Uganda blessed with oil and minerals - Interview with Minister of Energy and Mineral Development
Revenues from Uganda’s budding oil and mining sectors will help to boost socioeconomic development. In this interview with United World, Eng. Irene Muloni, Minister of Energy and Mineral Development, discusses the development of these important industries and opportunities for foreign investors - See more on this link and below;
Uganda is blessed with substantial natural resources, including fertile soils, regular rainfall, deposits of copper, gold, and other minerals, and recently discovered oil. Kindly comment on how the country has prioritized the energy sector as an engine for the sustainable economic growth.
As a country, Uganda has prioritized the energy sector because of its importance in accelerating development. We recognize that for us to be industrialized, we must have the basic infrastructure, upon which we can build all our activities, and energy is required in every aspect or sector of development and our lives. The key role of the Ministry of Energy and Mineral Development (MEMD) is to make sure that we have adequate energy to support the country’s economic activity. Right now, we are trying to tap into all our renewable energy resources so that we have adequate capacity. We are revamping and expanding the transmission and distribution networks, as well as accelerating rural electrification (RE). Through this, we aim to increase access in the rural areas, and promote the industrialization and value-addition that would increase household incomes. The government has lined up a number of projects in the energy sector. These include renewable energy sources like hydro, solar, geothermal, biomass, wind; and biogas. Projects for hydro are both small-scale and large-scale. For instance, we have the 600MW dam in Karuma, which should be online in 5 years. There is also the 183MW Isimba Power Station (IPS) and the 600MW Ayago Power Station (APS). IPS should be online in 40 months, while APS, like the Karuma Power Station (KPS), will take about 5 years. We have a series of small hydropower projects being developed by the private sector, as well as biomass projects to feed into the national grid. We also have stand-alone solar systems and are encouraging the private sector to come and invest in solar power projects for feeding into the national grid. Geothermal energy is being developed by the private sector. We are trying to promote wind energy in areas where there is strong wind so we can add it to the grid.
Right now, what percentage of Uganda has access to electricity?
About 15% of the Ugandan population has access to electricity. That is extremely low. That is why we are determined to accelerate Rural Electrification. Uganda is one of the pilot countries for the UN Sustainable Energy for All (UNSEA). Following our Vision 2040 (V2040), by that time, we believe that all Ugandans will be connected to the grid.
How do private-public partnerships (PPPs) fit into the picture?
We are promoting renewable energies through PPPs.
Are you looking into nuclear energy?
Yes, we are looking into nuclear energy for the future. We have set-up a Nuclear Power Unit in the ministry and developed a road map to help us strategize how we could tap into that energy in the future. Looking at the whole spectrum of energy, is the country able to meet the increasing demand? Yes, we are able to meet the demand at the moment; however, it is increasing at a rate of about 10% per annum as a result of our stability and conducive investment and business environment. We would like to increase our generation capacity using cost-effective renewable resources to control the tariff, reduce the cost of doing business, and promote widespread industrialization. As you know, we are expanding the network so that it can transmit huge volumes of electricity.
What makes Uganda different from its neighbors? Which elements would you like to highlight? Tell us about the uniqueness of Uganda.
Uganda is blessed with natural resources. We are rich in renewable energy, petroleum and mineral resources. The investment climate in Uganda is conducive. When you come to invest in the country, you just need to organize yourself and settle down. People are very warm and friendly. The environment is ideal. That is why they call Uganda the “Pearl of Africa”. Our country’s beauty is beyond comparison. When do you expect to see the first batch of oil? We have confirmed over 3.5 billion barrels of oil in place, out of which we expect to recover between 1.2 billion to 1.7 billion barrels of oil. Three companies are currently licensed to undertake petroleum exploration, development and production, and these are: China National Oil Offshore Corporation (CNOOC), Total E&P, and Tullow Oil. We expect to see the first oil production between 2016 and 2017 for power generation. The huge hydro power projects will take up to 5 years to be completed and therefore should electricity demand outstrip the current capacity before then, we can use some of the crude oil for power generation as an interim measure. We have agreed on the commercialization plan with the licensed companies, which includes crude oil for power generation in the interim.
What is the next step in terms of commercialization?
