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MINISTRY OF ENERGY AND MINERAL DEVELOPMENT CELEBRATING THE ANNUAL MANIFESTO WEEK, FROM 12th TO 19th MAY, 2017

MINISTRY OF ENERGY AND MINERAL DEVELOPMENT

CELEBRATING THE ANNUAL MANIFESTO WEEK, FROM 12th TO 19th MAY, 2017

1). INTRODUCTION, VISION AND MISSION
Introduction
The Energy and Mineral Development Sector is making significant progress towards the achievement of the National Development Objectives as spelt out in the National Development Plan and in the NRM manifesto, 2016 - 2021. In the Power Subsector, a number of electricity generation projects spearheaded by both the public and the private sector are under implementation. Government is expanding the Power Transmission and Distribution Infrastructure through the construction of the transmission lines and the substation projects. The potential of generating power from solar, wind and geothermal energy resources is being promoted. In the oil and gas subsector, the process of commercialization of oil and gas resources is being undertaken. Government has now granted a total of nine (9) Petroleum Production Licenses over 13 Oil Fields and three (3) exploration licenses are due to be issued in June 2017. The mineral investment promotion program has attained steady progress with an increase in various ore reserves. The development of Sukulu polymetallic phosphate deposit is nearing completion.
Mandate:
The Mandate of the Ministry of Energy and Mineral Development is to “Establish, Promote the Development, Strategically Manage and Safeguard the Rational, Sustainable Exploitation, Utilization of Energy and Mineral Resources for Social, and Economic Development”.
Vision:
“A model of excellence in the sustainable management and utilization of energy and mineral resources”
Mission
“To ensure reliable, adequate and sustainable exploitation, management and utilization of energy and mineral resources in Uganda”
2). SECTOR KEY MANIFESTO DELIVERABLES:
i)    Medium Term Objectives and Goals
In order to contribute effectively to the national objectives as enshrined in the National Development Plan II and in the NRM manifesto, 2016 - 2021, the Ministry’s policy goals are to;  
a)    Meet the energy needs of Uganda’s population for social and economic development in an environmentally sustainable manner.
b)    Use the county’s oil and gas resources to contribute to early achievement of poverty eradication and create lasting value to society.
c)    Develop the mineral sector for it to contribute significantly to sustainable national economic and social growth.
ii)    Medium Term Priorities
Over the medium term, the Ministry has aligned its priorities to the NDP II and in the NRM manifesto, 2016 - 2021 as follows: -
a)    Increase affordable Power Generation and expand Power Transmission and Distribution Infrastructure.
b)    Increase access to affordable modern energy services through rural electrification and renewable energy development.
c)    Promote and monitor petroleum exploration and development in order to increase the reserve base and achieve local production.
d)    Develop petroleum refining, pipeline transportation, bulk storage and transportation infrastructure. Oil production will be attained by the end of 2020.
e)    To streamline petroleum supply and distribution.
f)    Promote and regulate mineral exploration, development, production and value addition.
3). PRIORITY TARGETS FOR THE SECTOR FROM 12TH MAY 2016 TO 11TH MAY 2017
In line with the H.E. the President’s Strategic Guidelines and Directives for the Term 2016 – 2021, the sector has prioritized the implementation of the following:
i)    Lower the costs of electricity produced by Bujagali HPP from US$ 11cents to US$6 cents;
ii)    Expedite the granting of Oil Production licenses so that actual production starts in 2020;
iii)    Rectify the three weakness in the Mineral sub-sector during the FY2016/17 and FY2017/18 through equipping the department with a modern laboratory to test, quantify mineral presence and determine its quality; the artisan miners will be registered and the minerals mined shall be declared for export through formal channels and ensure that there is no interference with scientific exploration.

