1

The Republic Of Uganda

Ministry of Energy
&
Mineral Development
RENEWABLE ENERGY INVESTMENT GUIDE
May 2012
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1 Contents
1 Introduction to Uganda................................................................................................. 6
1.1 Country and people............................................................................................................... 8
1.2 Administrative Regions......................................................................................................... 8
1.3 Demographics....................................................................................................................... 8
1.4 Ethnic groups, Language and Religion................................................................................... 8
1.5 Literacy................................................................................................................................. 9
1.6 Employment ....................................................................................................................... 10
1.7 Poverty Incidence ............................................................................................................... 10
2 Political situation ........................................................................................................ 11
2.1 Structure of Government.................................................................................................... 11
2.2 Political History and Current Political Situation.................................................................... 12
2.3 Economic environment ....................................................................................................... 12
2.4 The Private Sector............................................................................................................... 13
2.5 The Investment Climate...................................................................................................... 13
3 Status quo of the energy sector .................................................................................. 15
3.1 Overview............................................................................................................................ 15
3.2 Electricity market demand and supply side ..................................................................... 16
3.3 Characteristic of the electricity grid.................................................................................... 17
3.4 National Energy Policy......................................................................................................... 22
3.5 Government Priorities (Regulatory Framework) .................................................................. 22
3.6 National Energy Policy 2002 ............................................................................................... 22
3.7 The Renewable Energy Policy 2007...................................................................................... 23
3.8 Rural Electrification Targets................................................................................................ 24
3.9 FIT scheme.......................................................................................................................... 24
3.10 Market Players and Responsibilities..................................................................................... 26
4 Regulatory Framework................................................................................................ 27
4.1 Market Access (Conditions for Market Entry) ...................................................................... 27
4.2 Privatisation, limitation and exclusion ................................................................................. 27
4.3 Economic Freedom............................................................................................................. 27
4.4 Imports/ exports................................................................................................................. 27
4.5 Fiscal and financial incentives (taxation, FIT)...................................................................... 28
4.6 Standards and quality......................................................................................................... 29
5 Starting a Business Entry Options and Barriers ........................................................ 29
6 The Financial Sector .................................................................................................... 30
7 Renewable Energy Sector............................................................................................ 31
7.1 Overview............................................................................................................................. 31
7.2 Biomass............................................................................................................................... 31
7.3 Solar Energy (Thermal and PV) ............................................................................................ 31
7.4 Hydro.................................................................................................................................. 32
7.5 Wind................................................................................................................................... 34
7.6 Geothermal ......................................................................................................................... 34
7.7 Municipal Waste ................................................................................................................. 35
7.8 Investment Potential ........................................................................................................... 36
7.9 Outlook............................................................................................................................... 36
7.10 Areas of Opportunity........................................................................................................... 36
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7.11 Grid Connected Renewables ............................................................................................... 36
7.12 Electricity Distribution ........................................................................................................ 37
7.13 Energy Products and Services.............................................................................................. 41
8 Prospects of Future Market Development.................................................................. 44
8.1 Power Sector Investment Plan............................................................................................ 44
8.2 The Energy for Rural Transformation Project............................................................. 47
8.3 Rural Electrification Plan..................................................................................................... 48
8.4 PV Targeted Market Approach (PVTMA) ............................................................................ 49
8.5 Uganda Energy Credit Capitalization Company................................................................... 49
8.6 Regional Technical Assistance Program ............................................................................... 50
8.7 Promotion of the Sustainable Supply of Biomass Energy...................................................... 50
9 Planning your investment ........................................................................................... 52
9.1 Must-knows and must-haves............................................................................................ 52
10 References .................................................................................................................. 55
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List of Abbreviations
AFD French Development Agency
BECS Bundibugyo Energy Cooperative Society
BEL Bujagali Energy Limited
CFR Central Forest Reserves
CIC Community Information Centres
COMESA Common Market for Eastern and Southern Africa
CSF Credit Support Facility
EAC East African Community
EE Energy Efficiency
ERA Electricity Regulatory Authority
ERT Energy for Rural Transformation
EU European Union
FDI Foreign Direct Investment
FIs Financing Institutions
FTA Free Trade Area
GDP Gross Domestic Product
GOU Government of Uganda
ICT Information and Communication Technologies
IP Investor Perception
IREMP Indicative Rural Electrification Master Plan
KCC Kampala City Council
KIL Kilembe Investment Ltd
MAAIF Ministry of Agriculture Animal Industries and Fisheries
MEMD Ministry of Energy and Mineral Development
MFIs Microfinance Institutions
Mtoe Million Tonnes of Oil Equivalent
NFA National Forest Authority
NRM National Resistance Movement Party
O&M Operation and Maintenance
PACMECS Pader and Abim Community Multi Service Cooperative Society
PAYE Pay As You Earn
PPA Power Purchase Agreement
PPP Public Private Partnerships
PREEEP Promotion of Renewable Energy and Energy Efficiency Programme
PSFU Private Sector Foundation Uganda
PSIS Private Sector Investment Survey
PV Photovoltaic
PVTMA Photovoltaic Targeted Market Approach
REA Rural Electrification Authority
REB Rural Electrification Board
REF Rural Electrification Fund
REFIT Renewable Energy Feed-in Tariff
RTAP Regional Technical Assistance Program
SACCOs Savings and Credit Cooperatives
SHS Solar Home System
TIN Tax Identification Number
UBOS Uganda Bureau of Statistics
UEB Uganda Electricity Board
UECCC Uganda Energy Credit Capitalization Fund
UEDCL Uganda Electricity Distribution Company
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UEGCL Uganda Electricity Generation Company
UETCL Uganda Electricity Transmission Company
UIA Uganda Investment Authority
UNBS Uganda National Bureau of Standards
URA Uganda Revenue Authority
VAT Value Added Tax
WENRECO West Nile Rural Electrification company
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FOREWORD
Uganda needs a renewed growth momentum to achieve its vision of attaining middle income status
in 10 years. This will only be achievable if the economy can grow at annual rates above 10 percent.
One of the methods envisaged to drive economic growth is value addition through primary
processing and manufacturing, however power shortages, high electricity prices and financing
constraints have curtailed growth in the energy sector. This underscores a dire need to attract more
investment in the energy sector given that energy consumption rates stand at 10% growth rates
outstripping energy generation and supply in the country. Ugandas competitive advantage in
renewable energy production has not been fully exploited. The role of energy in Ugandas economic
development need not be emphasized especially as the country seeks to transform its population
from subsistence production to commercialised producers with capacity to carry out agro-
processing to add value to their products.
The Ministry of Energy and mineral Development in a joint effort with The Royal Netherlands
Embassy (EKN) and Deutsche fuer Internationale Zusammenarbeit(GIZ) have produced a Renewable
Investment Guide to highlight the investment opportunities in the renewable energy sector and
hopefully attract more investments in renewable energy generation. Ugandas energy sector boasts
of enormous renewable energy potential which remain untapped The public sector which initially
undertook all energy generation projects has opened up to private investors that are not only
willing but have the capacity to undertake energy generation projects In Uganda. The government
of Uganda is committed to improving the supply of energy throughout the country and has put in
place an environment to facilitate investment through Private Public Partnerships.
Ugandas economy will continue to grow and attract Foreign Direct Investments (FDI) due to its
land-linked position within the Great lakes region with direct access to markets in South Sudan,
Democratic Republic of Congo, Central African Republic, Rwanda and Burundi with a total
population of not less than 250 million consumers. AS food basket for the region, agro processing
industries are increasing in number with an insatiable need for electricity. According to the World
Bank (2013).Uganda needs to adopt a multi-pronged approach to raise productivity in order to rip
the benefits of regional trade. Increasing electricity supply is not an option but a must-do for
Uganda.
The key areas with strong investment potential include grid connected renewable, electricity
distribution, and energy products and services. There are several market development
opportunities in Power Investment Plan, ERT, and PV targeted market approach, UECC, Regional
technical assistance program and Promotion of Sustainable supply of biomass energy.
Government would like to express its gratitude to the continued collaboration with the multilateral
and bilateral development partners, EKN and GIZ in particular for facilitating this guide amongst
others. I hereby welcome all intending international and local investors in the renewable energy
sector
For God and my country
Hon. Eng. Irene Muloni,
Minister for Energy and Mineral Development.
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EXECUTIVE SUMMARY
The contribution of renewable energies to the bigger energy sector in Uganda has not been
harnessed fully .However the growing population as well as the emerging manufacturing sector all
point to a need to increase investments in the energy sector to avoid a repeat of the economic
slowdown in 2011 due to power shortages. Attracting investments into the energy sector requires
elaborate and decisive actions which create awareness about Ugandas potential in producing
renewable energy. This is one of the key reasons that informed the publication of this renewable
energy investment guide to act as a critical resource tool for potential investors in the sector.
The general investment climate in the country is discussed comprehensively, with a particular focus
on business activities in the field of renewable energy providing a quick start for a potential market
entrant in the energy sector in general. The government of Uganda provides for the different
renewable energy generations to be added onto the national grid to increase available enough for
consumption. From the guide we get a general overview of the countrys geography, economic
environment and a precise insight into Ugandas political and administrative set-up.
Ugandas nascent energy sector is characterized by low levels of modern energy consumption and
heavy reliance on biomass energy. While the government of Uganda has put in place some long
term measures to address the current energy deficit and thus meet the countrys long term needs,
many times the efforts have not realised the expected impact. A critical assessment of the
government investment policies, the guide points to an array of opportunities in the renewable
energy sector.
Improved public-private investment partnerships in power generation and supply in the power
sector will enhance power production which is in tandem with Ugandas energy Policy (2002)
whose overall objective is to meet the energy needs of the Ugandan population for social and
economic development in an environmentally sustainable manner. This guide discusses in specific
terms how several opportunities that exist in energy sector can be taken advantage of, with a
particular focus on renewable energies to reduce the overwhelming electricity supply deficit
National statistics indicate that 80% of Ugandans reside in rural areas and predominantly use
rudimentary and inefficient technologies in their energy consumption. It is therefore deduced that
investment in this area will go a long way in satisfying the general demand.
Whereas the Renewable Energy Policy of 2007 reinforces the governments commitment to the
development and utilization of renewable energy resources and technologies, little has been done
in attracting investment in this area, despite the several opportunities in the sector. The overall aim
is to make renewable energy a substantial part of the national energy consumption and increase its
availability. It thus makes a case for stronger investment in the sector, while revealing the relevant
aspects of the legal regime governing the sector and the challenge of the un-updated laws.
On the regulatory framework, the guide outlines the conditions for market entry for private
entities, while giving provisions for the fiscal and other incentives available. Several opportunities
available in the sector are covered in this guide, in addition to potential financing options
In conclusion, the guide makes substantial recommendations to the government and other actors
to ensure that the different laws governing the sector are up to date with the emerging market
trends in the sector ., it is hoped that this guide will serve as an important tool in improving
investment in the sector.
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Introduction to Uganda
1.1 Country and people
Uganda is a landlocked country in Eastern Africa; bordered on the east by Kenya, on the north by South
Sudan, on the west by the Democratic Republic of Congo and on the south by Rwanda and Tanzania. Uganda
averages about 1,100 metres above sea level, and this slopes very steadily downwards to the Sudanese Plain
to the north.
Ugandas total area is 241,550km
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. It contains many large lakes; Lake Victoria, Lake Kyoga, Lake Albert, Lake
Edward and the smaller Lake George. It lies almost completely within the Nile basin. The Victoria Nile drains
from the Lake Victoria into Lake Kyoga and then into Lake Albert on the Congolese border before running
northwards into South Sudan.
Ugandas climate is equatorial; generally rainy with two dry seasons (Dec Feb and Jun Aug). Lake Victoria
influences the climate in the south; southern Uganda is wetter with rain spread throughout the year. Most
important cities are located in the south, near Lake Victoria, including the capital Kampala and the city of
Entebbe. The north east part of the country is semi-arid.
Ugandas natural resources include arable land, regular rainfall, and deposits of copper, cobalt and gold. The
country has largely untapped reserves of both crude oil and natural gas estimated at over 1 billion barrels of
oil and 14 million cubic feet per day of natural gas
1
. Agriculture is the most important sector of the economy,
employing over 80% of the work force. In 2005, cultivated land cover was estimated at 99,018.4km
2
. Coffee
accounts for the bulk of export revenues. Other key exports earners are tea, tobacco and fish and fish
products
2
.
1.2 Administrative Regions
Uganda is divided into districts, spread across four administrative regions: Northern, Eastern, Central and
Western as indicated in Figure 1 below. The districts are subdivided into counties. There are over 100
districts; most are named after their main commercial and administrative towns. Each district is divided into
counties, sub-counties, parishes and villages.
1.3 Demographics
According to the 2002 Uganda Population and Housing Census, the population was 24.2 million persons. The
annual population growth rate between 1991 and 2002 censuses was 3.2%. Nearly half of the population
was below the age of 15 in 2002 and the population structure is expected to remain youthful for the next
fifteen years. At 3.2% growth rate, the current population is estimated at 33.2 million. The majority of the
population lives in rural areas; only 12% of the population in 2002 was living in urban areas. Kampala is the
prime urban centre; it had 40% of the total urban population (1.2million persons) in 2002
3
. Figure 2 below
shows Ugandas population density map.