The next step is the development of a refinery in the country. We intend to construct a refinery with a capacity for 60,000 barrels a day. We will do this in phases, starting with 30,000 barrels per day. This will ensure that the refinery comes on stream quicker and enable the country build capacity in aspects of refining earlier before expansion to 60,000 barrels per day. The first phase of the refinery is expected to be up and running by end of 2017. We understand that there is a 3rd destination for the crude oil. The 3rd destination is export of crude oil to the international market.
What are your general expectations for these projects?
A lot of work is being undertaken to develop the required infrastructure as the country prepares to go into commercial production. These activities are expected to generate many investment opportunities in terms of logistics, equipment, materials, EPC contracts, consultancies, among others for investors.
What sort of preparations have you done on the legislative side of things?
We have enacted 2 new laws for the upstream and midstream sectors. We already have existing laws for the downstream sector. We have a robust legal, regulatory, and institutional framework for the petroleum sector which provides a predictable environment for investment. In line with the new laws, we are putting in place new institutions, namely a Petroleum Authority to regulate the sector, and a National Oil Company (NOC) to do business on the behalf of government. We expect the appointment of Board Members soon to take forward the establishment of these new institutions.
Are you preparing for the bidding rounds?
Yes, we are preparing for the licensing of exploration acreage through open competitive bidding rounds. This will initially be undertaken for some of the high potential acreage in the Albertine Graben which has been relinquished to government and has good data coverage. The confirmed 3.5 billion barrels of petroleum is only from 40% of the area with potential (the Albertine Graben), which lies in the western arm of the East African Rift system. Therefore, 60% of the Albertine Graben is yet to be explored. Government plans to undertake speculative surveys in the unexplored areas with little or no data coverage to inform future licensing. In addition to the planned bidding rounds, we have shortlisted six international firms/consortia for lead investor/operator of Uganda’s refinery. We are expecting their detailed proposals at the end of May 2014 which will be evaluated and one firm/consortia will be selected to partner with Government through a Public Private Partner arrangement to take forward this development.
How would you evaluate the success factor in drilling?
Uganda has an unprecedented drilling success rate of over 85%, which is one of the highest in the world. In addition, the cost of finding oil in Uganda is among the lowest in the world, at less than $1 per barrel. This, coupled with the drilling success rate, attests to the attractiveness of investing in Uganda’s Oil and Gas sector. Things look bright for the Ugandan oil sector. As a country, we are really looking forward to developing this resource because it will contribute to transforming this economy into a First World.
What are your thoughts on the economic inclusiveness that will bring the rational use of the oil resources?
We want all Ugandans to benefit from this resource because it belongs to us all. As such, we want to plough the revenues from this resource into development of infrastructure that supports other productive sectors of the economy, including roads, railway, electricity, airport, water and sanitation, education, health, services, and modernizing agriculture. This way, we will ensure that all Ugandans benefit from their natural resource. We want to transform the “black gold” into the “green gold” for our country. This would lay the foundation on which Ugandans can build their capacity to create wealth. For instance, through setting up small-scale industries in the rural areas that can add value to what we are producing, as an agricultural economy we create more jobs and increase per capita income. This will enable us to shift to a middle-income, and then to a high income country.
What can you tell us about the Ugandan mining sector?