 
4). KEY ACHIEVEMENTS IN THE LAST ONE YEAR (FROM 12TH MAY 2016 TO 11TH MAY 2017)
Status Update on the Implementation of H.E. the President’s Strategic Guidelines and Directives for the Term 2016 – 2021
No.    Issue / Directive     Guideline / Action    Status update     Comments
1    Government shall fast track the construction of 24 industrial parks to attract investors    MEMD to construct power lines and substations to facilitate the industrial parks    •    Construction of power transmission infrastructure in four (04) Industrial Parks is ongoing. These are: Namanve-South Industrial Park, 132kV transmission line (10km); Namanve-Luzira 132kV transmission line (31km); Mukono Industrial Park, 132kV transmission line (5km); and Iganga Industrial Park, 132 kV double circuit transmission line (12km).     •    Various power transmission infrastructure is being developed across the country targeting areas of production.
•    Completed preliminary designs for the substations
•    Geotechnical study for Namanve and Luzira Substations was completed
•    Geotechnical study for Mukono and Iganga substations is ongoing
•    RAP Implementation for Iganga segment is 74% complete
•    RAP Implementation for the Namanve-Luzira segment awaits NEMA’s guidance on how to handle titles in wetlands  
2    Lower the cost of electricity produced by Bujagali Station from US Ȼ11 to US Ȼ6

(Work to reduce the Bujagali tariffs from US$ 11cents to US$6 cents)    Put in place subsidy to reduce the cost of electricity to the manufacturer to US Ȼ 5    •    A Cabinet paper on the Re-financing of the Bujagali Hydro Electricity Project (Cabinet Memorandum CT (2017) was approved.
•    Government is now engaging the financiers of the Bujagali Hydropower Project discuss project re-financing and debt restructuring; re-negotiating the return on equity (ROE) in a bid to reduce the tariff.
•    The timeframe for the negotiations is planned to be completed within a period of three months.    Other efforts are:
•    Stimulate increase in power demand through the construction of several industrial parks which would result in enhanced system load factor and thus improve Bujagali’s plant factor which would bring down the cost per kWh.
•    Power loss reduction, and
•    Introduction of cheaper power from Karuma and Isimba in the energy mix.
3.    Expedite granting of oil production licenses so that the actual production starts.

(Fast track commercial oil production to get resources to finance identified priorities)        •    Government has now granted a total of nine (9) Petroleum Production Licenses over 13 Oil Fields.
•    Five (5) Petroleum Production Licenses covering nine (9) Oil Fields were granted to Tullow Uganda Operations Pty Limited (Tullow) and three Petroleum Production Licenses covering four (4) oil fields were granted to Total E&P Uganda B.V. (Total).
•    The review of the applications for Production Licenses submitted by Total for two fields is still ongoing, while the Lyec discovery made by the same company is still under appraisal stage.
•    The grant of the Petroleum Production Licenses paved way for the Oil Industry to put in place the necessary infrastructure prior to commencement of oil production.     •    The Joint Venture Partners (TULLOW, TOTAL and CNOOC) launched the Front-End Engineering Design (FEED) studies for the upstream petroleum development and production projects in Feb 2017 and will be completed by end of August 2017.
•    The FEED will inform the Final Investment Decision (FID) before the commencement of Engineering, Procurement and Construction (EPC) of these projects.
•    The FID is planned to be concluded by end of December 2017
•    Government together with the joint venture partners also finalized the Land Acquisition and Resettlement Framework (LARF) to guide fair and adequate compensation and resettlement of project affected persons.