1.4 Ethnic groups, Language and Religion
Uganda is home to many different ethnic groups, none of whom forms a majority of the population. Around
forty different languages are regularly and currently in use in the country. English is the official language and
1
Tullow Oil estimates
2
Statistical Abstract 2011 Uganda Bureau of Statistics
3
2002 Uganda Population and Household Census
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Luganda is the most widely spoken local language in Uganda. Luganda is spoken predominantly by the Ganda
people (Baganda) in the urban concentrations of Kampala, the capital city.
Figure 1: Ugandas Administrative Regions
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1.5 Literacy
Literacy rate among persons aged 10 years and above has increased by 4% from 69% in 2005/06 to 73% in
2009/10. The male literacy rate (79%) is higher than that for females (66%). Kampala had the highest literacy
rate (92%) compared to other regions. Excluding Kampala, the Central region had the highest literacy rate
(83%) while the Northern region had the lowest (64%)
5
.
In terms of religious affiliation, Christians made up about 84% of Uganda's population, with Muslims
representing 12%. The remainder of the population follow traditional religions, non-Christian religions or
have no religious affiliation (0.9%)
6
.
4
http://www.nationsonline.org/oneworld/map/uganda-administrative-map.htm
5
Uganda National Household Survey 2009/10
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Statistical Abstract 2011 Uganda Bureau of Statistics
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1.6 Employment
In 2010 the labour force was estimated at 11.5 million persons reflecting an annual growth rate of 4.7% from
2005/2006 and the Labour Force Participation Rate
7
was 79%. 76% of the labour force was self-employed
while 24% was in paid employment. The primary sector (agriculture, mining and quarrying) employed 66% of
the working population while the service and manufacturing sectors engaged 28% and 6% of the labour
force respectively. 67% of the working population in the non-agricultural sector were in informal
employment
8
. Kampala district together with the rest of Central region had the highest proportion of the
working population (30%), while Northern region had the least (19%)
9
.
Figure 2: Uganda Population Density Map
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1.7 Poverty Incidence
Rural poverty rates in Ugandas sub-counties range from <15% - >60% of the population as illustrated in the
Figure 3 below. Brown areas indicate higher poverty levels and green areas represent lower poverty levels.
There is a high geographic concentration of poverty in northern districts (e.g., Gulu, Amuru, Kitgum, Pader,
7
This is a measure of the extent to which a countrys working age population (14-64 years) is economically active
8
Informal employment identifies persons who are in precarious employment situations irrespective of whether or not
the entity for which they work is in the formal or informal sector.
9
Statistical Abstract 2011 Uganda Bureau of Statistics
10
2002 Uganda Population and Household Census
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Moroto, and Nakapiripirit Districts) and low poverty in the southwest and central part of the country (e.g., in
parts of Mbarara, Bushenyi, Isingiro, Kibaale, and Wakiso Districts). The reasons for this spatial pattern
include factors such as rainfall and soil quality (which determine agricultural potential), land and labour
availability, degree of economic diversification, level of market integration, and issues of security and
instability (the latter is especially relevant for the northern parts of Uganda).
Figure 3: Poverty Rate in Uganda: Percentage of rural sub-county population below the poverty line,
2005
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2 Political situation
2.1 Structure of Government
Uganda is a presidential republic, in which the President of Uganda is head of state, head of government and
head of the armed forces. Executive power is exercised by the government and legislative power is vested in
both the government and the National Assembly. The system is based on a democratic parliamentary system
with universal suffrage for all citizens over 18 years of age.
11
http://www.wri.org/map/poverty-rate-uganda-percentage-rural-subcounty-population-below-poverty-line-2005
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2.2 Political History and Current Political Situation
Since the late 1980s Uganda has rebounded from civil war and economic catastrophe to become relatively
peaceful, stable and prosperous. However, the north of the country still remains blighted due to the war
counflicts that raged on for some time in that region. Since becoming president in 1986, Yoweri Museveni
has introduced democratic reforms and has been credited with substantially improving human rights. In
addition, Western-backed economic reforms produced solid growth and falls in inflation in the 1990s.
Although the country is still grappling to industrialise, the discovery of oil and gas in the west of the country
has boosted confidence in the economy. The oil industry in the country is expected to propel a number of
other industries in the country thus a greater need for a conducive environment for the same.
A constitutional referendum cancelled the 19-year ban on multi-party politics in July 2005 and parliament is
currently made up of representatives from 6 political parties and 30 independents. The National Resistance
Movement party (NRM) has 263 seats and currently dominates parliament. The leading opposition party is
the Forum for Democratic Change with 34 parliamentary seats.
There has been some public dissatisfaction due to the unstable commodity prices at times when the Uganda
shilling is stretched against more stable currencies. In the recent past, issues around land ownership have
sparked off confrontations which have led to riots, especially in 2009 and 2010. The discovery and
development of oil reserves in western Uganda could also increase political tensions with local communities
in western Uganda. Local opposition has already arisen over land rights and forced displacement, the oil
development companies employment of foreigners rather than natives, and concerns over how the wealth
will be distributed
12
.
2.3 Economic environment
Uganda has experienced sustained economic growth averaging 7% annually over the past 15 years. In 2010,
the economy grew at about 6% while core inflation remained low, falling to 2.5% by the end of the year.
From the beginning of 2011, the country experienced price increases for food crops, fuel and most consumer
goods. The countrys headline inflation started soaring in the middle of last year touching 30.4% in October.
The price of food crops rose dramatically, reaching an annualized inflation rate of 42% in July while prices for
Electricity, Fuel and Utilities items increased by 9.1% for the year ending September 2011 before it started to
decline. Inflationary pressures were the result of a number of factors; 16% output reduction by the
agricultural sector partly due to a prolonged dry season in most parts of the country, increased global
commodity prices and the depreciation of the Uganda Shilling. Furthermore, at regional level, countries in
the East African Community all suffered high food inflation as a result of drought and the high global food
prices and increasing the demand for food from Uganda.
Since that period, year-on-year inflation has been reducing marginally. The Bank of Uganda raised the
central bank rate from 13% in July last year to 23% in October and started easing when inflation slowed. The
Bank kept the rate unchanged in April 2012 at 21% to further discourage access to bank credit and fight
inflation. Government officials to predict that inflation will be in single digits by the end of 2013.
The broad sector composition of Ugandas Gross Domestic Product (GDP) during 2010 was; Services (46.2%),
Industries (25.4%) and Agriculture (22.5%). The largest sub-sector contributors in 2010/2011 were food
crops, trade and construction. Nominal Per Capita GDP increased by 7.5%
13
.
12
Uganda Humanitarian Profile - 2012
13
Statistical Abstract 2011 Uganda Bureau of Statistics
13
The countrys trade deficit continued to deteriorate during the 2010/2011 period. Overall trade deficit grew
to
14
2,107.6 million in 2010 from 1,541 million in 2009. In 2010, all traditional exports
15
recorded a
significant increase in export receipts except cotton. Coffee remained the main foreign exchange earner for
the country, although its share to total export earnings declined marginally. In 2010, petroleum and
petroleum products took the highest import bill of 716 million followed by road vehicles with 327 million,
then telecommunications instruments with 178 million and iron and steel value estimated at 178.6
million. Table 1 below presents major imports and exports by percentage value.
Table 1: Formal exports and imports by percentage value
Major Exports Major Imports
Coffee 17.5% Petroleum and petroleum products 19.7%
Fish and fish products 7.9% Road vehicles 9%
Cellular telephones 4.9% Machinery for specialized industries 5%
Petroleum products 4.5% Iron and steel 4.9%
Cement 4.4% Telecommunications instruments 4.9%
Tea 4.2% Medical and pharmaceuticals 4.4%
Tobacco 4.2% Cereals and cereal preparations 4.0%
NB: Total formal export revenue 1.25 billion; total formal import bill 3.64 billion
2.4 The Private Sector
Ugandas total business population in the country is estimated at about 500,000 (although most are micro
and small businesses)
16
. This represents a growth of 185% percent since 2001/02. Most of these businesses
are fairly new; 50% are less than 6 years old. Majority of businesses are in the trade (61%) and hotels and
food services sector (14%).
Information about the legal ownership of businesses shows that the majority of businesses are sole
Proprietorships. Businesses that operated as Partnership or Private Limited Companies each accounted for
only 2%. With only 2% of the businesses reported to be members to any association, business advocacy is
still in its infancy.
2.5 The Investment Climate
Strong economic growth, open markets, and abundant natural resources provide good opportunities for
knowledgeable investors in Uganda. The results of the 2010 Private Sector Investment Survey (PSIS)
17
indicate that foreign private capital inflows to Uganda began to recover in 2009 following the slowdown
which had occurred in 2007 and 2008. Foreign direct investment (FDI) rose by 12% in 2009, to over US$800
million. The sectors which attracted most of the FDI were financial services, manufacturing, Information and
Communications, Technology and mining.
Table 2: Value of projects licensed by the Uganda Investment Authority
18
(listed in million $)
14
1 = 1.279US$
15
Coffee, tea, tobacco and cotton
16
2010 Census of Business Establishments Report
17
The 9
th
Private Sector Investment Survey (PSIS) 2010 was conducted by the Bank of Uganda in collaboration with
Uganda Bureau of Statistics and Uganda Investment Authority (UIA). PSIS provides annual information on the: scale of
investment, composition, causes, sustainability and macroeconomic implications. The 2010 survey targeted a sample of
698 enterprises drawn from; enterprises with foreign assets and liabilities from the investor register, the Top tax payers
and enterprises which were newly licensed by UIA.
18
Uganda Investment Authority
14
Sector 2006 2007 2008 2009 2010
Agriculture, Hunting, Forestry and Fisheries 72.21 28.99 60.89 203.27 664.55
Community, Social and Personal Services --- 41.06 34.10 66.35 32.57
Construction 32.46 223.83 58.10 175.88 125.70
Electricity, Gas and Water --- 742.50 173.34 69.93 12.57
Financing, Insurance, Real Estate, Tourism, and Business
Services
351.6 109.9 380.89 309.84 294.97
Manufacturing 291.2 325.36 641.23 577.36 327.20
Mining and Quarrying 10.48 88.25 30.36 53.8 103.31
Transport, Communication and Storage 468.6 444.81 946.12 84.65 49.33
Wholesale & Retail Trade, Catering & Accommodation
Services
--- 218.33 55.90 31.04 62.85
Total 1226.55 2223.03 2380.93 1571.82 1673.03
The Investor Perception (IP) rating, undertaken as part of the PSIS, indicated good prospects for private
sector growth in the medium term. The factors considered to have promoted favourable business
environment included domestic and international market size; availability of local credit facilities; cost and
efficiency of support services such as telecommunication, banking, insurance, and internet; availability and
productivity of skilled and unskilled labour and efficiency of some regulatory and government agencies.
However, the private sector also identified a number of constraints particularly related to effects of
exchange rates, inflation and corruption; cost and efficiency of electricity and road transport, and the effect
of the financial crisis on turnover and import costs.
Uganda is open to foreign investment and provides attractive incentives for medium and long-term foreign
investors. The Heritage Foundation's 2010 Index of Economic Freedom ranked Uganda's economy 76 of 179
countries, and as the fifth freest economy of 46 countries in sub-Saharan Africa based on the ease of doing
business, openness to trade, property rights, and fiscal and monetary policy.
In 2001, Uganda created the Uganda Investment Authority (UIA) to assist foreign and domestic investors.
The Investment Code allows foreign participation in any industrial sector except those touching on national
security or requiring the ownership of land. The Investment Code also allows licensing authorities to impose
performance obligations on foreign investors to which nationals are not subject. While the Code does not
specify these obligations, UIA imposes requirements based on the size of investment, staff training, local
employment, local procurement and environmental protection.
A revised investment code is still under review. Once adopted, this code will turn the UIA into a one-stop
shop for investors by granting the UIA new powers to obtain secondary permits for investor operations,
allocate government resources for investment, and provide government incentives for rural investment.
Uganda is moving away from a much-criticized emphasis on ad hoc, venture-specific incentives for potential
investors in favour of an approach aimed at levelling the playing field for all investors. Uganda now offers
investment incentives and is implementing reforms to ease business transactions. The UIA is implementing a
plan to construct industrial parks
19
in the country's largest population centres. The government is financing
the project with a 21 million World Bank loan and 7.8 million budget allocation. The first park is located
eight miles east of Kampala in Namanve, with electricity, sewage systems, roads, and telecommunications
infrastructure jointly funded by the World Bank and the government.
Ugandan policies, laws, and regulations are generally favourable towards foreign investors, though revised
legislation is needed. Uganda is revising more than 20 commercial and bankruptcy laws to reduce
19
http://www.ugandainvest.go.ug/index.php?option=com_k2&view=item&layout=item&id=27&Itemid=236
15
administrative delays and the cost of doing business. This includes plans to revise the Companies Law,
modernize and speed up bankruptcy procedures, strengthen intellectual property rights protections, expand
and clarify provisions on mortgages, update commercial contract law, and modernize provisions for e-
commerce and electronic signatures. Most of these laws are either still in the drafting phase or awaiting
Parliamentary review
20
.
