Uganda has one of the best climates in Africa that is moderate with cool temperatures, and receives rainfall throughout the year. The country has rich and green vegetation with tropical rain forests and water bodies covering most parts of the country. The River Nile, one of the longest rivers in the world, starts its long journey to Mediterranean Sea from Uganda. Uganda is home to the Lake Victoria, the largest lake in Africa and also the second largest fresh water lake in the world.
Uganda lies astride the equator and enjoys a unique location at the heart of sub-Saharan Africa within the East African region. The country has been able to achieve macro-economic stability when clouds of uncertainty rocked many regions of the world. Uganda is one of the fastest growing economies in Africa with GDP growth rate averaging 7.7% per annum since the year 2000, making the country the fastest growing economy in East Africa.
In order to provide information to investors to Uganda, this energy sector profile has been prepared as a guide on the potential investment opportunities in the country. The profile gives highlights on investing in a number of areas including: design, construction, sales and service support of biomass plants; assembly and marketing of solar units in Uganda; manufacture and marketing of charcoal briquettes; and acquisition, installation and services of micro hydro dams in Uganda.
Uganda’s overall national development objectives are accelerated economic growth, through increased productivity and enhanced agricultural and industrial production, thereby increasing employment opportunities, an equitable distribution of income, and reduction of poverty. The realization of these objectives requires, amongst others, that quality energy services are available in a sustainable, cost-effective and affordable manner to the people.
Energy policies integrate economic, social and environmental objectives in such a way that improves the well being of the current generation whilst safeguarding the welfare of future generations.
1.2 Current activities, capabilities and players
The current activities are geared towards domestic or small scale biogas application for cooking purpose; there are no players who use organic waste for electricity generation.
Biomass as a source of generating electricity at small scale has not been explored in the African region except in South Africa [Dasappa, 2007]. A centralized plant that generates biogas from organic wastes (of grass, weeds, aquatic plants, crop waste and farm yard manure) will help manage the ever increasing organic waste in the country.
Generation of power from garbage does not exist in Uganda, yet there is an increasing population which has led to increasing amounts of garbage generated. In Kampala City alone, it is estimated that the per capita generation of garbage is one kilogram per day. With a population of about 1.5 million, this works out to about 1,500 tons generated every day, [www.kcc.go.ug]. The City Council disposes 40 percent of the 1,500 tons of garbage to landfills.
Feasibility studies have been carried out in many areas along the various rivers in Uganda to estimate the capacity of the sites under review. The studies depict potential Micro Hydro power Sites. However not so much has been done to exploit the Hydro potential which is abundant in Uganda. Available sites for Hydro power exploitation are estimated to be in hundreds, especially in the mountainous areas of the great lakes region.
1.3 Markets – in-country, regionally and beyond
Uganda’s population is estimated at 30 million people and is growing at a rate of 3.5 percent per annum. Most of this population is educated and economically active. This is a sizable market to depend on. The Ugandan economy has been one of the fastest growing economies in Africa, with an average growing rate of 6.4 percent for the last eight years. This represents an increase in the potential market for energy of two percent per month. Though this population has been dependant on rudimental methods of biomass for their energy needs, the economically active and progressive lot is desirous of adopting advanced forms of biomass that are energy efficient, highly combustible and smoke free. An investment in biomass aimed at serving this section of the public would be a welcome development.
Uganda’s population is estimated at 30 million people and is growing at a rate of 3.5 percent per annum. Most of this population is educated and economically active. This is a sizable market to depend on. The Ugandan economy has been one of the fastest growing economies in Africa, with an average growing rate of 6.4 percent for the last eight years. This represents an increase in the potential market for energy of two percent per month. Though this population has been dependant on rudimental methods of biomass for their energy needs, the economically active and progressive lot is desirous of adopting advanced forms of biomass that are energy efficient, highly combustible and smoke free. An investment in biomass aimed at serving this section of the public would be a welcome development.
Investment opportunities exist for developing renewable energy sources to provide electricity. The potential for private sector participation in the provision of these services is quite significant in both rural and urban electrification. This is especially relevant in Uganda where the level of electrification is very low with only five percent of the populations connected to the national grid.
There is a large potential market for micro hydropower and solar energy in Uganda and the region. Most households could be beneficiaries of Micro hydro power and solar energy. At medium-scale level, hydro power could be utilized in hotels and electrification of fast growing real estates housing projects. At medium-scale level, solar energy utilization includes heating in hotels and electrification of fast growing real estates housing projects and for community solar water pumping. Micro hydropower and solar energy could also be used in small industries to run agro processing machinery and in the telecommunication industry for powering remote Base Stations (BS) which are off the main grid.
There is a large potential market for micro hydropower and solar energy in Uganda and the region. Most households could be beneficiaries of Micro hydro power and solar energy. At medium-scale level, hydro power could be utilized in hotels and electrification of fast growing real estates housing projects. At medium-scale level, solar energy utilization includes heating in hotels and electrification of fast growing real estates housing projects and for community solar water pumping. Micro hydropower and solar energy could also be used in small industries to run agro processing machinery and in the telecommunication industry for powering remote Base Stations (BS) which are off the main grid.