4    Rectify the weaknesses in the Minerals Department

(Rectify the weaknesses in the Minerals Department to develop the mining sector to provide the raw materials for industries)    •    Equip the department with a modern laboratory.     •    A Special Mineral Laboratory Development Project has been designed.     •    The project was presented to the Development Committee in the Ministry of Finance Planning and Economic Development for financing in the FY2017/18
        •    Register and sensitize all artisan miners to stop the illegal mineral exports.
    •    Registration, sensitization and awareness creation among the artisanal and small scale miners is being undertaken.
•    Provided technical assistance to big exploration and mining companies.
•    Mineral Certification Inspection Manuals were developed and tested on tin, tungsten and tantalite mining sites in Isingiro, Kabale and Kisoro Districts.
•    A Statutory Instrument to aid the implementation of the Regional Certification Mechanism (RCM) is being drafted and is expected to be operational in Financial Year 2017/18.    •    Training for the following categories of stakeholders was conducted: staff in geosciences and related topics; District Officials, Natural Resources Officers in Mining Legislation and Mineral Resources Management; Artisanal and Small Scale Miners in best practices, Environment, Health and Safety issues, business skills, organizational structures and benefits; and

        1.    Ensure no interference with scientific exploration    a)    Mineral Policy and Mining Legislation: The review of the Mineral Policy and Mining Legislation was completed. A draft Green Paper on the Minerals and Mining policy; (ii) draft Cabinet Memo on the principles for the policy review and (iii) Cabinet Memo for the principles to be embodied in the Mining Act amendment, 2016. The policy provides for a conducive, stable, predictable legal and fiscal environment to attract foreign and local investment for exploration and mineral development.

2.    Mineral Promotions and investments: The Mining Cadastre has been updated and availability of geoscientific information to the public.     Both documents in the revised form shall be ready for presentation to Cabinet by June 2017.

 
OTHER ACHIEVEMENTS IN INCREASING ELECTRICITY GENERATION CAPACITY AND EXPANSION OF THE TRANSMISSION NETWORK

A). PROGRESS IN ELECTRICITY GENERATION CAPACITY
1.    The total installed power generation capacity has continued to improve over time and currently stands at 947MW. The power generation projects are: Nalubaale (180MW), Kiira (200MW) and Bujagali (250MW); Mpanga (18MW), Nyagak I (3.5MW), Kasese Cobalt (9.9MW), Kabalega (9MW), Ishasha (6.5MW), Mubuku I (5MW), and Bugoye (13MW). Cogeneration plants: Kakira Sugar Works (51MW), Sugar Corporation of Uganda Ltd. (9.5MW), Mayuge Sugar Industries Ltd. (1.6MW), Sugar and Allied Industries Ltd. (11.9MW) and Kinyara Sugar Works (14.5MW); Thermal plants: Tororo (89MW) and Namanve (50MW); Solar Plants: Soroti (10MW) and Kalangala (1.6MW).  Muvumbe Hydro Power Plant (6.5MW) was technically commissioned on 18th March 2017.

POWER PLANT    INSTALLED CAPACITY (MW)    LICENSED CAPACITY (MW)
Bujagali    255.00    250.00
Eskom    380.00    380.00
Namanve HFO    49.00    49.00
Tororo HFO    89.00    50.00
Mubuku I    5.00    5.00
Mubuku III    9.90    9.90
Bugoye    13.00    13.00
Ishasha    6.40    6.40
Mpanga    18.00    18.00
Kabalega    9.00    9.00
Kakira Sugar    51.10    51.10
Kinyara Sugar    14.50    14.50
Kaliro Sugar    11.90    6.90
Soroti Solar    10.13    10.13
Lugazi Sugar    9.50    9.50
Mayuge Sugar    9.20    9.20
Nyagak I    3.50    3.50
Bukuzindu Hybrid    1.60    1.60
Bwindi    0.06    0.06
Kisiizi Hospital    0.30    0.30
Kuluva Hospital    0.12    0.12
Total    946.21    897.21