3 Status quo of the energy sector
3.1 Overview
Ugandas energy sector is undeveloped and characterised by among other things, extremely low levels of
modern energy consumption and heavy reliance on biomass energy which account for 93% of total energy
consumption. It is envisaged that this trend will continue in the foreseeable future. Petroleum accounts for
6% while electricity account for 1% of the total national energy balance.
Biomass is predominantly used at the household level for cooking and heating applications. In addition, a
considerable amount of biomass is also used in the services/commercial, institutional, cottage industry and
industrial sectors.
Electricity access is currently about 5.91%; 2% in rural areas
21
. Uganda's power sector is suffering from a
shortage of generating capacity due to prolonged drought, inadequate investment in least cost generation
capacity and a relatively high load growth; the power deficit is currently estimated at 130MW
22
. This has
resulted in massive electricity rationing and has forced the country to resort to expensive thermal
generation. The country currently depends on hydroelectricity for around 60% of its total power generation
output; the remainder of Uganda's power generation comes from thermal power stations, fired by bagasse
and diesel.
Electricity has been heavily subsidized by the government; the Ministry of Energy estimates that since 2005
the government has spent about 390 million on power subsidies. The subsidies were used to minimize the
shock of high tariffs when thermal generation was introduced in 2005. Although the subsidies have not been
completely scrapped, it is anticipated that subsequent rounds of price hikes will be implemented in the near
future. The decision will encourage the increase of private sector investment in the power supply sector and
also enable the Uganda government to invest in large hydro power projects.
The government has put in place a comprehensive plan to address the current energy deficit and meet the
long term energy needs. The plan is to enhance public-private partnerships in power generation and supply
and the sustainability of the power sector. The strategies include: energy loss reduction in the power system,
procurement of additional thermal generation capacity, energy efficiency/demand side management,
renewable energy generation projects including small hydro, cogeneration in sugar mills and biomass-
gasification plant, promotion of solar water heating in both homes and commercial enterprises and
construction of Bujagali (250MW) and Karuma (150-200MW) projects. The long term measures include
development of four large hydro power sites, use of indigenous petroleum resources for thermal generation;
Interconnection of the regional power grid; Use geothermal, peat and other renewable sources of energy.
20
2011 Investment Climate Statement Uganda (Source: US Embassy Uganda)
21
Uganda Accelerated Rural Electrification Project Report 2011
22
The Electricity Distribution Utility Umeme
16
3.2 Electricity market demand and supply side
The enactment of the new Electricity Act in 1999 provided the legal basis for the privatisation of Uganda
Electricity Board (UEB). The unbundling of UEB into the segments of generation, transmission, and
distribution was effected in March 2001. The successor companies were registered in accordance with the
Companies Act under the following names:
Uganda Electricity Generation Company (UEGCL);
Uganda Electricity Transmission Company (UETCL); and
Uganda Electricity Distribution Company (UEDCL).
In 2003, after a competitive bidding process, UEGCL concessioned out its hydro generation assets at
Nalubaale and Kiira to Eskom (U) Ltd
23
. In March 2005, UEDCL also concessioned out its distribution assets to
Umeme Ltd
24
. Both concessions are for 20 years. UEGCL and UEDCL remain asset owners for generation at
the two hydro dams and for the distribution assets (33kV and below) which are leased to Umeme. UETCL
remained a government company in charge of the transmission network maintenance, system operation and
dispatch, and bulk purchase and supply of electricity.
Uganda operates a single buyer market model; UETCL purchases all the generated electricity and sells to
electricity distribution concessionaires. The bulk supply tariff is currently 6.48 compared to an average
weighted generation cost of 9.76.
Even with suppressed demand total energy purchases have been increasing by an average of 14.7% over the
last four years. Table 3 below shows the trend in energy purchases from 2006-2010.
Table 3: UETCL Energy Purchases (GWh)25
2006 2007 2008 2009 2010
Eskom 1,160.45 1,263.54 1,373.44 1,234.98 1,254.80
Aggreko 1 (Lugogo) 319.95 272.80 141.39 - -
Aggreko 2 (Kiira) 50.03 266.21 239.59 126.34 150.98
Aggreko 3 (Mutundwe) 99.52 395.14 417.78
Jacobsen (Namanve) 116.57 353.09 372.58
Kinyara 4.47 4.80
Kakira 80.31
Electromax 0.28 82.56
Bugoye 15.91 66.36
Backflows to UETCL 19.98 11.63 130.68 346.10 331.20
Electrogaz 2.18 1.84 2.29 2.33 2.93
Kasese Cobalt Company Limited 1.53 0.74 1.80 1.31 3.42
Kilembe Mines Limited 28.05 29.64 29.80 28.35 22.31
KPLC(IMPORT) 46.73 58.25 40.92 25.06 29.21
TOTAL 1,628.90 1,904.66 2,175.99 2,533.37 2,819.25
Annual Percentage Change 16.93 14.25 16.42 11.28
Table 4: Installed Electricity Capacity (MW), 2008-2010
26
23
Eskom Uganda Limited (EUL) is a subsidiary company of Eskom Enterprises (Proprietary) Limited. South Africa. Eskom
Enterprises Proprietary Ltd is the investment arm of Eskom Holdings Ltd, a leading electricity generation company in
Africa with its head office located in Johannesburg South Africa.
24
Umeme is owned by Actis, a private equity firm based in the UK.
25
Uganda Electricity Transmission Company
26
Uganda Electricity Transmission Company
17
Plant Name 2008 2009 2010
Installed Capacity 527 492 539.5
Hydro Electricity 315 328 352.5
Kiira 120 120 120
Nalubale 180 180 180
Kasese Cobalt 10 10 10.0
Kilembe Mines 5 5 5.0
Bugoye Tronder Power - 13 13
Mpanga - - 18
Ishaha Ecopower - - 6.5
Thermal Electricity 200 150 170
Lugogo 50 - -
Electromax - - 20
Kiira 50 50 50
Jacobsen Plant- Namanve 50 50 -
Mutundwe 50 50 -
IDA Plant - - 50
Aggreko II - - 50
Bagasse Electricity 12 14 17
Kakira 12 12 12
Kinyara - 2 5
UETCL currently purchases electricity from the hydro and thermal power plants shown in Table 4 above. For
a long time, Uganda relied solely on the hydropower generation from the Owen Falls Dam as the sole source
of grid electricity. Whereas the installed capacity of the complex is 380 MW (180 MW at Nalubaale and 200
MW at Kiira power plants), the effective capacity of the complex has been as low as 100 MW due to frequent
droughts in the region resulting in chronic power shortages since 2005. As part of the short term solution to
the power problem, the government of Uganda contracted Independent Power Producers to supply
electricity from diesel fired generators; this began with an initial 50MW in May 2005 and has grown to
170MW.
The future outlook is optimistic; private sector players generating cheaper power are anticipated e.g.:
Bujagali Energy Limited (BEL) will be launched in October 2012;
Several small scale power generation plants (from hydropower and cogeneration) are under different
stages of development and these may, in aggregate, result in as much as 100 MW of generating capacity;
Other large hydropower stations on the Nile River are being considered by Government: Isimba, Ayago,
Kalagala, Murchison Falls, etc;
Other renewable energy sources like geothermal, solar, biomass, peat and wind will also be developed.
Tullow Oil (an international oil and gas company) conducting oil exploration in the Lake Albert western
region and has applied to the Electricity Regulatory Authority for an electricity generation license for a
57 MW power plant.
3.3 Characteristic of the electricity grid
Transmission Network
As illustrated in Figure 4 below major developments and investments are being undertaken to strengthen
Ugandas transmission network. Projects are being developed to transmit electricity from upcoming power
18
plants, to improve the electricity access, reliability, and quality of supply to consumers in the country and for
regional interconnection projects.
These projects include evacuation of power from Bujagali Hydro Power Station, mini-hydro power plants in
the Western region, a thermal power plant in Mputa near the Lake Albert oil fields, as well as a transmission
line to Lira, to serve the growing energy needs of the north eastern region of the country. UETCL has
developed a 10-year grid investment plan estimated at US$1.2 billion to implement these projects; details of
these projects are presented in UETCLs business plan
27
. To facilitate power exports and imports; 220kV
interconnection projects with Kenya and Rwanda are under development. In addition, a feasibility study for
interconnection with Tanzania has been completed while the feasibility study for interconnection with the
Democratic Republic of Congo is ongoing.
27
http://www.uetcl.com/UserFiles/File/Businessplanannextures.pdf
19
Figure 4: UETCL electricity transmission network
28
28
Uganda Electricity Transmission Company Limited
20
Distribution Network
There are 5 electricity distribution concessionaires, the largest of which is Umeme. The other
concessionaires include Ferdsult Engineering Services (3 concession areas, 8 field offices), Kilembe
Investment Ltd (KIL), the Bundibugyo Energy Cooperative Society (BECS), and the Pader and Abim
Community Multi Service Cooperative Society (PACMECS). Each of whom serve about 1,500 consumers in
each concession area. Outside the Umeme concession area, grid extensions are financed by the Rural
Electrification Agency (REA) with the funding support of several donors. The network in these areas is owned
by REA.
Umeme, the national electricity distribution company, supplies over 450,000 customers. Of these, 2,000 are
large and medium-scale enterprises; 90,000 are small businesses and 350,000 are "domestic" or household
consumption. 60% of total electricity is consumed by the 2,000 large industrial and medium scale
enterprises. Distribution tariffs range from 7.8-17.2 per kWh. The West Nile region
29
is not connected to
the national grid. In 2003, government established the West Nile Rural Electrification company (WENRECO)
and leased it to Industrial Promotions Services with a mandate to construct a 3.5MW mini hydro power
project on River Nyagak to be completed in 2006. WENRECO serves about 3,000 consumers principally in the
towns of Arua and Nebbi. The proposed hydro project has delayed for 6 years during which time the towns
have been unreliably supplied with power from a 1.5MW diesel generating plant.
Off-grid stations were not part of the concessioned assets and were retained by UEDCL to manage and
operate. UEDCL operates diesel powered off-grid stations in Moyo and Adjumani (in the West Nile region),
Moroto (in the North East) and Kalangala (on Bugala Island within Lake Victoria). These stations are operated
on non-cost reflective tariffs. These off-grid stations are all likely to be interconnected with the national grid
system and would fall under Rural Electrification Authoritys management system for the on-grid
electrification program.
One of the objectives of privatising UEDCL through a 20 year concession was to bring on board private
investors to rehabilitate, upgrade and expand the distribution network. Since 2005, Umeme have reduced
energy losses from 38% to 27.7%; replaced over 120,000 poles, 2,000 transformers and 40 sub-stations;
refurbished over 1,500kms of medium voltage (MV) and low voltage (LV) lines; and introduced SCADA
30
, a
prepayment system and automated meter reading.
29
West Nile sub-region is a region in north-western Uganda that consists of the districts of Adjumani, Arua, Koboko,
Maracha-Terego, Moyo, Nebbi and Yumbe. The sub-region received its name from being located on the western side of
the White Nile
30
Supervisory Control and Data Acquisition (SCADA), a computer systems that monitor and controls electric power
distribution infrastructure
21
Figure 5: Access to grid electricity by district
31
31
Uganda Accelerated Rural Electrification Project Report 2011
22
3.4 National Energy Policy
3.5 Government Priorities (Regulatory Framework)
3.6 National Energy Policy 2002
The Energy Policy for Uganda which was approved by Cabinet and published in September 2002. The goal of
the Energy policy is to meet the energy needs of the Ugandan population for social and economic
development in an environmentally sustainable manner.
The energy policy seeks to meet the following broad objectives:
1. To establish the availability, potential and demand of the various energy resources in the country i.e.:
Prepare a database on all the available energy resources and energy consumption patterns in order
to have a long term perspective of the options for demand/supply matching; and package
information on potential projects for investment.
Build the necessary local capacity to acquire the required data and assess and evaluate the
resources.
2. To increase access to modern affordable and reliable energy services as a contribution to poverty
eradication i.e.:
Attract private capital and management in the energy sector; promote competition between energy
service providers and promote the development of markets in energy technologies and services.
Put in place a conducive environment to accelerate rural energy supply and access by:
(i) Applying subsidies exclusively on capital investment;
(ii) Applying light-handed regulation to facilitate investment in rural energy projects
(iii) Having differentiated tariffs for different areas or projects to reflect investment and supply
costs;
(iv) Exploring schemes to assist consumers to purchase appliances thereby increasing the speed at
which the load of new consumers matures; and
(v) Formulation of guidelines on organising rural communities to enable them access better
provision of energy services
Intensify provision of consumer information, education and technical advice in the use and
conservation of energy.
Work with financial institutions to establish sustainable financing mechanisms for energy
programmes.
3. To improve energy governance and administration in order for the energy sector to operate efficiently
and play its role in the socio-economic development of the country i.e.:
Clarify the roles and functions of the various institutions involved in the energy sector increasing the
role of the private sector and other NGOs and communities;
Create a transparent legal and regulatory framework for the sector;
Build capacity at the national and local levels for better formulation and implementation of energy
policies and programmes;
Build the capacity of regulatory agencies to provide even handed and predictable regulation;
Develop incentives to retain local human resource for the energy sector; and
Involve all stakeholders in the formulation of new policies in the energy sector.