Opportunities also abound in the manufacture and marketing of charcoal briquettes. The briquettes are best for the institutional markets, because they can directly substitute wood without modification to the stoves. Schools, restaurants, hospitals, etc are potential markets and future opportunities will be there especially if the Government and local authorities decide to further enforce the restriction on cutting down trees.
The domestic market in Uganda notwithstanding, there is a great export market potential in the East African Community, with an estimated population of 120 million people and the Great lakes region which has a population of over 150 million people. Besides, there is the Common Market for Eastern and Southern Africa states (COMESA) which is Africa’s single regional economic grouping with an estimated population of over 389 million in 19 countries (www.comesa.int).
1.4 Competitiveness of the energy sector
Energy is a vital force in the economic growth and development of any society. With the revitalization of the Ugandan economy coupled with a steady increase in population growth, additional demands for energy have been created.
Energy is a vital force in the economic growth and development of any society. With the revitalization of the Ugandan economy coupled with a steady increase in population growth, additional demands for energy have been created.
Only five percent of the total population is connected to the national grid; in the rural areas only two percent of the household are connected to the national grid and furthermore, the grid is unreliable characterized by load shedding and continuous power outages, which leaves a huge opportunity for investment in alternative electricity generation.
1.5 Rationale behind the project
Energy is a vital force in the economic growth and development of any society and has been tightly linked with the Millennium Development Goals (MDGs). With the revitalization of the Ugandan economy coupled with a steady increase in population growth, additional demands for energy have been created. However the national grid has limited coverage and extension to rural folks is rather slow. Only 5% of the total population is connected to the national grid and further more the grid power is unreliable characterized by load shedding and continuous power outages. In the rural areas only about 2% of the households have access to grid power. Thus there is need for alternative power sources especially in the renewable sector.
The demand and consumption of fuel wood and charcoal is increasing with the increasing rural and urban population. Household consumption of charcoal has more than doubled while the use of firewood increased by almost 70 percent. 30 percent less briquettes are required to replace wood. Briquettes have the added advantage that they been proven to be more energy efficient, highly combustible, healthier and environmentally friendlier.
The abundant sun light in Uganda presents wonderful prospects for harnessing solar energy for use in homes, businesses and institutions. Being astride the Equator, Uganda is assured of reliable sunlight all year round, all that is needed is equipment, technological know-how and investment to transform it to electricity. There are governments and donor funded projects and programs to facilitate uptake and utilization of solar energy but solar technology for electricity generation is wanting.
Investments in Micro hydro power are much needed to compliment the huge power dams currently being constructed at Bujagali since the energy deficit in the country is bound to continue growing even with the completion of all power dams due to the rising population and economic growth in Uganda. The Uganda Ministry of Energy and Mineral Development with support from development partners have already carried out feasibility studies on the viability of the available sites in the country.
2.0 INVESTMENT OPPORTUNITIES IN THE ENERGY SECTOR
The proposed investment opportunities in the Energy sector include dedicating resources in one or a combination of the following:
• Design, construction, sales and service support of biomass plants;
• Assembly and Marketing of solar units in Uganda;
• Manufacture and Marketing of Charcoal Briquettes;
• Acquisition, Installation & Services of Micro Hydro Dams in Uganda.
2.1 Design, construction, sales and service support of biomass plants
Purpose of the project
The objective of this project is to increase the economic viability of a large scale electricity generation from organic garbage in Uganda. This will provide quality and reliable grid electricity to meet the energy demand for both the rural as well as the urban sector.
Projected Capacities and Sales and Preferred Technology
The technology to be employed will be on-grid large scale biogas generation to produce electricity to be added onto the national grid.
Estimated Total Investment Costs (US$)
The detailed investment costs for the whole project
Main Production Inputs Locally Available
Biomass used in the process is 100 percent locally available; this is illustrated in the Table that follows.
The composition of the organic waste generated in Kampala city
(Source: Lars Petter Bingh, 2004)
Kampala City, the capital city of Uganda, generates 1,500 tons of organic waste daily; this garbage has a high potential to be used as a raw material to generate electricity.
Kampala City, the capital city of Uganda, generates 1,500 tons of organic waste daily; this garbage has a high potential to be used as a raw material to generate electricity.
Selected Factor Costs
Proposed Infrastructure available at the proposed site
Uganda’s transport sector has over the years registered tremendous growth as depicted by the number of both passenger and cargo vehicles. Uganda’s road network has been improved and expanded significantly, increasing the number of roads addressing village-to-town road connectivity (Ministry of Works and Transport, 2006).
The information and communication technology sector is growing rapidly as government and investors meet demand for both telephony and internet services. These services are penetrating throughout the country at a rapid rate.
Utility costs for the first year
Personnel and Labor Costs
Uganda has the most flexible and competitive labor market in Africa (Doing business 2007, World Bank). The work force is well educated, English-speaking and low cost. The educational system has made Uganda’s labor high quality and competitive.