2.    Development of Karuma Hydropower Project (600MW): Construction works are progressing well. Underground excavation and support works have been completed. Concreting of the dam is at 44%. Overall, 52% of the works have been completed and project completion is still targeted during the FY 2018/19.
3.     Isimba Hydropower Project (183 MW): The overall construction works stands at 66% and the project is expected to be commissioned by August 2018. The overall implementation of the Resettlement Action Plan for this project is at 93% completion.
4.    Ayago HPP (840MW): Government signed a Memorandum of Understanding (MoU) with M/s China Gezhouba Group of Companies (CGGC) for the construction of the Ayago Hydropower plant and the Transmission Line under an Engineering Procurement and Construction (EPC) arrangement. The feasibility study and the Environmental and Social Impact Assessment (ESIA) studies for this project were accomplished. Financial closure will be done in line with Government Medium Term Expenditure Framework.
5.    Oriang Hydropower Project (392MW): The aerial and topographical surveys have been completed. Geo-technical surveys and the Environment and Social Impact Assessment (ESIA) are ongoing.
6.    Nuclear Power Development: Pre-feasibility studies for nuclear power development are on-going with support from International Atomic Energy Agency. A Final Preliminary Site Survey Report was prepared by the Siting and Technology Deployment Working Group (STDWG). Preparation for detailed site survey in Buyende, Kamuli, Kayunga and Nakasongola Districts were made.

B). PROGRESS ON THE DEVELOPMENT OF MEDIUM SIZE HYDROPOWER PROJECTS AND MINIHYDROS

7.    Achwa Hydropower Project (83MW): The project developer executed a Power Purchase Agreement (PPA) with Uganda Electricity Transmission Company Limited (UETCL) and negotiations of the Implementation Agreement were completed. The feasibility for the associated transmission line was completed. Construction works for the power plant have commenced.
8.     Muzizi Hydro Power Project (44.7MW): Implementation of the Resettlement Action Plan (RAP) is on-going. An implementing Engineer, ILF, has been procured. Alternative design studies on buried pipe or tunneling was completed; Water way option of tunnel has been selected; Preparation for Phase two geotechnical investigations on the selected waterway alternative is on going.
9.     Nyagak III Hydropower Project (5.4MW): A Generation License by the Electricity Regulatory Authority was approved and granted to the developers of the project. The RAP implementation process for the 310 Project Affected Persons is on-going. The Owner’s Engineer /supervising consultant, GOPA, has been procured. A Consortium Hydromax, Dott Services has been selected as Private partner and a Special Purpose Vehicle (SPV) Genmax Nyagak Ltd was created. Construction of access road is on-going and preparation of the detailed design is on-going. Debt financing is being secured.
10.    GETFIT Portfolio (156.5MW): The Global Energy Transfer Feed-in Tariff (GETFiT) Programme is supporting 17 renewable power generation projects developed by the private sector to generate about 156.5 MW. Progress achieved to date: A bagasse based power plant at Kakira (20MW) and a 10MW Solar Plant in Soroti were commissioned in 2015 and 2016 respectively. A total of 69.2MW is expected by end of 2018 from 9 hydro power projects namely; Siti I (6.1MW), Nkusi (9.6MW), Rwimi (5.5MW), Lubilia (5.4MW), Waki (4.8MW), Nyamwamba (9.2MW), Siti II (16MW), Sindila (5MW) and Kyambura (7.6MW). Plants expected to start construction in 2017 are; Kikagati (16MW), Nyamugasani I (15MW), Nyamugasani II (5MW), Ndugutu (4.8MW) and 1 solar plant; Tororo Solar (10MW). Construction of the Solar plant in Tororo is ongoing, started in December 2016 and is planned for commissioning in July 2017. It is being constructed by Tororo Solar North Ltd.
11.    On the reduction of the power tariffs, in the short term Government is engaging the financiers of the Bujagali Hydropower Project to refinance it so that the tariff comes down. In the medium term the tariff will reduce as power losses reduce and cheaper power from Karuma and Isimba is introduced in the energy mix.
12.     Power Loss reduction strategy implemented by Umeme has resulted in the reduction of power losses on the distribution network from 19.5 to 18.5%. Umeme has also converted 65.5% of their post-paid customers to the prepaid system compared to 52.2% by end of 2015.