4. To stimulate economic development by ensuring that energy plays a central role in the economic
development of the country and in the region i.e.:
Encourage competition within the energy markets to achieve efficiency.
Attract investments in energy services provision by providing appropriate incentives.
Ensure energy supply security and reliability.
23
Promote energy trade within the region.
5. To manage energy-related environmental impacts. Government will ensure that environmental
considerations are given priority by energy suppliers and users to protect the environment and put in
place a monitoring mechanism to evaluate compliance with established environmental protection
guidelines i.e.:
Promote the use of alternative sources of energy and technologies which are environmentally
friendly;
Sensitise energy suppliers and users about the environmental issues associated with energy;
Work towards the establishment and acceptance of broad targets for the reduction of energy-
related emissions that are harmful to the environment and energy users;
Promote efficient utilisation of energy resources; and strengthen the environment-monitoring unit
in the energy sector.
3.7 The Renewable Energy Policy 2007
Whereas the 2002 Energy Policy laid down Governments commitment to the development and utilization of
renewable energy resources and technologies. The Renewable Energy Policy, which was approved by
Cabinet on the 29th March 2007, reinforced that commitment.
The Governments policy vision for Renewable Energy is to make modern renewable energy a substantial
part of the national energy consumption. The overall policy goal is to increase the use of modern renewable
energy, from the current 4% to 61% of the total energy consumption by the year 2017.
In order to achieve the Policy Vision and Goal, the following supporting objectives will be pursued:
Maintain and improve the responsiveness of the legal and institutional framework to promote
renewable energy investments.
Establish an appropriate financing and fiscal policy framework for RET investments.
Mainstream poverty eradication, equitable distribution and gender issues in renewable energy
strategies.
Acquire and disseminate information in order to raise public awareness and attract investments in
renewable energy sources and technologies.
Promote research and development, international cooperation, technology transfer and adoption of
standards in renewable energy technologies.
Utilize biomass energy efficiently, so as to contribute to the management of the resource in a
sustainable manner.
Promote the sustainable production and utilization of bio-fuels.
Promote the conversion of municipal and industrial waste to energy.
Some key strategies elaborated in the policy include:
Publish a standardized Power-Purchase Agreement (PPA) with feed-in-tariffs.
Develop appropriate regulations for grid connections and wheeling of electricity generated from
renewable energy
Implement, through public-private partnerships (PPP), innovative financing mechanisms, including
targeted subsidies.
Introduce fiscal measures that favour renewable energy investments.
Implement innovative risk mitigation mechanisms and credit enhancement instruments.
Continuously acquire data on the renewable energy resource availability.
Promote, in collaboration with NFA
32
and MAAIF
33
, the growing of energy crops.
Provide incentives for farmers to establish commercial woodlots.
32
National Forest Authority
33
Ministry of Agriculture Animal Industry and Fisheries
24
Develop appropriate legislation for the use of bio-fuels.
Provide incentives for the conversion of wastes to energy.
Put in place fiscal measures that will discourage open burning or disposal of wastes without extracting
their energy content.
3.8 Rural Electrification Targets
Statutory Instrument No. 75 of 2001, The Electricity (Establishment and Management of the Rural
Electrification Fund) Instrument 2001, established three inter-related mechanisms for management of
Ugandas rural electrification program namely, the Rural Electrification Fund (REF), the Rural Electrification
Board (REB) and the Rural Electrification Agency (REA) all supervised by the Minister responsible for Energy.
REA serves as the Secretariat to the Board whose principal responsibility is to ensure management of the
Fund for equitable promotion of rural electricity access and connectivity. REA prepared a 7-year Strategic
Plan covering the period 2005/06-2014/12 to provide a clear decision platform for carrying out its mandate
The main goal of the REA/REB Strategic Plan is to facilitate achievement of Ugandas target of 10% Rural
Electrification Access by 2012.This goal is the first main target in the long process of fulfilling REAs vision
which is: Universal access to electricity by 2035.
The Plan seeks to achieve the following specific objectives:
1. Facilitate an average connection rate of at least 1 percentage point of rural consumers per annum over
the Plan period - This rate translates into connections of between 40,000-50,000 consumers every year.
REAs projections anticipated that growth would initially be slow but pick up rapidly starting FY2007 to
reach an average of 74,000 connections per year by 2012.
2. Promote equitable rural electrification access having special regard to those areas of the country that
are currently marginalized - REA will initiate and promote affirmative measures intended to enhance
investment for RE generation and distribution in the 19 districts currently disadvantaged in terms of
socio-economic development by the long drawn conflicts. These areas include Northern and North-
Eastern Uganda as well as the Rwenzori region in Western Uganda.
3. Establish and maintain a comprehensive database on Ugandas Rural Electrification sub-sector to
facilitate informed decision-making - Prepare, maintain and publicize locally, regionally and
internationally, a user friendly National Rural Electrification Database. The database will be an
information platform on Ugandas rural energy potential (hydro and other renewable sources), supply
and demand, completed and ongoing projects, tariff levels, environmental considerations, etc.
4. Enhance the available financial resource base for Rural Electrification - It has been estimated that as
much as 374 million may be required in subsidies to realize the connection of 400,000 consumers.
3.9 FIT scheme
Under the Renewable Energy Policy (2007), a Renewable Energy Feed-in Tariff (REFIT) was initially
established in Uganda which ran from 2007 to 2009. Due to limited uptake by project developers, the REFIT
was reviewed in 2010 and a new tariff was developed based on updated levelised costs of production.
In consultation with the ERA, the system operator (currently UETCL) shall publish the REFIT tariffs for priority
technologies as approved by the ERA. Under its mandate as single buyer, UETCL will issue and sign
standardised Power Purchase Agreements (PPA) with qualifying renewable energy generators. Under the
25
PPA, UETCL shall be obliged to purchase power generated under the REFIT from licensed renewable energy
electricity generators subject to fulfilment of all necessary licence conditions.
UETCL shall be obliged to connect licensed renewable energy electricity plants to the grid and to transmit
purchased electricity from renewable energy electricity generators licensed under the REFIT.
Qualifying renewable energy generators shall be defined as:
Priority technologies i.e. small hydro, geothermal, bagasse, landfill gas, biogas, biomass, wind and solar
(considered priority 2).
Projects of 0.5- 20MW. Projects with an installed capacity greater than 20 MW will be required to
negotiate a tariff and PPA with UETCL, on a case by case basis.
Plants including additional capacity resulting from project modernisation, repowering and expansion of
existing sites, but excluding existing generation capacity.
Projects connected to the National Grid; off-grid projects may be included in future developments of the
REFIT, although this would require collaboration with REA to develop the technical and operational
modalities. In particular, this will require the establishment of a mechanism for the monitoring and sale
of power to the System Operator as the Single Buyer
Priority technologies shall include:
Priority 1 technologies for which the levelised cost is below or close to the avoided cost
Priority 2 technologies for which the levelised cost is significantly above the avoided cost and therefore
limited annual allowable installed capacities shall apply.
The tariffs for each priority technology are determined using a US$/kWh levelised cost approach, based on
the electricity generation costs from the renewable energy sources. The key inputs are based on general
investment assumptions and specific assumptions for each of the priority technologies that influence the
power generation costs.
The tariff shall be set according to the year in which the licence is issued and are provided in Table 5 below.
The tariff will be paid for a guaranteed payment period of 20 years, with O&M costs adjusted on an annual
basis for inflation. The REFIT tariffs are listed in the table below. They are currently undergoing revision.
Table 5: REFIT Phase 2 tariffs, O&M%, capacity limits and payment period
34
011 2012 2013 2014 (Years)
Technology
Tariff
(US$/kWh)
O&M %
Cumulative Capacity Limits (MW)
Payment
Period (yrs)
2011 2012 2013 2014
Hydro (9 ><= 20 MW) 0.073 7.61% 45 MW 90 MW 135 MW 180 MW 20
Hydro (1 ><= 8 MW) Linear tariff 7.24% 15 MW 30 MW 60 MW 90 MW 20
Hydro (500kW ><= 1 MW) 0.109 7.08% 1 MW 1.5 MW 2 MW 5 MW 20
Bagasse 0.081 22.65% 20 MW 50 MW 75 MW 100 MW 20
Biomass 0.103 16.23% 10 MW 20 MW 30 MW 50 MW 20
Biogas 0.115 19.23% 10 MW 20 MW 30 MW 50 MW 20
Landfill gas 0.089 19.71% 10 MW 20 MW 30 MW 50 MW 20
Geothermal 0.077 4.29% 10MW 30MW 50MW 75 MW 20
Solar PV 0.362 5.03% 2 MW 3 MW 5 MW 7.5 MW 20
Wind 0.124 6.34% 50 MW 75 MW 100 MW 150 MW 20
34
Uganda Renewable Energy Feed-in Tariff (REFIT) Phase 2 Approved Guidelines for 2011-2012
26
3.10 Market Players and Responsibilities
In order to achieve Government of Ugandas policy objective for renewable energy resources, a number of
institutions, each with its own legal mandate, are involved. These include
The Ministry of Energy and Mineral Development (MEMD), which is responsible for the overall
management of the sector, dealing specifically with energy policy formulation, implementation and
monitoring.
The Electricity Regulatory Authority (ERA) is responsible for regulating the electricity sector. Some of
functions of the ERA are: to issue licenses for the generation, transmission, distribution or sales of
electricity in the country; to establish a tariff structure and approve rates and tariff charges.
The Rural Electrification Authority which has a broad mandate in rural electrification which includes
providing policy advice to the Rural Electrification Board
35
, operationalization of Ugandas Rural
Electrification Strategy and Plan and administering the Rural Electrification Fund (REF)
The Uganda Electricity Transmission Company Limited (UETCL) is the System Operator and owns
transmission lines above 33kV. UETCL is the bulk supplier and single buyer of power for the national grid
in Uganda. It is the purchaser of all independently generated power in the country that is fed into the
national grid.
Uganda Electricity Distribution Company Limited (UEDCL) is the owner of the electricity distribution
network, which has been leased by UMEME Ltd.
Uganda Electricity Generation Company Limited (UEGCL) is the owner of Kiira and Nalubaale
Hydropower Stations in Jinja, which were concessioned to ESKOM
The Electricity Disputes Tribunal is a mechanism through which any of the entities regulated by ERA or
other persons can appeal the decisions of the Electricity Regulatory Authority.
The Uganda Energy Credit Capitalisation Company (UECCC) is a GOU owned company set up for
purposes of managing and administering the Uganda Energy Capitalisation Trust. The objectives of the
UECCC are: to serve as a credit support institution and to promote private sector led renewable energy
infrastructure development; to provide transaction advisory services to independent power producers;
to introduce into the Ugandan financial market new and innovative financing modalities directed at
reducing real or perceived risks faced by financial institutions participating in the renewable energy
sector.
The Uganda Investment Authority (UIA) is an agency set up to promote and facilitate private sector
investment in Uganda. The agency serves to: provide information on investment opportunities; issue
investment licenses; assist in securing licenses and secondary approvals for investors; help investors to
implement their project ideas through assistance in locating relevant project support services; provide
assistance in acquisition of industrial land; help to obtain work permits and special passes for investors
and their expatriate staff; arrange contacts for potential investors; assist investors in seeking joint
venture partners and funding and review and make policy recommendations to government about
investment
35
The Rural Electrification Agency serves as the secretariat of the Rural Electrification Board
27
4 Regulatory Framework
4.1 Market Access (Conditions for Market Entry)
4.2 Privatisation, limitation and exclusion
The Government of Uganda (GOU) began a privatization program in 2001 that has resulted in the sale of 128
public enterprises, with 30 remaining in State hands. Of these, 15 are scheduled for divestiture in the next
three years. State-owned enterprises currently exist in the mining, hotel & hospitality, agro industry,
housing, and transport sectors. In some of these sectors, the GOU is not directly involved in the running of
the business but remains a shareholder and is open to competition from private investors in all of these
sectors. In the electricity sector a concessional approach has been used to privatise the government owned
electricity generation and distribution companies as well as off-grid isolated power stations.
Businesses generally deem acquisition of land with a clean title as one of their biggest challenges. Foreign
companies or individuals may not own land, but they may hold it under long-term lease. Foreigners must
seek Cabinet approval through the UIA to lease land over 50 acres to be used for agricultural or animal
production purposes. Uganda has not initiated any changes to allow foreign investors to purchase freehold
property.
4.3 Economic Freedom
Ugandas economy is fully liberalized and investment and marketing are allowed in all sectors of the
economy
36
. Ugandas economic freedom score is 61.9 and it is ranked 8th out of 46 countries in the Sub-
Saharan Africa region, and its overall score is above the world average
37
. Continued economic expansion has
been facilitated by open-market policies related to global commerce. The financial sector is relatively well
developed for the region and there is countrywide access to financial services.
