourth, investors will require predictable fiscal, investment and regulatory conditions.
Finally, strong agricultural linkages will be necessary to ensure that locally produced fertiliser reaches farmers efficiently and affordably.
Failure in any of these areas could leave the country with a refinery that produces fuel but does not trigger the wider industrial transformation being promised.
A broader story for the media
For editors and journalists, UNOC’s presentation offered a broader framework for reporting on Uganda’s oil industry.
The petroleum story should not end with barrels produced, agreements signed or the date of first oil. It should also examine whether Uganda is building the factories, skills, infrastructure and markets necessary to retain more value from its resources.
Journalists will need to track whether the projected jobs go to Ugandans, whether local manufacturers can access feedstock, whether fertiliser prices actually fall and whether the promised foreign-exchange savings are realised.
They must also scrutinise investment terms, environmental consequences, public expenditure, implementation timelines and the distribution of benefits.
The refinery’s success should ultimately be measured not only by the fuel it produces, but also by the industries it supports and the economic opportunities it creates.
Uganda’s petroleum resources offer the possibility of moving from crude-oil production to domestic processing, manufacturing and regional exports.
That is the “petrochemical ripple effect” presented by UNOC: a chain running from the refinery to factories, farms, jobs and foreign-exchange savings.
Whether the ripple becomes a wave of industrial transformation will depend on what Uganda builds around the refinery—and whether the promises made today are translated into measurable benefits for its people.