C). PROGRESS IN INCREASING POWER TRANSMISSION AND DISTRIBUTION INFRASTRUCTURE
13.    Transmission Lines under implementation: Government has continued to expand the power transmission network to ensure attainment of national electrification coverage as envisioned in the National Development Plan. During the FY 2016/17, Government completed development of the following electricity transmission projects: Six substations (Bujagali, Kawanda, Fort Portal, New Mbarara Substation 220kV, Opuyo and Lira Upgrade to 132kV); and Mbarara - Nkenda T-line, 167km. Queensway substation is almost complete and due for commissioning soon.
14.    A total of 948km of transmission lines and four substations, namely Mirama, Masaka, Tororo, and Hoima will be completed during the FY 2017/18. The timelines for the key projects are as follows: -
Project    Commissioning date
Bujagali-Tororo-Lessos 220kV, 127km line    Commissioning Projected for August 2017
Mbarara-Mirama, 220kV, 66 km line    Commissioning Projected during the FY 2017/18
Tororo – Opuyo – Lira 132kV    Commissioning Projected for August 2017
Mbarara – Nkenda 132kV, 160km line    Commissioning Projected for August 2017
Kawanda – Masaka 220kV, 137km line    Commissioning Projected for September 2017
Nkenda-Fort Portal –Hoima 220kV 227km    Commissioning Projected for August 2017
Karuma-Kawanda 400kV 254km, Karuma-Lira 132kV 75km, and Karuma-olwiyo 400kV 60km    Construction ongoing; projected for completion in April 2018
Isimba Interconnection 132kV, 40km    Construction has commenced
Industrial Parks and associated substations (Namanve South-Namanve 132kV transmission line 10km; Namanve-Luzira 132kV transmission line 31km; Nalubaale-Namanve 132kV transmission line: Mukono Tee off (5km); Nalubaale-Tororo 132kV line: Tembo Steels Ltd tee off (12km);    Estimated time of commissioning April 2019  

15.    Rural Electrification: Overall electrification rate stands at 20.5% and grid coverage is at 15.7%. The target is to achieve a rural electrification access rate of 22% of the estimated population by 2022.
16.    During the FY2016/17 so far 391.63 Kms of Low Voltage lines and 474.33 kms of Medium Voltage lines have been constructed. The target is to achieve 450 kms of Low Voltage lines and 550kms of Medium Voltage lines by end of June 2017.
17.    A total of 113 districts out of the total 117, representing 96.6% are now electrified and efforts to electrify the remaining 4 (four) (Kotido, Kaabong, Buvuma and Buyende) are ongoing. The construction contracts to extend electricity to Buyende district HQ’s, Kaabong and Kotido district HQ’s respectively have been signed and the works are in progress. The feasibility study for Buvuma is scheduled to commence in this FY, with the signing of the agreements planned for June 2017. Government has also continued to support and promote Private Sector led access in the hard to reach areas and sub counties that are not economically feasible to extend the grid.
18.    As regards sub-counties, out of 1,368 sub-counties, 734 are connected to the national grid representing coverage of 54%. The projects that are under implementation when complete will connect an additional 285 sub-counties. This will bring coverage to about 74%. The target is to have all sub-counties connected by 2021.
19.    Government has developed a connection Policy that is aimed at easing connections to all (households, commercial enterprises and industrialist) so as to speed up access. The framework for cost recovery has been put in place.
20.    About 6,000 Off-grid connections at household/institutional solar systems across districts were installed in households, commercial establishments and private institutions such as churches and schools. Government has continued to implement the free electricity connections for households through the Grid Based Output Based Aid Project for electricity consumer connections.
21.    Energy efficiency management measures have been instituted through audits of major energy consumers, labeling and enforcing standards, installation of the lighting test bench and preparation of the Energy Efficiency Conservation Bill 2017.