Despite some progress, institutional shortcomings continue to undermine prospects for dynamic long-term
economic expansion. The trade weighted average tariff rate
38
is relatively high at 8.2%, and non-tariff
barriers further constrain freedom to trade. However, Uganda has attempted to update various commercial
laws to reduce administrative delays and the cost of conducting business.
4.4 Imports/ exports
Uganda is a member of the World Trade Organization. Uganda is also a member of the East African
Community (EAC) along with Kenya, Tanzania, Burundi, and Rwanda. While the EAC has passed protocols
establishing a Customs Union and Common Market among the five countries, numerous exceptions,
unchanged regulations, and bureaucratic inefficiencies still hamper the free movement of goods, capital, and
people. Uganda, along with its counterparts in the EAC signed a Trade Investment Framework Agreement
with the United States in July 2008. Uganda is a member of Common Market for Eastern and Southern Africa
(COMESA), but not a participant in the COMESA Free Trade Area.
Uganda has also negotiated bilateral tax treaties with several nations, including China and South Africa. The
EAC signed an Economic Partnership Agreement with the EU in 2007. Uganda was among 26 countries which
signed onto an initiative aimed at establishing an African free trade zone stretching from Cairo to Cape Town
in October 2008. According to the initiative, the members of the EAC, COMESA, and the Southern African
36
Uganda Investment Authority
37
2012 Index of Economic Freedom (http://www.heritage.org/index/pdf/2012/countries/uganda.pdf)
38
Calculated as the ratio of total tariff revenue to total value of imports
28
Development Community will draft a roadmap for creating a single trading bloc that would speed economic
integration and therefore help African economies compete in the global economy.
The Free Zones Bill of 2002, which will authorize the creation of Free Trade Areas (FTA) within Uganda, is still
awaiting final Cabinet approval. The Ugandan government is using a 19 million credit from the World Bank
to create three FTAs: the Kampala Industrial and Business Park (open), Luzira Industrial Business Park and
the Bweyogerere Industrial Estate.
4.5 Fiscal and financial incentives (taxation, FIT)
Ugandas fiscal incentive package for both domestic and foreign investors provides generous capital recovery
terms, particularly for medium and long-term investors whose projects entail significant plant and machinery
costs and involve significant training. In Kampala, 50% of allowances for plants and machinery and 100% of
training costs are deductible on a one-time basis from a company's income. A range of annual deductible
and depreciation allowances also exist, resulting in investors normally paying substantially less than the 30%
corporate tax rate in the early years of their investment. In order to promote export-oriented manufacturing
investment, the GOU included several tax incentives in the 2008/2009 budget. These included a removal of
the import duty on plant and machinery imports, as well as for schools, hotels, hospitals, agro-processors,
and heavy truck transporters. The GOU also provides a 10-year tax holiday for investors engaged in export-
oriented production and, if the investment is located more than 25km away from Kampala, for agro-
processing investors. In the 2009/2010 budget some of these incentives were enhanced and others were
introduced. Import duty on trucks with a carrying capacity of at least 5 tons was reduced from 25% to 10%
and trucks with a minimum capacity of 20 tons now have no import duty. Taxes on spare industrial parts
were also removed.
Below are listed a number of investment incentives offered by the GOU
39
:
a) Investment Capital Allowances These allow investors to deduct from their net income a certain
percentage of their investment capital e.g.:
Initial allowance on plant and machinery of 50-75%; the higher value for investments outside
Kampala. This applies for the 1
st
year only
Start up cost spread over 4 years 25% p.a.
Scientific research expenditure 100%
Training expenditure 100%
Mineral exploration expenditure 100%
Initial allowance on hotel, hospitals and industrial buildings 20%
Deductible annual allowances (depreciable assets) 20-40%
Depreciation rate for hotels, industrial buildings and hospitals 5%
b) Investors who register as investment traders are entitled to VAT refund on building materials for
industrial/commercial buildings
c) Duty and tax free import of plant and machinery
d) Export promotion incentives and facilities
Manufacturing under bond
Duty exemption on plant and machinery and other inputs
Stamp duty exemption
Duty draw back a refund on all or part of any duty paid on materials and inputs imported to
produce for export
Withholding tax exemptions on plant and machinery, scholastic materials, human and animal
drugs and raw materials
Ten year tax holiday
39
Uganda Investment Authority
29
Duty remission scheme for exporters involved in value addition
The Law Reform Commission has proposed draft legislation on investment incentives, but further steps have
not been approved. The draft legislation would include an exemption on withholding tax on interest on
external loans, repatriation of dividends to provide relief from double taxation, exemptions from duty on
raw materials, and a waiver of export tax. Foreign investors should consult the UIA and carefully evaluate
depreciation allowances by region and sub-sector prior to investing. The GOU will often work with foreign
investors to provide additional incentives, including further tax reductions, government subsidies, or the
provision of land.
4.6 Standards and quality
The Uganda National Bureau of Standards (UNBS) is mandated to develop and promote standardisation,
quality assurance, laboratory testing and metrology. UNBS carries out the following activities:
Standards development: Carried out through Technical Committees which consists of representatives of
consumers, traders, academicians, manufacturers, government and other stakeholders
Product testing: Domestic and imported products are tested by UNBS laboratories for conformity to
Uganda Standards and other specifications.
Market surveillance to rid the market of dangerous, counterfeit and substandard products
Verifying accuracy of weighing and measuring instruments used by traders and consumers in commercial
transactions and calibrating measuring and testing equipment used in industry;
Carrying out shipment inspection and conformity assessment for exports, imports and tender supplies;
e.g. UNBS has in place an Import Inspection and Clearance Scheme. The scheme requires imported
products be inspected for conformity to the relevant Ugandan Standard by UNBS before release onto
the Ugandan market. Quality inspection is done by UNBS at the entry point during the customs
verification exercise.
Assisting the private sector, procurement agents, government and the general public in conformity
assessment of goods by testing , measuring and inspection against standards and or specifications;
Carrying out factory inspection to evaluate conformance with standards; and
Liaison with national, regional and international standardisation and related bodies.
5 Starting a Business Entry Options and Barriers
To start a business in Uganda, investors are required to
40
:
1) Register the company in Uganda The registration process includes the following:
Reservation of a company name at the Office of the Registrar.
Filling of incorporation forms i.e. statement of nominal capital, declaration of compliance with
the requirements of the Companies Act (before a Commissioner of Oaths), particulars of
directors and secretaries, consent to act as director of company, notice of situation of the
registered office and postal address
Registering the company at the Uganda Registration Services Bureau. As part of the registration
companies are required to develop and submit a Memorandum and Articles of Association and
pay registration fees and stamp duty. Registration fees depend on the amount of share capital.
Applying to the Uganda Revenue Authority (URA) for a tax identification number (TIN) for each
director and a VAT number. Applications can be done online. An inspector from URA inspects the
business premises.
Applying for pay-as-you-earn (PAYE) tax; to be paid by employees upon the company becoming
operational but collected by the employer.
40
Uganda Investment Authority
30
Applying to the relevant local authority for a trading license. This a general business license
required for all companies. A license fee is required whose amount varies depending on the
nature of business. The licensing officer arranges an inspection of the premises and fills out an
assessment form.
Filing a form with the National Social Security Fund (NSSF). NSSF is a compulsory savings scheme
that covers all employees in the private sector. Every employer must register the company with
the NSSF when it has 5 or more employees.
Making a company seal.
2) Apply for an investment license Foreign investors require a minimum of 78,200 in planned investment
in order to secure an investment license from the Uganda Investment Authority. For local investors, the
minimum planned investment requirement is 39,100. These amounts represent the value of fixed
assets as determined from the investors business plans, which they are required to submit when
applying for an investment license. Local investors may proceed with their investment without licensing
from the UIA. However the license is mandatory for foreign investors as it legalizes their investment in
Uganda. Traders do not require a license from UIA but must demonstrate operating capital of 78,200
before trading licenses and entry permits are issued by local authorities. Investors must have registered
their companies before applying for an investment license
3) Secure necessary secondary clearances Certain sectors require other secondary licenses e.g. mining,
forestry. Where required, UIA provides assistance for securing these licenses
To save investors time, UIA has implemented a one stop shop that enables investors to obtain most licensing
services at the UIA. UIA assists investors in identifying suitable land and work permits for expatriate staff.
Representatives from URA, Department of Immigration and Ministry of Lands are housed at the UIA for this
purpose. UIA also offers professional advice and facilitation services to access other government sister
agencies.
6 The Financial Sector
Uganda keeps open capital accounts, and Ugandan law imposes no restrictions on capital transfers in and
out of Uganda. Investors can obtain foreign exchange and make transfers at commercial banks without
approval from the Bank of Uganda (BOU, the Central Bank) in order to repatriate profits, dividends, and
make payments for imports and services. The BOU prefers that investors make large transfers through the
Central Bank itself in order to help it monitor and maintain the stability of the Ugandan shilling, though this
is not a requirement. Investors have reported no problems with their ability to perform currency
transactions.
Overall, the banking industry is well capitalized and has no serious non-performing loan problems. Following
a decade-long moratorium on new bank licenses, the BOU provided licenses to seven new institutions in
2007, bringing the number of banks in Uganda to 22. The total size of the commercial banking system has
risen to 3.6 billion in 2009, up from 3 billion in 2008. Most banks are foreign owned, including major
international institutions such as Citigroup, Barclays, Stanbic, and Standard Chartered. Interest rates for 12-
month corporate loans generally run between 19% and 25%.
Foreign investors can apply for loans from the local banking sector. Investors can also list their companies on
the local stock exchange. A number of financial support initiatives exist to support investors in given sectors.
UIA can advise potential investors on the how and where to access existing financing options for their
planned investments
41
.
41
Uganda Investment Authority
31
7 Renewable Energy Sector
7.1 Overview
Uganda is endowed with abundant energy resources which are fairly distributed throughout the country.
These include hydro, biomass, solar, geothermal, peat and fossil fuels. The energy resource potential of the
country includes an estimated 2000MW of hydro power, 200MW of mini-hydro, 450 MW of geothermal, 460
million tonnes of biomass standing stock with a sustainable annual yield of 50 million tons, 5.1 kWh/m2 of
solar energy, and about 250 Mtoe
42
of peat (800MW).
7.2 Biomass
Biomass contributes over 90% of the total energy consumed in the country and provides almost all the
energy used to meet basic energy needs for cooking and water heating in rural areas, most urban
households, institutions, and commercial buildings. Biomass is the main source of energy for rural industries.
Limited availability of electricity and high prices of petroleum products, constitute barriers to a reduction in
the demand for biomass. Trade in biomass especially charcoal is a large contributor to the rural economy.
The per capita consumption of firewood in rural and urban areas is 680kg/yr and 240kg/yr respectively. Per
capita charcoal consumption is 4kg and 120kg in rural and urban areas respectively. Current charcoal
consumption in Uganda is estimated at 580,000 tons per annum the biomass equivalent is about 6 million
tons of wood, based on the conversion efficiency of 10% for the charcoal kilns in use. According to the
Uganda Bureau of Statistics (UBOS) population projection data, about 80% of the current population of
reside in rural areas and predominantly use firewood; their biomass consumption can be estimated at 18
million tons. The combined annual biomass consumption (firewood and charcoal) is estimated at 24 million
tons. Cottage industries account for about 20% of total biomass use, adding a further 5.5 million tons;
bringing the total biomass demand to about 29.5 million tons countrywide.
In addition to household and cottage industry applications, there is biomass for industrial applications i.e.
tea processing, cement manufacture and agro-processing. Fuel wood is used by tea factories to provide
thermal energy for withering and drying operations; where available it represents a significantly cheaper
alternative to furnace oil. Fuel wood is sourced from tea estate plantations dedicated for this purpose or is
purchased from farmers in the vicinity of the tea factory. Small holder tea factories often lack sufficient land
to develop dedicated fuel wood plantations and therefore most of the fuel wood they source and use is
unsustainable. Hima Cement factory is another example of biomass use for industrial applications; the
factory is currently using biomass waste i.e. coffee husks to substitute 30% of its fuel consumption. With
these trends likely to continue and grow, there is need to develop sustainable biomass resources.
The 2007 MEMD, Report on The Renewable Energy Resource Information Development and Capacity
Building Assessment in Uganda projected that the woody biomass demand and supply balance scenario was
set to move into a deficit (4 million tonnes) by 2011 and one of acute deficit by 2016 (10.7 million tonnes).
7.3 Solar Energy (Thermal and PV)
Uganda has an average daily insolation of 5-6 kWh/m2. It is estimated that about 1.1 MW of solar PV power
is installed throughout the country. This includes both institutional and solar home systems with the former
accounting for a greater portion of that installed capacity.
The solar PV market in Uganda has steadily grown over the last 15 years with new players entering the
market that include foreign investors. While ten years ago there were a handful of solar companies mainly
42
Million tonnes of oil equivalent
32
engaged in institutional solar PV installations, there are now over thirty companies involved in the solar
business (both PV and solar thermal). The market is in a state of transition where different players are yet to
find their optimum servicing levels within the market
43
. The prevailing market conditions in the PV sector
are: ease of importing solar PV products, tax exemptions, and high margins.
