Monday, 9 July 2018

Kabaale International Airport construction starts

Artistic impression of Kabaale aiport

Construction of a special purpose airport to facilitate the delivery of heavy, long and sensitive equipment to be utilized in Uganda’s planned oil refinery and other oil related facilities is underway in Hoima, close to Lake Albert.

The proposed Kabaale International Airport, to be built on 174.2 acres of land close to the proposed Uganda Oil Refinery, is expected to be in full operation in 2021.

When completed, it would be the country’s second international airport, after Entebbe International Airport. The airport is located in Kabaale Parish, Buseruka sub-county, Hoima District, near the Kaiso-Tonya oil fields and the Uganda Oil Refinery.

Phase I will include an airport servicing cargo aircraft and passenger aircraft for the construction and operation of the refinery and oil fields. 

The first phase of the project is expected to last between 17-24 months covering construction of a Runway (which can handle big and heavy aircraft), Taxiway, Apron, multi-purpose Terminal Building for Cargo and Passengers, Fire Station, Car Park, Access Road, Perimeter fence and Electrical Centre, among other facilities.

In the medium and the long-term the airport will undergo further development to function as Uganda’s second international airport servicing both cargo and passenger traffic.

The airport will be designed to support the operation of large aircraft like the AN124 and Boeing 747- 800 as well as all types of wide body and medium sized passenger and cargo aircraft.

The Masterplan for Kabaale International Airport in Hoima was completed last year and a 3 year plan for its development in liaison with the Ministry of Works and Transport and other stakeholders has started.

Bush clearing, road construction starts

Bush clearing, construction of access roads and fencing off the 29 sq. km that the airport will occupy have started, according to a team of East African Business Week that visited the site in May, 2018.

Ministry officials visit the site (top), and above, clearing of the ground
has started in Kabaale.

“The runway, measuring 3.5km long and 75m wide,  will be provisionally opened in 2020 to allow for the landing of Antonovs and Boeing 777s that will carry the oil refinery fleets and other equipment,” Mihail Gorachinov the Senior Development Manager SBI told East African Business Week . The contractors for the airport are SBC/SBI Llodys British International.

Phase II will involve further development of the airport to service increased commercial passenger flights and cargo flights for the fish and flower export industry. These include for instance expansion of passenger and cargo terminals, a new parallel taxiway and expansion of apron.

With the anticipated growth of the oil industry in the region, the airport on completion will additionally facilitate the rising movement of people to and from the region and grow the area’s tourism potential given the many tourist attractions in the vicinity.

Dr. Micheal Nkambo Mugerwa, the General Manager Uganda National Oil Company who are overseeing the Airport Development works together with the ministry of Works and Transport told  East African Business Week recently that the airport would be a large international airport capable of handling large passenger and cargo aircraft, sufficient to carry the equipment and staff to develop the Uganda Oil Refinery and the oilfields.

To fund the project, in January 2018, the UK lenders Standard Chartered Bank with guarantees from the United Kingdom Export Finance, secured €307 million.

In February 2018, Shikun & Binui, a construction firm based in Israel were picked to construct this airport, at a cost of US$309 million. The construction will be undertaken by Solel Boneh International Holdings (SBI), the international arm of Shikun & Binui.

Case for an airport

Following a Uganda refinery study (MEMD 2010) carried out to establish the feasibility of constructing a refinery in Uganda to facilitate utilization of the country’s oil and gas resources, an airport was recommended. 

The study recommended that a refinery be constructed close to the oil fields to avoid lengthy and costly pipelines and to optimize the value accruing out of the resources. 

The Government of Uganda (GoU), represented by the Ministry of Energy and Mineral Development (MEMD) and through the Uganda Civil Aviation Authority (UCAA) as the implementing agency supported by the International Civil Aviation Organization (ICAO), agreed to the proposal of an airport in Hoima District. 

The study further recommended, among the required infrastructure, the development of an aircraft runway local to the refinery location, capable of accommodating large cargo airplanes with carrying capacity of 112 - 250 tonnes and with ability to accommodate take-off runs of at least 3,500m. 

The most suitable location for the refinery was found to be in Kabaale Parish, Buseruka subcounty, Hoima District. Kabaale is located about 30 km from Hoima Town via Buseruka Township, off Hoima-Buliisa road and about the same distance via Kiziranfumbi Township on the Hoima - Fort Portal Road. The MEMD earmarked 29 km2 of land in Kabaale to host the refinery and its attendant infrastructure, including the proposed airport.

The UCAA through ICAO therefore commissioned Ramboll Denmark A/S in association with Newplan Limited to undertake the Master Plan Development and Detailed Design for Kabaale International Airport.  

Kabaale Airport Time-Line

Jun-2018.  Shikun & Binui International (SBI) senior development manager Mihail Gorachinov reported SBI plans to complete and commence provisional operation of a 3500m x 75m runway at Hoima Kabaale Parish International Airport in 2020 "to allow for the landing of Antonovs and Boeing 777s" transporting materials required for the region's oil industry. The airport is expected to commence full scale operation in 2021.

Feb-2018. Shikun & Binui secured a USD309 million contract to construct a new airport in a rural area of Uganda's oil-drilling region near Hoima and Lake Albert. Shikun & Binui's international construction arm SBI will construct the airport to support the development of the region's oil industry. The construction phase is expected to last for three years.