D). PETROLEUM SECTOR
Uganda petroleum sub-sector has progressed to the development phase of the petroleum value chain. Efforts in building national expertise in the field of petroleum exploration, development and production; attraction and retention of oil companies into the subsector; and emplacement of an appropriate policy, legal, regulatory and institutional framework are ongoing.
22.    The Petroleum Authority of Uganda (PAU) and the Uganda National Oil Company (UNOC) are now operational to undertake their regulatory and commercial roles respectively. Recruitment of more staff in the two institutions is ongoing. This is in addition to the ongoing recruitment by the Directorate of Petroleum in the Ministry of Energy and Mineral Development which is responsible for policy and licensing matters.
23.    In addition to the Petroleum Laws, seven (07) sets of regulations; on general aspects, metering, national content together with health, safety and environment for the upstream and midstream laws have been put in place to guide and ensure regulatory compliance in the industry.
Upstream Petroleum
24.    Government granted eight (8) additional Petroleum Production Licenses over 13 oil fields to the licensed oil companies during August 2016. This brings the total licenses issued to nine (9). In addition, three (3) exploration licenses are due to be issue in June 2017.
Midstream
25.    Refinery Development: Negotiations with the selected Refinery Development Lead Investor, RT Global Resources were terminated during June 2016 due to additional unfavourable conditions set by the investor. Government started another process of identifying a lead investor and received interest from over forty companies. Four (4) companies have been shortlisted, and due diligence on these Companies was concluded.  Two companies have been selected for negotiations of the Project Framework Agreement and Implementation Agreement in line with the Midstream Act 2013. The target is to complete the process this year 2017. Government will participate in the project through the Uganda Refinery Holding Company (URHC), a subsidiary of the Uganda National Oil Company (UNOC). It is through the URHC that the confirmed interests of the East African Partner States will be held.
26.    Development of Crude Oil Pipelines: At the 13th Northern Corridor Integration Project (NCIP) Summit which was held on 23rd April, 2016 in Kampala, a decision was taken to develop a crude oil export pipeline from Kabaale, in Hoima District to Tanga Port in Tanzania. The 1445km long, 24-inch diameter, heated pipeline is being developed to provide access for Uganda’s crude oil to the international market. The Front-End Engineering Design (FEED) study for the development of the Hoima - Tanga East Africa Crude Oil Pipeline (EACOP) was launched in January 2017, with a target of FID in December 2017.
27.     The Hoima-Kampala refined petroleum products pipeline is being developed as an essential infrastructure for the refinery project with a planned storage terminal near Buloba, North West of Kampala to serve both as a Central Bulk Storage Facility and a Distribution Terminal. The detailed routing of the corridor, together with the Environmental Baseline Survey studies was completed in September 2016. The land acquisition process for the infrastructure corridor has commenced with development of a Resettlement Action Plan (RAP) study through a consultative process.
28.    Airport development at Kabaale: The Master Plan and Engineering design for Uganda’s second international Airport to be located in Kabaale, Hoima was concluded. Government entered into a Memorandum of Understanding with M/S COLAS and SBI joint venture to evaluate the project. Discussions on financing the project are on-going.
Downstream
29.    Storage and Transportation of Petroleum Products: Under the Public Private Partnership arrangement, the 30 million litre Jinja Storage facility is operational and payment to Government of the concession fees as Non-tax Revenue commenced. Development of the Nakasongola storage reserves awaits final discussions with the Ministry of Defence and Veteran Affairs.
National Content for the Petroleum Sector
30.    Government has put in place policy, legal, regulatory and institutional frameworks to ensure National Content development in the oil and gas sector. This includes development of upstream and midstream national content regulations and a draft national content policy for the petroleum sector.  Government is also developing a National Suppliers’ Database and a National Talent Register for the petroleum sector to ensure that first priority for employment and supply of goods and services is given to Ugandans where capacity is available in the country.  Where capacity is lacking, Government is working with the licensees, development partners and the private sector to build the necessary capacity of Ugandan citizens and companies to benefit from the available opportunities. This is being undertaken in line with the workforce skills development strategy and plan and the industrial baseline study.