As I have said, Uganda is very blessed. It has plenty of minerals. When you look at the minerals map of this country, the minerals that are here are amazing. We need to tap into this resource, add value to it, and generate wealth for this country. This should help support the transformation process. In terms of mineral resources, we have already confirmed the occurrence of various minerals (both metallic and industrial). Under metallic minerals, we have beryl, bismuth, chromite, cobalt, copper, gold, iron ore, lead, lithium, manganese, columbite tantalite or coltan, tin, tungsten or wolfram, and so on. Our industrial minerals include asbestos, phosphates, clay, diatomite, feldspar, limestone, granite, marble, mica, rock salt, silica sand, talc, vermiculite, graphite, kaolin, kyanite, rare earth, uranium, and so on. It is also a known fact that Uganda is extremely rich when it comes to gold, as well. A lot of work is being done. We have conducted airborne magnetic survey on 80% of this country. By being able to identify things better, we are in a better position for investors to come, conduct explorations and add value. Further investigations have revealed a wealth of mineral potential in this country. Certain progress has been made with certain minerals. Yes, we have copper. This one is in Kilembe. There is an investor who is already developing the place. It has an estimated capacity of 6 million tonnes, with a grade of 1.77%. We also have about 5.5 million tonnes of cobalt, with an estimated grade of 0.17%. Beryl and chromite are still under investigation. If you look at iron ore, we have about 300 million tonnes of proven reserves. The potential for rare earth, on the other hand, has a potential of about 74 million tonnes, with a grade of 0.32%. We have about 3 billion tonnes of aluminous clays with a grade of about 23% REE and 27% Alumina. Regarding phosphates, we have about 300 million tonnes, with a grade of 13.1%. We already have an investor on the ground. We have 55 million tonnes of vermiculite—one of the biggest in the world. There is already an investor for this particular area, but we need value-addition. We have over 140 million tonnes of coltan, about 4 million tonnes of tin, over 300 million tonnes of marble (in Karamoja), and over 2 million tonnes of good grade wolfram or tungsten (at 68.67%) in one area. We have about 3 million tonnes of kaolin, 2 million tonnes of gypsum, 22 million tonnes of salt, 2 million tonnes of really high quality glass sand (at 99.95%), as well as silicon oxide (with a grade of 99.9%). For limestone, we have about 27 million tonnes, with 15 million tonnes in Hima and 12 million tonnes in Dura. Under this, we have 2 cement factories—one in the west and another in the east. Gold occurs in various parts of this country. Measured and indicated reserves have been established at Busia (SE Uganda), Mashonga, Kitaka, Kampono (SW Uganda) and Kisita and Kamalenge (Central Uganda). Indeed, a good amount of work has gone into this area already. We need to add value before exporting it. Another area of investment could be the dimension stones for the construction of tiles. We have about 300 million tonnes of it. There are just so many to highlight. How do you intend to export this to the world? The first step is to let the world know that we have these reserves. The next step is to attract those interested investors. They set up machinery to add value. It is going to be a win-win situation. You see, the return on investment (ROI) here is really high at about 18%. That is no small feat. You cannot find that kind of ROI just anywhere. Depending on how you do the investment, you are bound to get this amount or more.
How about your iron and steel industry?
The development of the Ugandan iron and steel industry is very important. We are looking for serious investors to participate in this sector in a big way so that we can add value. A lot of construction work is going on. Rather than import steel for constructing dams and industries, we could add value to the raw materials here. What we need are investors to bring in the capital and technologies. How important is for the MEMD to showcase the investment attractiveness of the sector? When you look at its immense potential for natural resources that it could use for its transformation, the huge task for me as the Minister of MEMD is how to get investors to harness this huge potential and convert it to revenues to develop this country. Hopefully, in a few years to come, we should have paradise on earth in Uganda. You have lived in the US.
How would you describe the American perception of Uganda?
I participated in various fora. I was able to share the potential that we have with them, and encourage them to come and invest here. The information I shared with you is the information I shared with them. I market and share any opportunity. They know that the environment is conducive to investment. What can you say about the current administration? H.E President Yoweri Kaguta Museveni is at the frontline to ensure that the country is stable. He focuses on development. He really looks at everything. The vision he has is clear and spot-on. He knows where he wants to take this country, and he is working so hard, with a passion. We see light at the end of the tunnel. All we need to do is get partners to join us and tap into these resources.
How do you feel about the first African Summit in Washington?
I think that it will be a great opportunity to Uganda in terms of promoting our country to investors. H.E President Obama announced the “Power Africa Initiative” to accelerate renewable energy growth in Africa, which is very good. We had a business forum in the UK in May 2014 with H.E President Museveni at the forefront. It was very successful. I thought that it was a very good thing for people to be invited to Uganda to see the beauty of the country, and know what business opportunities are there.
What would you like people to think of when they think about Uganda? I want them to think of Uganda as a blessed country. You can grow nearly anything here. We have fresh and flavorful fruits and vegetables. The food is fantastic; organic. Our flora and fauna (I am sure you know about our mountain gorillas) are amazing. The people of Uganda are welcoming. The country has so much to offer. It is just a very big spectrum of opportunities. Everything is there. The weather is unrivalled in the world. Fernando Mora (Editorial Director) Belén Buenaventura (Project Director)
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