Nov-2017. UK Export Finance agreed to provide Colas UK with a GBP215 million loan to construct Kabaale Airport in Uganda, creating approximately 820 jobs and expanding the country's capacity.

Dec-2016. Colas and SBI Uganda submitted a proposal to construct Uganda's second international airport, Kabaale International Airport. Uganda's Ministry of Works and Transport project coordinator Tony Kavuma said the construction would likely commence in 2017. Kabaale Airport is expected to facilitate movement of materials to benefit the oil sector in Hoima region, and western Uganda, as well as developing regional tourism and agriculture. 

Apr-2016. Uganda’s Minister for Energy and Mineral Development Irene Muloni announced the development of a plan for an airport at Kabaale Parish in Hoima district is approaching completion. The Minister stated the overall design work is expected to be completed by 1Q2016, with 95% of design reports already submitted. 29sqkm of land is being acquired to build the airport, which will feature a 3100m runway, allowing use by large cargo aircraft.

Uganda's oil refinery in Hoima
The Energy Minister, Eng. Irene Muloni (left) and an AGRC
 official share documents after the signing of the pact
In April, Uganda took a firm step to building its first oil refinery when officials signed a Project Framework Agreement with the Albertine Graben Refinery Consortium (AGRC).

The agreement will ensure development, design, financing, construction, operation and maintenance of the oil refinery in Hoima District. The project will cost $3 billion-$4 billion.

Dr Josephine Wapakhabulo, the chief executive officer, of the Uganda National Oil Company, said the development of the refinery will trigger a number of other investments in the energy-based industries, contributing to economic development and attainment of middle income status.

She added that the refinery will grow UNOC's business portfolio and help unlock other planned investments at the Kabaale Industrial Park.

The AGRC comprises YAATRA Africa (Mauritius), Lionworks Group Limited (Mauritius), Nuovo Pignone International SRL (a General Electric Company located in Italy) and SAIPEM SPA (Italy).
Uganda is represented in the consortium by the Uganda National Oil Company (UNOC), which is a limited liability petroleum company owned by the government.

The signing of the PFA means pre-Final Investment Decision (FID) activities like Front End Engineering and Design (FEED), Project Capital and Investment Costs Estimation (PCE), Environmental and Social Impact Assessments (ESIA) can commence.

Under this agreement, AGRC will be responsible for funding the pre-FID activities listed above and will also proceed to construct and operate the refinery.

The consortium has also been tasked to ensure Ugandans get jobs and skills out of the project.
The refinery, which will be developed as a commercial undertaking with focus on the regional market, will supply products like kerosene, petrol, diesel, heavy fuel oils, among others.

The refinery will have a refining capacity of 60,000 barrels per day, relying on crude oil from Uganda.

The entire project will be implemented by a Special Purpose Company, the Refinery Company, that will be incorporated by the private investors and the Uganda Refinery Holding Company, which is a subsidiary of the Uganda National Oil Company.

Uganda is estimated to have 6.5 billion barrels of oil deposits with an estimate of 1.4-1.7 billion barrels recoverable.

After the signing, President Yoweri Museveni challenged Western companies to take interest in helping Africa explore its resources potential, saying the continent presented immense business opportunities.

"There is a lot of sleeping in Africa. You find people who should know but instead don't know," said the Ugandan President. "And also there has been sleeping in the West, they don't care about what potential is in Africa."

Museveni said unlike China which seems to understand Africa's potential and has been active in doing business with Africa, Western companies have been reluctant in taking up projects and investing in the continent.

"Africa is going to be a huge power house in terms of business," said the President, who noted that African leaders and the NRM government in particular have resolved some of the obstacles to doing business like fragmented markets and confiscation of private companies by past regimes.

A history of Oil in Uganda

Oil exploration has been on-going in the Albertine Graben since the 1920’s. Commercially viable oil and gas deposits were discovered in the Albertine Graben in Western Uganda (Sensitivity Atlas for the Albertine Graben, 2010).  The discoveries are in the area east of Lake Albert and the Nile Delta north of Lake Albert in Hoima, Buliisa and Nwoya Districts. 

Oil exploration and production activities so far indicate that the oil potential in this area is promising. For example, out of the 34 oil and gas wells that have been drilled, only 2 have been found without oil. Furthermore, the productivity prospects in the area are reasonably high; for instance the buffalo prospect alone can produce 400 million barrels of oil with estimated revenue 15 times the Uganda’s current expenditure. 

The estimated reserves in the Albertine Graben as a whole are about 2 billion barrels. The size of the reserves is enough to sustain production for 20 years (Sensitivity Atlas for the Albertine Graben, 2010).

A pipeline to Tanga on the Indian Ocean coast from Hoima has also been agreed between Uganda and Tanzania.

The East African Crude Oil Pipeline (EACOP) is 1,445 kilometres in length, of which 296 kilometres (184 mi) (21 percent) is in Uganda and 1,149 kilometres (714 mi) (79 percent) in Tanzania.

The pipeline will measure 24 inches (61 cm) in diameter and will be insulated and heated and is expected to cost US$3.55 billion.

SOURCES: MoWT Uganda Kabaale Master Plan, PPU & East African Business Week


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