E). THE MINERAL SECTOR
31.    Mineral Policy and Mining Legislation:  A review of the Mineral Policy is ongoing and a draft Green Paper on Mineral and Mining Policy was prepared and preparation of Principles to be embodied in the Mining (Amendment) Act, 2003 was done. Both documents in the revised form are ready to be presented to Cabinet by June 2017.
32.    Geothermal Policy and Legislation: The first draft of the Geothermal Policy and Legislation has been prepared. The Geothermal policy will help to give a clearer direction in Uganda as to how geothermal energy projects can be developed, by whom, the time frame, and the sources of finance and support mechanisms. In the new policy, where a geothermal resource coexists with a mineral right, a geothermal license can be granted independently. The target is to complete this policy during the FY2017/18.
33.    Mineral Certification: Mineral Certification Inspection Manuals were developed and tested on tin, tungsten and tantalite mining sites in Isingiro, Kabale and Kisoro Districts. A draft Statutory Instrument to aid the implementation of the Regional Certification Mechanism (RCM) is being drafted and is expected to be operational in Financial Year 2016/17.
Mineral Exploration and Investment Promotion
34.    Geological Surveys: Government continued carrying out Uranium exploration in Ndale, Kabarole District and Kit 4, Kitgum District. The results indicated extensive Uranium anomalies over a wide area. Further, ground geo-scientific investigations carried out over metavolcanics in Kitgum District also confirmed that these metavolcanics host sulphide bearing minerals associated with Copper, Nickel, Zinc, Lead and Gold. In the same period, Iron ore exploration established new Iron ore targets in Rutenga, Rukiga, Kabale District whose resource is estimated at 30 million tonnes and geosite exploration identified Kitosa site as a potential area for consideration for geosite appraisal.
35.    Geothermal Energy Resources Development: Government carried out detailed geophysical, geological and geochemical exploration at Kibiro in Hoima District, Buranga in Bundibugyo and Katwe-Kikorongo in Kasese District. Surface temperatures indicate high potential for geothermal drilling and development.
36.    Mineral Promotions and investments: The Mining Cadastre has been updated and availability of geoscientific information to the public attracted a total of UGX 11.5b in revenues from licensing of mineral activities. For the year ended December 31, 2016 the value of Mineral Production was UGX149.6 billion and that of Mineral exports was UGX 17.7 billion.

Mines Development
37.     Kilembe Mines Limited: M/S Tibet Hima Mining Company Limited (THMCOL) the Concessionaire has so far not performed as agreed and government is reviewing the Contract, with a consideration of terminating the concession.
38.    Sukulu Phosphate and Steel Project: The licensee (M/S Guangzhou Dong Song Energy Group Co. Ltd) established mineral reserves totalling to 216.93 million tonnes where: Phosphates alone in form of apatite is estimated at 62.45 million tonnes at an average grade of 11.31% P2O5; Iron ore is 61.77 million tonnes at 30.12%, Niobium pentoxide (Nb2O5) estimated at 429,800 tonnes; and Rare Earth Elements estimated at 890,600 tonnes. The production is expected before 2020. Construction of Main Office Block; the Dining Hall; and the first Dormitory Block out of the planned eight (8) facilities for the staff who are going to set up the plants, is ongoing.
Mineral Value Addition
39.    In line with the Policy objective of Value Addition on minerals, investors have been attracted in value addition on gold, tin and dimension stones respectively.
40.    Gold: A private company (African Gold Refinery) has set up a gold refinery in Entebbe near the Entebbe International Airport. Gold can now be refined and packaged in to pure gold bars of purity 99.99% in Uganda.
41.    Tin: A private company (African Panthers Ltd) is setting up a plant in Kikagati, Isingiro District.
42.    Dimension Stones:  A private company (Dao Marble Ltd) established Marble Tiles factory in Bugolobi, Kampala. The company is producing high quality marble tiles from dimension stones.