Institutional public procurements account for the biggest portion of the installed solar PV systems, usually
project or donor supported through government. The applications are mainly in the following sectors:
health, water, education and local government. An on-going World Bank funded rural electrification
programme, Energy for Rural Transformation (ERT), is currently the main driver behind most of the public
procurements. ERT provides support under a strategy that has been referred to as the Photovoltaic Targeted
Market Approach (PVTMA) which provides solar PV subsidies and facilitates access to consumer finance.
The solar home systems (SHS) market is one of the biggest areas for commercially driven solar PV business.
The largest demand is for small PV systems ranging from 10 50W; annual SHS sales estimates are in the
range of 12,000. Pico PV systems, 0.5-5W and costing 15-40 per system, are significantly more affordable
and are becoming increasingly more popular. Solar PV systems under various schemes initiated by REA and
other donor agencies energized around 5,587 households, 416 small commercials and 1,729 institutions.
Field verification found that a significant portion of gridconnected consumers also utilize solar PV systems in
their homes and businesses as backup.
The solar thermal business in Uganda is relatively small in comparison to solar PV. Growth in this subsector is
slow because of limited effort towards creating awareness, lack of a clear government policy to support
growth and comparatively high initial investment costs.
7.4 Hydro
The large-scale hydropower potential along the River Nile has been estimated at about 2,000 MW including
six potential major hydropower sites: Bujagali 250 MW, Kalagala 450 MW, Karuma (Kamdini) 150 MW,
Ayago North 300 MW, Ayago South 250 MW and Murchison Falls 600 MW. Bujagali and Karuma sites have
been significantly studied and are being developed on a Public Private Partnership (PPP) basis to generate
electricity in the medium term.
More than 60 mini hydropower sites with a total potential of about 210 MW have been identified through
different studies in Uganda. Some of the sites can be developed for isolated grids; others as energy supply to
the grid and the reminder of the sites were assessed to be less relevant to the energy supply for
environmental and power market reasons.
Hydro resources in Uganda are the most abundant and well documented renewable energy resource (see
Figure 6 below). With changing weather patterns detailed hydrological assessments are required to assess
the extent to which seasonal changes in flow rates would affect the performance of the proposed plants.
43
Target Market Analysis: Ugandas Solar Energy Market (GIZ 2009)
33
Figure 6: Maps showing hydro sites in Uganda and their status
34
7.5 Wind
The Karamoja region (north east border with Kenya) is widely considered as one of windiest locations in
Uganda although detailed studies have not been undertaken. The Ministry of Energy plans to undertake a
reconnaissance survey of metrological stations in Karamoja to assess the best sites to install equipment to
undertake wind measurements.
7.6 Geothermal
Geothermal investigations have been focused on three areas namely Katwe, Buranga and Kibiro all in west
Uganda. The three were chosen for study because of their volcanic and tectonic features that indicate a
powerful heat source and high permeability. They have all been ranked as potential targets for geothermal
development. Their total geothermal energy potential is estimated at 450 MW. Other areas are located
within or on the outskirts of the rift valley in southwest, west, north and northeast Uganda as indicated in
Figure 7 below.
Figure 7: Geothermal sites
The Uganda government funded a detailed geothermal resource assessment in the June 2011-2012 financial
year. These were undertaken by the Geological Survey and Mines Department of the Ministry of Energy.
During this survey a 4
th
site, Panyimur in Nebbi district, was also identified as promising. Uganda currently
has no Geothermal Policy and USAID has offered to support its development. Currently geothermal
exploration is addressed using the Mining Act which grants a 3 year exploration license to investors.
Currently all sites apart from the new Panyimur site are licensed to investors for exploration. The conditions
of the license require quarterly reporting from investors to show progress.
35
7.7 Municipal Waste
Kampalas Mpererwe land fill has been in operation since 1996 and 60% of Kampalas waste is dumped at
this land fill. The volume of the land fill is estimated at 1,256,000m
3
. Annual waste deposited in the land fill
has grown from about 50,000tons/year in 1996 to 240,000tons/year in 2011
44
.
The composition of Kampalas waste is broken down as follows: vegetable matter 73.8%; paper 5.4%; plastic
1.6%; metal 3.1%; glass 0.9%; street debris 5.5%; tree cuttings 8.0% and saw dust 1.7%. Waste separation
regimes and recycling activities are limited although there is an ongoing program to promote this that is
supported by the Belgian Technical Cooperation.
In 2011, the Kampala City Council (KCC) commissioned the, Design of Landfill Gas Recovery and Utilization
Project. The study estimates electricity generation potential of about 3MW and an average CO
2
emission
reduction potential of 40,000tons per year for 9 years. KCC plans to submit a tender for bids to develop the
land fill project later this year and is also investigating waste to energy options i.e. energy recovery through
waste incineration.
44
Design of Landfill Gas Recovery and Utilization Project (Kampala City Council 2011)
36
7.8 Investment Potential
7.9 Outlook
Ugandas energy sector is open for business and the country has abundant renewable energy sources which
are largely untapped. Uganda has one of the fastest growing economies and highest population growth rates
in the region and the energy demand for households, businesses, institutions and industries is largely
unfulfilled; electrification rates are at 5.91%, there is a power deficit of 130MW, biomass represents over
90% of total energy consumption and the biomass energy technologies used are highly inefficient.
The private sector is encouraged to invest in electricity generation and distribution and trade in energy
products and services. However, Ugandas renewable energy market is a virgin market and requires patient
capital, a long-term outlook and a willingness to do lobbing and advocacy to address institutional and policy
barriers.
Lack of detailed renewable energy resource data presents both a challenge and opportunity; a number of
studies have been done on hydro resources but little or no resource availability information is available for
other renewable energy resources. Energy policy and regulation in Uganda allows for investors, on a 1
st
come 1
st
serve basis, to identify sites, apply for permits to collect data for detailed feasibility studies and
develop projects.
7.10 Areas of Opportunity
Opportunities in the sector can be broken up into grid connected renewables, electricity distribution and
energy products and services
7.11 Grid Connected Renewables
Ugandas peak electricity demand is expected to grow from the current 540MW to between 1,873
2,722MW in 2030. To encourage investment in the sector the government established the renewable energy
feed in tariff in 2007. It has been reviewed once since then; the current feed in tariffs and guidelines (Phase
II) are available on the Electricity Regulatory Authority website (http://www.era.or.ug/FeedInTariffs.php).
These are currently undergoing review.
The feed in tariffs focus on renewable energy projects in the range of 0.5-20MW. The tariff will be paid for a
guaranteed payment period of 20 years, with O&M costs adjusted on an annual basis for inflation. The tariff
adjustment formula is defined in the tariff guidelines and is based on the core producer price index for the
United States as published by the Bureau of Labour Statistics. Power purchase agreements are done with the
bulk buyer, UETCL, and approved by the regulator, ERA. The power purchase agreements (PPA) have a
standard template and PPA negotiations are relatively fast if the project developer is amenable to the stated
tariffs. Although, the tariffs are non-negotiable, other incentives can be negotiated with the ERA e.g. some
project developers request for higher tariffs in the earlier years and lower tariffs later so as to enable the
repay their debt. Other incentives that can bring down the initial investment costs e.g. tax exemptions on
equipment can also be negotiated.
With regard to power output frequencies and voltages, details are available in the grid code. Output voltages
are 11kV, 33kV and 132kV 10%, output frequency is 50Hz 1%. For solar and wind generation systems
where generation fluctuates, developers are required to eliminate harmonics.
Power evacuation for generation projects in the range of 0.5-20MW can represent a challenge. The power
transmission company is not obligated to evacuate power from generation plants with capacities below
20MW; however the rural electrification agency has resources to develop transmission lines to evacuate
37
power from these plants. Before a PPA can be concluded the commitment from REA to develop the
transmission network needs to be presented. It is important to note that the maintenance of this
transmission network is the responsibility of the electricity network distribution concessionaire.
There are currently no feed-in-tariffs for projects above 20MW and the PPAs and negotiations for these
kinds of projects are significantly different. For these projects a detailed feasibility study is required for the
negotiation of the tariffs. For these projects UETCL can only negotiate on tariffs up to the bulk supply tariff,
which is calculated by ERA and varies depending on a number of factors e.g. generation mix, O&M. The
current bulk supply tariff is 8.3US. For tariffs above this subsidies are required from the government and
therefore an implementation/support agreement between the government and the project developer is
required. Sovereign guarantees could be negotiated for projects of this scale.
UETCL is also obliged to provide the transmission infrastructure to evacuate energy from energy projects
above 20MW and since they are directly responsible for this infrastructure, they can provide network
guarantees. However, it is important to note that the 132kV infrastructure is still underdeveloped and the
transmission infrastructure development plan and timelines needs to be considered when selecting sites and
planning their development.
Investment opportunities i.e. small hydropower sites for which no exclusive permits are in force, and which
are available are listed on the ERA website (http://www.era.or.ug/AvailableProject.php). Interested
developers are required to lodge a notice of intended application with the Electricity Regulatory Authority.
Also listed are companies who have permits to conduct feasibility studies. For investors seeking local
partners who already have permits or generation and sale licenses, although the ERA does not offer any
match making services, they do have a database of these project developers. Permit and license holders at
an early stage of project development may also be seeking for technical assistance (design, resource
assessment, feasibility studies, and equipment), equity partners or financing.
7.12 Electricity Distribution
Of the total grid and isolated minigird electric consumers, more than half (56.32%) are located within
Kampala and Wakiso Districts. This indicates the level of electric infrastructure investment within these two
cities, while a majority of the population outside of these Districts suffers from a relatively low level of
access on average 2.80%. In 24 districts, electricity access is essentially zero; no form of gridbased
electricity exists leaving about 800,000 households without access to electric service.
The Indicative Rural Electrification Master Plan (IREMP) of 2009 illustrates that there are more than 500,000
connections that could in some way or another be supplied by means of an electricity system (i.e., not just
individual, scattered households or point loads). It further demonstrates that in nearly all cases, it is more
appropriate to supply these potential connections from the grid as opposed to offgrid and minigrid
solutions because even though the initial capital layout is not always lower, the lifecycle costs and
therefore the affordability hurdle are lower
45
.
The Rural Electrification Agency has shifted to direct investment in rural electrification construction as GOU
owned assets. Therefore, through ERT and with funding from GOU and some of the donor agencies (SIDA,
JICA, NORAD, etc), a variety of grid extension projects have been executed under REA direct management.
Upon completion of these extension projects, the assets are given to the distribution licensees, or new
licensees are sought, and the ownership retained in the name of the GOU. In addition to its license issued by
ERA, the licensees execute lease agreements with REA which obligates them to pay annual fees. Currently,
three energy service providers operate gridtied distribution systems through a lease with REA.
45
The Indicative Rural Electrification Master Plan (Rural Electrification Agency, 2009)
38
These leases are typically signed between the energy service provider (ESP) and the REB Chairman
representing the Government of Uganda. In the case of the lease of one of the electricity distribution
concessionaires the lease dictates a system rental amount of 3,518/month, in addition to stipulating key
terms of service such as providing quarterly report to the REB, maintaining the system in good working
order, obeying proper laws (such as the Grid Code), and creating an expansion plan for the primary
distribution system for review of the REB one year after service is commenced. The lease additionally
specifies the term and termination processes, required tax and insurance standards, assumptions of liability
and dispute resolution modalities, among other items. However, in regard to RE acceleration, no specific
connection targets are mentioned. While REA provides the initial financing for project development, it is
unlikely that ESPs can finance system backfill (densification of consumer connections in existing distribution),
maintenance and upgrades.
The 2011 Uganda Accelerated Rural Electrification Project provided a few recommendations which, if
effected could result in investment opportunities in electricity distribution. These include
46
:
Geographically defining 12 new rural service territories covering the entire country. Each with
approximately 4,000 original customers, providing a sufficient revenue base to render each a
commercially viable electric utility. Apart from the 12 new service territories, the major urbanized region
of Kampala, Jinja and Entebbe, and the majority of the territory and consumers currently served by
Umeme are included in a separate service territory.
From a planning standpoint, electric distribution construction planning is performed on the basis of long
term utility business plans, including periodic construction plans under a revised procedure for
distribution project design for the purpose of ordering investments and financing sequentially to achieve
total coverage of each area.
For the purpose of awarding the 12 ruralarea distribution concessions, several options are considered.
The focal issue is to realign Umemes concession to pare off the more rural areas and by so doing
render the rural territories more viable by making them larger. These are:
a) A single concession for the entire national system and negotiate with Umeme
b) A single concession which is competitively bid
c) Multiple rural concessions, each to be competitively bid
d) Multiple rural concessions, each to be assigned to existing licensees
e) Multiple rural concessions, each to be served by an electric cooperative
f) A combination of the last three options
The proposed service territories and shown in Figure 8 below.
46
Uganda Accelerated Rural Electrification Project Report (REA 2011)
39
40
Figure 8: Proposed Service Territories
41
7.13 Energy Products and Services
Large scale demand for charcoal and fuel wood by households, institutions, cottage industry and large
industry presents interesting opportunities for investors.
Charcoal - A charcoal survey undertaken in 2004
47
indicated the total consumption of charcoal in
Kampala at that time was estimated at 300,000 tonnes/year; equivalent to a 50% increase over 10 years.