5. THE CHALLENGES IN ENERGY AND MINERAL SECTORS
43.    Land Acquisition for government projects. This has significantly increased project costs and in some cases led to delays in project implementation. In this regard, government has commenced the process of revising the Laws on land acquisition. In a meantime, Government guided as follows:
−    Create utility corridors to cater for several infrastructure projects to eradicate multiple compensations;
−    Gazette identified corridors for infrastructure projects as soon as Resettlement Action Plan studies are completed; and
−    Pay the Project Affected Persons at rates recommended by the Chief Government Valuer. In case of disputes, the money should be deposited in courts of law and allow projects to progress.
44.    Inadequate counterpart funding for compensation which delays disbursements by other funding partners. Government will put in place a mechanism that will ensure adequate counterpart funds for the projects are promptly availed. There is therefore need to provide for the Energy Fund in the Public Finance and Accountability Act 2015 and capitalize it.
45.    Low access of Rural Electrification. Expanding electricity coverage to realize the required transformation in rural areas of Uganda in reasonable time poses unique challenges. First, rural areas are characterized by low population densities due to dispersed settlements. Second, a significant number of households are poor and find it difficult to connect and pay for electricity services. Therefore, despite the heavy investment in the construction of the rural electrification infrastructure which is capital intensive, the connection rates have remained very low. Government is putting in place a Connection Policy to address this challenge.
46.    High power tariffs. The power tariff is relatively high mainly due to the Bujagali tariff that is relatively higher than the Kira and Nalubale power plants. Government is now engaging Bujagali Financeiers with the aim of debt restructuring and refinancing the project. Other measures be pursued are; Increase in power demand through the construction of several industrial parks.
47.    Illegal mining by the Artisanal Miners. There is an increase of illegal mining being carried out by artisans in areas of Mubende, Namayingo, Bugiri and the Karamoja region. This shall be addressed in the revised legislation where some areas will be gazetted for these Artisanal and Small-scale miners.
48.    The oil price is currently very low. At less than $50 a barrel, development of some of the discoveries and the required commercialization infrastructure may be affected. The oil and gas infrastructure projects are high capital expenditure in nature. Attracting private funds is becoming difficult and we therefore need to consider more involvement by the Government in funding strategic projects like the refinery.
49.    Management of expectations created by the discovery of petroleum: The people of Uganda in general, and in the areas where the discoveries have been made in particular, expect quick revenues, jobs and business opportunities, among other things. There are also anxieties about the possible negative impacts of developing the oil resources like environment degradation and how the revenues will be managed. These anxieties have been exacerbated by some Non-Governmental Organizations who have consistently and persistently misinformed the communities. To mitigate this challenge, Government has intensified the sharing of information on the realistic development program of the sector. In addition, through the communication strategy of the Ministry, we have regular interactions with stakeholders to try and manage these expectations.

6). CONCLUSION AND BRIEF FORECAST ON SECTOR PRIORITIES (12/5/2017-12/05/2018)
50.    Despite the challenges in the Sector, there is good progress in project implementation.
−    Electricity extended to nearly all district headquarters and the remaining four districts (Kaabong, Kotido, Buyende and Buvuma) to be connected by 2017/18.
−    Funds for Karuma and Isimba Hydropower Projects secured and Civil Works Construction and Electromechanical Equipment are on schedule.
−    Nine (9) Oil Production Licenses have been awarded.
−    Preparation for petroleum production in Uganda is ongoing. Support by both Norwegian and German Governments is supplementing this effort.
−    Oil and Gas Institutions (Directorate of Petroleum, Petroleum Authority of Uganda and Uganda National Oil Company Ltd.) have been put in place to manage the country’s nascent petroleum industry.
−    Mineral policy and legislation is being reviewed.

Ministry of Energy and Mineral Development
Amber House
KAMPALA
www.energyandminerals.go.ug