The five most important districts supplying Kampala with charcoal were Luweero (25.3 %), Nakasongola
(14.5 %), Kiboga (13.6 %), Mpigi (10.8 %) and Masindi (6.9 %). The current price of charcoal in Kampala is
25US$ for a 50-60kg bag.
In Renewable Energy Sector Investment Plan for Uganda, MEMD also estimates the level of charcoal
demand for industrial applications (i.e. cement production in Hima and Tororo and iron and steel works
in Jinja, Iganga and Kigezi) at about 990,000tons of charcoal a year.
Fuel wood - The per capita consumption of firewood is estimated at 680kg/yr and 240kg/yr, in rural and
urban areas. In addition to households there is significant fuel wood demand from schools and
institutions for cooking, the tea industry for provide thermal energy for withering and drying operations,
and energy intensive industries such as brick making, lime burning, baking, fish smoking and tobacco
curing.
Developing sustainable commercial tree plantations to meet this demand therefore presents a viable
investment opportunity.
Commercial tree plantations require large areas of land capable of supporting good tree growth. To
maximize potential, the land must be located near to the main markets or close to the main processing
facilities; and to benefit from economies of scale, the core plantation areas should be as contiguous as
possible. In Uganda there are large areas of public and private land well suited for tree plantations. It has
been government policy for many years to allocate tree planting permits (usually for 25 years and renewable
based on performance) in selected Central Forest Reserves (CFRs) to private investors for plantation
development.
Central Forest Reserves (CFRs) in Uganda fall in two main categories namely those for production and those
for protection. Production forests which include savannah, bush land and grassland areas were gazetted for
supply of forest products and future development of industrial plantations. The protection forests include all
the tropical high forests, savannah woodlands and/or grasslands that protect watersheds and water
catchments, biodiversity, ecosystems and landscapes that are prone to degradation under uncontrolled
human use. Although central forest reserves are ideal for establishment of commercial tree plantations,
there has been a move recently more towards private land due to uncertainties over government policies,
especially relating to permit conditions and poor support for (often illegal) encroachment
48
. Below is a map
showing central forest reserve categories and locations and another showing sivicultural zones in Uganda
and those suitable for commercial forestry.
Due to the scale of agricultural activities; Uganda also has an abundance of biomass waste. This waste can be
aggregated and sold/used directly for provision of thermal energy or it can be used to make briquettes.
Table 6 below gives an indication of the availability of biomass waste from different agricultural products.
47
A Study on Charcoal Supply in Kampala (MEMD/GIZ 2004)
48
A Ugandan Model for Engaging the Private Sector in Commercial Tree Growing (Paul A. Jacovelli)
42
43
Figure 9: Central Forest Reserve categories in Uganda (National Forest Authority) and sivicultural classification map of Uganda showing are suitability for commercial
forestry (Sawlog Production Grant Scheme Tree Planting Guidelines for Uganda)
44
Table 6: Agricultural residue potential in Uganda
49
Agricultural
Crops
Cultivated Area
(ha)
Production
(tons/year)
Residues
(tons/year)
Theoretical residue potential for
energy production (tons/year)
Sugar cane 360,000 222,866 2,547,040 2,547,040
Banana 1,512,001 9,011,997 3,604,799 1,081,440
Maize 571,002 913,009 913,009 365,204
Sorghum 266,001 399,002 478,802 143,641
Beans 600,003 390,002 273,001 81,900
Coffee 181,470 145,176 88,557
Groundnuts 199,999 144,000 144,000 66,240
Rice 55,226 77,461 108,445 32,534
Soya beans 71,997 78,998 55,299 16,590
Pigeon peas 69,999 57,999 34,799 10,440
Cow peas 53,972 44,639 26,783 8,035
Tea 29,236 12,692 3,808
Field peas 28,000 15,999 9,599 2,880
Tobacco 22,837 6,851 2,055
Cassava 331,729 2,224,000 667,200 -
Finger millet 394,995 632,000 695,200 -
Wheat 5,000 9,000 10,800 -
Sun-flower 51,183 43,630 22,251 -
Sweet potatoes 477,998 2,222,999 666,900 -
Irish Potatoes 49,998 402,000 160,800 -
Total 5,091,103 17,123,144 10,583,448 4,450,363
Awareness and uptake of efficient biomass technologies is still low. Considering that biomass represents
93% of total energy consumption, opportunities exist for introduction and dissemination of such
technologies; these include biomass fired boilers/dual fuel boilers, biomass gasifiers, energy efficient
household and institutional wood fuel stoves, efficient charcoal production kilns/technologies and improved
kilns and ovens.
8 Prospects of Future Market Development
8.1 Power Sector Investment Plan
The Uganda Power Sector Investment Plan (PSIP) was concluded in 2011 and is aimed at:
Enabling the provision of adequate and reliable power while anticipating the demand based on the
countrys vision for economic development;
Developing a plan that would enable a shift from a project by project approach, to a sector-wide
framework encompassing programmatic funding in a coordinated harmonized manner; and
Translating the strategic sector plans into a series of actionable projects over a period of up to 20 years.
The Demand Forecast
For the base case total energy sales are projected to grow on average by 6.8% per year from 2008 to 2030.
This represents a growth in energy sales from 1 800GWh in 2008 to 7 679GWh in 2030. For the high case,
the energy sales are forecast to grow to 13 101GWh by 2030 which present an average annual growth rate
of 9.2%. For the low case, the energy sales are forecast to grow to 3 873GWh by 2030 which present an
average annual growth rate of 3.8%. For the Vision 2035, the energy sales are forecast to grow to 17
877GWh by 2030 which present an average annual growth rate of 10.8%.
49
The Uganda Alternative Energy Resource Assessment and Utilization Study (2002)
45
For the base case the peak demand is forecast to grow from 528MW in 2008 to 1,873MW in 2030 i.e.
average annual growth rate of 5.9%. For the high case, the peak demand is forecast to grow to 2,722MW by
2030; an average annual growth rate of 7.9%. For the low case, the peak demand is forecast to grow to
938MW by 2030; an average annual growth rate of 3.0%. For the Vision 2035 case, the peak demand is
forecast to grow to 4,116MW by 2030; an average annual growth rate of 10.0%
50
.
Generation Plan
The least cost future capacity to supply the growing demand is predominantly hydro generation capacity.
The base case generation least cost plan is presented in Figure 10 and Table 7 below.
Table 7: Energy Generation Projections
51
Plant name Nominal Capacity (MW) Energy (GWh) Earliest year on Power
Hydro Existing
Misc plants 15
Nalubaale 180 767
Kira 1115 200 747
Bujagali 15 250 1970 2011
Small hydro (committed) 50 2011
S/T 695 3,485
Thermal Existing
Kakira 17 112
Namanve 50 329
Invespro HFO IPP 50 329 2010
Electromax IPP 10 66 2009
S/T 127 834
Total Existing Supply 822 4,319
Hydro Future
Karuma high 700 5512 2018
Murchison Falls high 750 5904 2019
Isimba 100 788 2016
Ayago 550 4336 2019
Small hydro candidates 37 2016
S/T 2137 16,540
Thermal Future
Kampala steam 56 392 2016
Tullow steam 53 371 2016
Tullow GT 57 399 2016
Tullow CCGT 185 1296 2016
Tullow diesel 10 70 2016
Geothermal 33 231 2016
S/T 394 2,761
Total Future Options 2,531 19,301
Total Future Supply 3,353 23,620
50
Uganda Power Sector Investment Plan 2011
51
Eastern Africa Power Pool (EAPP) and East African Community (EAC) Regional Power System Master Plan and Grid
Code Study
46
The following are key highlights of the generation plan:
In 2012, with the introduction of the first three units at Bujagali, it is expected that the Base Case energy
demand can be supplied.
The contribution of thermal plants is expected to remain high until 2017.
By 2015 all the existing capacity is expected to be utilised to the maximum and new capacity is required
to supply some of the growing demand. Due to the lead times required for large hydro developments,
new small hydro stations are expected provide the capacity (60MW) required.
The Isimba hydro project is expected to come online by 2017 to meet new demand.
A feasibility study being conducted to evaluate the feasibility of developing Karuma as a 600-750MW
plant; 2018 is the earliest estimated date of commissioning
With the introduction of the Karuma plant the reserve margin is anticipated to increase to above 80%
and remains above 25% until 2024,
With the introduction of the new hydro projects the contribution from thermal plants is expected to
reduce significantly from 2018
In 2022 new base load capacity is required to serve the base case energy demand forecast. The least cost
option is expected to be geothermal
The Ayago hydro plant is expected to be introduced in 2025
Figure 10: Base case generation capacity extension plan
52
52
Uganda Power Sector Investment Plan 2011
47
Transmission Plan
The least cost transmission development plan by 2025 resulting from the analysis is presented in Figure 5.
There are no committed or candidate projects beyond the integration of Ayago Power Station in 2025.
Figure 11: Transmission Network Summary 2025
8.2 The Energy for Rural Transformation Project
53
The purpose of the ERT program is to develop Ugandas energy and information/communication
technologies (ICT) sectors, so that they make a significant contribution to bringing about rural
transformation, i.e., these sectors facilitate a significant improvement in the productivity of enterprises as
well as the quality of life of households. The objectives of Phase I were to put in place a functioning,
conducive environment and related capacity for commercially-oriented, sustainable service delivery of
rural/renewable energy and ICTs. These were largely achieved.
Phase 2 (ERT II) was declared effective in November of 2009, to run for a period of 4 years. It will accelerate
investments and increase the regional coverage by shifting from the Phase I case-by-case approach to
processing sub-projects through the institutional framework.
The project has the following components:
53
Energy for Rural Transformation ERT II Project Operational Manual (MEMD. December 2009)
48
Rural Energy Infrastructure (41.8 million): This includes: rural electrification (grid extension and
independent grids); renewable energy power generation; solar PV systems excluding health, education,
water and agriculture sectors; energy efficiency (electricity and other energy).
o REA will be responsible for grid extensions, independent grids, Solar PV systems, support of
renewable energy power generation projects, and capacity building
o To facilitate access to local commercial finance, ERT II will operationalize the Credit Support
Facility (CSF), which was set up in ERT I, but has not yet started functioning. The CSF will provide
credit enhancement products aimed at encouraging the participation of local financial
institutions. These will include a standby liquidity option that effectively extends the loan tenor
to more closely match the needs of private investors. Also included will be a partial risk
guarantee to address the perceived start-up risks of mini-hydro and other eligible investments.
CSF will also operate a refinance facility similar to the ERT I facility aimed at supporting solar PV
transactions.
Information Communications Technologies (7.1 million): This focuses on extending access to ICT
services. The investments to be financed are: (i) last mile Internet broadband access extension to rural
areas with a focus on the Northern region; (ii) new community information centres (CICs), including cell-
phone charging facilities, for underserved rural areas and rechargeable lamps for the public in areas
where grid power is not available.; (iii) cell-phone charging facilities for CICs installed in ERT I; and (iv)
equipment for computer labs to schools and computer equipment for health facilities and subsidized
Internet access.
Energy Development, Cross Sectoral Links, Impact Monitoring (23.7 million): This includes health,
education, water, agriculture and local government sectors.
o Establishment of a Project Coordination Unit in MEMD which will have the overall responsibility
of coordinating, guiding and supporting and monitoring the different activities of the
Implementing Agencies
o ERT II will selectively support activities that are considered to be cornerstones of the Energy
Efficiency Strategy for Uganda. These may include: energy efficient street lights, energy
efficiency in large industrial/commercial facilities, promotion of energy efficient appliances,
energy efficiency in SMEs, and solar water heaters.
o Increasing investments in modern energy services in rural health centres for improved health
services delivery. This will be through use of solar PV systems or connection to a reliable grid.
Twenty four (24) districts will be covered in ERT II.
o Assist Ministry of Water and Environment in improving the water supply services; in particular
for the rural growth centres and small towns mechanized systems, by providing the least cost
energy solutions to the communities where water schemes have been or are to be installed. ERT
II shall target 16 20 water supply schemes.
o Improve the quality of education in 40 districts by providing access to energy and ICT to post-
primary education institutions including staff houses.
o Support the Plan for Modernization of Agriculture process of transforming agriculture from
largely subsistence to commercial through the use of energy/ICT in agricultural activities.
8.3 Rural Electrification Plan
The Indicative Rural Electrification Master Plan (IREMP) report represents an indicative plan for rural
electrification in Uganda. The Rural Electrification Strategy & Plan foresees an increase in the rural
electrification rate to about 10%, i.e. an additional approximately 400 000 rural connections; 250 000 on-grid
and 100 000 off-grid connections, phased over a ten-year period.
The recommended Indicative Rural Electrification Master Plan therefore achieves the total connection
targets mostly via the grid. There are specific cases where off-grid solutions are recommended, for example
for the electrification of District Head Quarters which will not be reached by the grid soon.
49
8.4 PV Targeted Market Approach (PVTMA)
PVTMA was designed to provide a targeted solar PV system buy down subsidy, wherein eligible solar PV
providers or regulated micro-finance institutions (MFIs) would be eligible for a targeted subsidy of US$
5.50/Wp for systems up to 50W. Additionally, a targeted subsidy of US$ 4.00/Wp is available for commercial
or institutional PV systems up to 500 Wp. These subsidies are be managed by REA, 70% of the subsidy is paid
to the PV dealer or MFI when the solar PV installation was made, with the remaining 30% paid after an
independent auditor had verified that the system was installed according to contract specifications.
Through the PVTMA framework, regulated MFIs (those registered with the Bank of Uganda) through the
Uganda Energy Credit Capitalization Company (UECCC), and the Savings and Credit Cooperatives (SACCOs)
regulated through the Microfinance Support Centre
54
are authorized to receive credit and liquidity support
in order to furnish solar PV loans to individual clients and cooperative members. Finally, a PV Supervisory
Group is to be established to coordinate the activities of each of these players towards the overall goal of
installing 20,000 PV systems under ERT II.
GIZ Promotion of Renewable Energy and Energy Efficiency Programme (PREEEP) and Solar Market
Development programs were intended to work in parallel with the GOU/REA/PSFU coordinated solar PV
development programs. Similar to PVTMA, these programs provide assistance to solar PV dealers to qualify
for PV subsidies, as well as to provide support to improve marketing, commercial and technical skills. In
addition, the programs engage microfinance institutions to establish further linkages with PV dealers and
available subsidy schemes.
8.5 Uganda Energy Credit Capitalization Company
The main roles of the UECCC are to pool resources to contribute financing requirements of the renewable
energy sector and provide a framework for structuring public private partnerships.
UECCC are also offering technical assistance to financial institutions e.g. building the capacity of local
financial institutions to appraise renewable energy projects seeking finance and assisting interested FIs to
design adaptable consumer financing packages for solar PV systems.
UECCC are currently offering credit enhancement instruments to enable projects reach financial closure e.g.:
Standby liquidity option Local financial institutions (FIs) do not typically offer loans beyond 5 years; by
placing a cash reserve at the bank that it could disburse to the project developer upon the completion,
UECCC enables the financing institution to extend the tenure of their loan and the project developer to
get long term financing.
Partial risk guarantee A cost overrun insurance facility available during the construction phase that
allows renewable energy project developers to access an additional financing for up-to 15% of the
project cost
For projects that are in the early stages of the project development cycle, UECCC is the process of developing
and capitalizing additional credit support instruments such as:
Early stage transaction advisory services to project developers on project activities such as business and
financial planning, financial structuring and institutional liaison
Bridge financing To cover interest payments that accrue before a project starts generating cash flows.
These are repayable after project commissioning.
54
A government financial support centre primarily for SACCOs
50
Subordinated Debt Finance To address the shortfall in project developer equity to meet the levels
required by debt provider
Interest rate buy down To address the currently high interest rates that are not in line with the
requirements of project financing.
Power purchase liquidity guarantee Short term payment guarantees to cover delays in payment from
the bulk buyer UETCL
Both local and international investors can access UECCCs instruments; although international players have
to be locally registered.
UECCC have mobilized 1.17 million in grant financing from KfW to provide early stage advisory services to
about 10 project developers
55
. These services include: full pre-feasibility study, technical evaluation of
milestone project studies, business plan preparation, financial/economic model structuring, risk assessment,
market assessment, marketing of projects to local participation financial institutions (Barclays, Stanbic and
Standard Chartered banks) and potential investors and valuing of projects for sale.
The beneficiaries targeted for these services are private small scale renewable energy project developers.
Project developers applying for these services must be owners of the project (i.e. should hold an ERA issued
permit), must have performed a sufficient level of technical work on the project, must have experience in
developing capital investment projects and sufficient technical/business knowledge in project management
in the energy sector.
8.6 Regional Technical Assistance Program
In April 2011, the French Development Agency (AFD) made available long term concessional financing, in
form of an 30 million Environmental Credit Line to assist the banking sector to finance renewable energy
and energy efficiency projects in Kenya, Uganda and Tanzania. The credit line is being made available to
commercial banks in each participating country.
The Regional Technical Assistance Program
56
operated by the Kenya Association of Manufacturer provides
technical support to project sponsors (pre-feasibility, feasibility study or technical support) and makes
recommendations to the partner banks in order to mitigate the technical risk. RTAP activities are intended to
complement the AFD credit lines to finance eligible RE and EE projects via local partner banks.
8.7 Promotion of the Sustainable Supply of Biomass Energy
The Sawlog Production Grant Scheme (SPGS) is a European Union funded programme that aims to promote
private investment in timber production in Uganda. The SPGS started in 2003 and has subsidized over 10,000
hectares of commercial plantations throughout the country: this includes small community-based, tree
planting associations up to large-scale commercial operations. SPGS sparked an enormous interest in tree
planting in Uganda. From what was always seen as the States business, commercial tree planting is
increasingly being taken seriously by both large and small scale growers from the private sector.
The SPGS provides two of the key factors needed for plantation establishment, namely, financial and
technical support. The financial assistance comes in the form of a direct subsidy (or grant) paid in the first
two years after planting. The total grant is US$ 330 per ha but it is only paid where planters meet the
standards as laid out in the contracts that have to be first agreed. The main standards are: sound species
55
A maximum support of 150,000 per project
56
http://www.kam.co.ke/index.php/kam-services/energy-services/regional-techical-assistance-programme
51
choice, using only improved seed, having at least 80% survival after planting and ensuring weeding and
protection operations are carried out.
In establishing the commercial energy plantations, a similar model as outlined below is proposed by the
MEMD:
Prospective planter applies for support by providing a business plan and proof of land ownership.
Successful applicant signs a contract with GoU, stating size of area to be planted in a set time period and
the expected plantation management standards.
Planter establishes plantation using own funds, then reports progress to MEMD, which then does a site
visit to check for compliance with standards, and advises accordingly.
If the required standards have been met, payment is effected
52
9 Planning your investment
9.1 Must-knows and must-haves
Must know Must have Where to go
To do business in Uganda one needs to register a company in
Uganda
Company name
Incorporation forms
Memorandum and Articles of Association
Tax identification number
Trading license
Company seal
Uganda Investment Authority
(1-stop shop to obtain most licensing
services)
Contact details:
The Investment Centre,
TWED Plaza,
Plot 22 Lumumba Avenue
P. O. Box 7418,
Kampala, Uganda
Tel: +256 414 301 000
An investment license is mandatory for foreign investors.
Local investors may proceed without licensing
Business plan showing a minimum of 78,200 in
planned investment (fixed assets) for foreign investors
and 39,100 for local investors
Traders do not require a license but must demonstrate
operating capital of US$100,000 to obtain trading
licenses and entry permits
Foreign investors are not allowed to own land in Uganda, but are
allowed to lease. UIA, through its land data bank and/or district
focal point officers can help in identifying suitable land and linking
the investor with the owner of the land.
Size and general location of land requirements for the
project
Preliminary renewable energy resource data is available at the
Ministry of Energy and Minerals Development.
Investment opportunities i.e. small hydropower sites for which no
exclusive permits are in force, and which are available are listed on
the ERA website (http://www.era.or.ug/AvailableProject.php)
Ministry of Energy & Mineral Development,
Contact Details:
3
rd
floor Amber House, Kampala Road
P. O. Box 7270,
Kampala, Uganda
Tel: +256 414 257 863
A study permit is required to do necessary feasibility studies on an
identified site. The permit gives the developer exclusivity to
develop the site.
The project developer is required to submit a notice of intended
application. The notice shall be published in the Gazette and a
Information on the financial and legal status and the
technical and industrial competence and experience ;
Project description and time plan for execution
Review of the use of land for the project and the
relation of the project to local authorities;
Review of public and private measures necessary to
Electricity Regulatory Authority
Contact details:
Plot 5 Shimoni Road, Nakasero
P. O. Box 10332,
Kampala, Uganda
Tel: +256 414341852
53
Must know Must have Where to go
national newspaper and directly affected parties or public agencies
invited to make comments
carry out the project;
Information relating to permissions required from
public authorities;
A description of the impact of the project on electricity
supply, socioeconomics, cultural heritage, the
environment, natural resources and wildlife.
A license is required for the establishment of a project Legal and financial status;
Technical and economic description of the project;
Description of how the project fits in with the existing
and planned power supply system;
Planned time of commencement and completion of
the construction of the project;
View of the projects adaption to the landscape,
including necessary maps and drawings;
Impact of the project on public interests and possible
mitigation;
Results of assessments, including environmental
impact assessments,
Impacts of the project on private interests, including
the interests of affected landowners and holders of
other rights.
Power purchase agreements are done with the bulk buyer, UETCL,
and approved by the regulator, ERA. Power purchase agreement
template available at
http://www.era.or.ug/Pdf/Pro%20forma%20PPA.pdf.
For projects between 0.5 20MW, tariffs are based on the
approved Uganda Renewable Energy Feed-in Tariff. These are
currently under review.
No guarantees are provided for projects in the range of 0.5-20MW.
Projects above 20MW are negotiated under a separate framework.
UETCL is not obligated to evacuate power from
generation plants with capacities below 20MW;
however REA has resources to develop transmission
lines to evacuate power from these plants. Before a
PPA can be concluded the commitment from REA to
develop the transmission network needs to be
presented.
For tariffs above the bulk supply tariff, subsidies are
required and an implementation/support agreement is
therefore between the government and the project
developer is required.
Uganda Electricity Transmission Company
Ltd.
Contact details:
Plot 10, Hannington Road,
P. O. Box 7625,
Kampala, Uganda
+256 414 233 433
Rural Electrification Authority
Contact details:
Plot 1 Pilkington Road
10
th
floor, Workers House
P. O. Box 7317
54
Must know Must have Where to go
Kampala, Uganda
Tel: +256 312 264095
55
10 References
Bank of Uganda, Uganda Bureau of Statistics and Uganda Investment Authority, 2010, Private Sector
Investment Survey,
http://www.bou.or.ug/export/sites/default/bou/bou-
downloads/publications/PrivateSectorCapital/PSIS/2010/All/Private_Sector_Investment_Survey_Report_2010.pdf
Eastern Africa Power Pool and East African Community, 2011, Regional Power System Master Plan and Grid
Code Study, http://www.eac.int/energy/index.php
Electricity Regulatory Authority, 2011, Uganda Renewable Energy Feed-in Tariff (REFIT) Phase 2 Approved
Guidelines for 2011-2012, http://www.era.or.ug/Pdf/Approved_Uganda%20REFIT%20Guidelines%20V4%20(2).pdf
GIZ, 2009, Target Market Analysis: Ugandas Solar Energy Market, http://www.gtz.de/de/dokumente/gtz2010-
en-targetmarketanalysis-solar-uganda.pdf
Inter-Agency Working Group and the Office of the Prime Minister, 2012, Uganda Humanitarian Profile,
http://reliefweb.int/sites/reliefweb.int/files/resources/uganda_humanitarian_profile__2012.pdf
Kampala City Council, 2011, Design of Landfill Gas Recovery and Utilization Project
Ministry of Energy and Mineral Development, 2002, Uganda Alternative Energy Resource Assessment and
Utilization Study
Ministry of Energy and Mineral Development, 2011, Uganda Power Sector Investment Plan
Ministry of Energy and Mineral Development, 2009, Energy for Rural Transformation ERT II Project
Operational Manual
Ministry of Energy and Mineral Development and GIZ, 2004, A Study on Charcoal Supply in Kampala,
http://www.ecosilva.de/HOMEPAGE/CharcoalInflowSurvey.pdf
NRECA International, Ltd., 2011, Uganda Accelerated Rural Electrification Project Report
Paul A. Jacovelli, 2010, A Ugandan Model for Engaging the Private Sector in Commercial Tree Growing,
http://www.sawlog.ug/downloads/Papers/Jacovelli-CFC-2010-paper-final-full.pdf
Paul A. Jacovelli , 2009, Sawlog Production Grant Scheme Tree Planting Guidelines for Uganda,
http://www.sawlog.ug/index.php?option=com_content&view=article&id=150:spgs-hosts&catid=1:latest-news
Rural Electrification Agency, 2009, Indicative Rural Electrification Master Plan
Uganda Bureau of Statistics, 2011, Statistical Abstract,
http://www.ubos.org/index.php?st=pagerelations2&id=31&p=related%20pages%202:Abstracts
Uganda Bureau of Statistics, 2002, Uganda Population and Housing Census,
http://www.ubos.org/onlinefiles/uploads/ubos/pdf%20documents/2002%20CensusPopnSizeGrowthAnalyticalReport.p
df
Uganda Bureau of Statistics, 2010, Census of Business Establishments Report,
http://www.ubos.org/onlinefiles/uploads/ubos/pdf%20documents/2010%20COBE%20Report.pdf
56
US Embassy Uganda, 2011, Investment Climate Statement,
http://kampala.usembassy.gov/media/pdfs/uganda_2011_investment_climate_statement.pdf
57
Ministry of Energy and Mineral Development
Amber house Plot No. 29/33, Kampala Road
P. O. Box 7270 Kampala - Uganda
Tel: +256 414 230243
+256 414 235895
+256 414 230926
Fax: +256 414 230220
+256 414 230234/ 732
Email: psmemd@energy.go.ug
http://www.energyandminerals.go.ug
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