Uganda has the most flexible and competitive labor market in Africa (Doing business 2007, World Bank). The work force is well educated, English-speaking and low cost. The educational system has made Uganda’s labor high quality and competitive.
The annual labor costs
Preliminary Financial Viability Analysis of the Proposed Investment
The financial and economic analysis is given in US dollars based on the exchange rate of 2,100 UGX. The financial analysis focuses upon the viability of the production unit only. The project as a whole does have many other direct and indirect benefits.
Assumptions:
• Production 1,500 MWh per month spread over 12 months
• Calculations are based on 1,500 MWh of electricity sold per month
• Production will start after one year (time to build the unit)
• Plant life expectancy = 25 years after completion date
• Raw material cost per ton =US$ 10.00
• Selling price = $ 0.15 per KWhr
The financial and economic analysis is given in US dollars based on the exchange rate of 2,100 UGX. The financial analysis focuses upon the viability of the production unit only. The project as a whole does have many other direct and indirect benefits.
Assumptions:
• Production 1,500 MWh per month spread over 12 months
• Calculations are based on 1,500 MWh of electricity sold per month
• Production will start after one year (time to build the unit)
• Plant life expectancy = 25 years after completion date
• Raw material cost per ton =US$ 10.00
• Selling price = $ 0.15 per KWhr
The investment cost includes all the costs such as licenses, land, connection to utilities, initial training etc.
Infrastructure and utilities account for 44% of the total investment, which is evaluated at US $ 4,338,650. The assumption is that the initial investment cost is covered from equity and loan.
Estimated Capital Costs
Major Input Requirements
Estimated Production Cost and Operating Expenses
Estimated Sales
Proposed Organization and Management Aspects
Project Implementation Plan
Financial Analysis
Profitability Analysis
Profitability Analysis
Feasibility Analysis
Net Present Value Analysis
Pay Back Period Analysis
Return on Investment
2.2 Assembly and marketing of solar units in Uganda
Purpose of the project
The project aims at assembling quality and efficient solar units to address the acute energy deficit in rural areas as well as unreliable grid power in urban and semi-urban areas where it exists. Some of the imported solar units do not deliver according to the specifications; hence pass as low quality products. Having an assembly plant in Uganda will address some of the problems cited above.
Purpose of the project
The project aims at assembling quality and efficient solar units to address the acute energy deficit in rural areas as well as unreliable grid power in urban and semi-urban areas where it exists. Some of the imported solar units do not deliver according to the specifications; hence pass as low quality products. Having an assembly plant in Uganda will address some of the problems cited above.
Projected Capacities and Sales
Given the energy gap that is currently being experienced in Uganda, solar Photo Voltaic (PV) business is on the increase. Solar power has been pin-pointed as reliable, environmentally-friendly and cost-effective. Currently it has caught the eyes of real estate developers who have land in semi urban areas. The sales are bound to increase as more estates are being set up. The table that follows shows the projected production and sales capacities of the different panel sizes.
Given the energy gap that is currently being experienced in Uganda, solar Photo Voltaic (PV) business is on the increase. Solar power has been pin-pointed as reliable, environmentally-friendly and cost-effective. Currently it has caught the eyes of real estate developers who have land in semi urban areas. The sales are bound to increase as more estates are being set up. The table that follows shows the projected production and sales capacities of the different panel sizes.
Main production inputs
Raw Materials
Selected Factor Costs
Infrastructure Available at Proposed Site
Uganda’s road network has been improved and expanded significantly since 1986, increasing the number of vehicles on the road and addressing village-to-town road connectivity (Ministry of Works and Transport, 2006). The information and communication technology sector is growing rapidly as government and investors meet demand for both telephony and internet services. These services are penetrating throughout the country at a rapid rate. National Water and Sewerage Corporation (NWSC) is the principal provider of the water in the country in over 22 major urban centers throughout the country and has extended its services to the Kampala Industrial Business Park (KIBP) at Namanve. Grid power is also available at KIBP which is the proposed site for the location of a solar unit assembly plant.
Estimated Monthly Utility Costs
Infrastructure Available at Proposed Site
Uganda’s road network has been improved and expanded significantly since 1986, increasing the number of vehicles on the road and addressing village-to-town road connectivity (Ministry of Works and Transport, 2006). The information and communication technology sector is growing rapidly as government and investors meet demand for both telephony and internet services. These services are penetrating throughout the country at a rapid rate. National Water and Sewerage Corporation (NWSC) is the principal provider of the water in the country in over 22 major urban centers throughout the country and has extended its services to the Kampala Industrial Business Park (KIBP) at Namanve. Grid power is also available at KIBP which is the proposed site for the location of a solar unit assembly plant.
Estimated Monthly Utility Costs
Note that the Broad Band installation cost is US$ 150
Personnel and Labour Costs
Uganda has the most flexible and competitive labor market in Africa (Doing business 2007, World Bank). The workforce is well educated, English-speaking and low cost. Uganda’s laws protect both workers and investors’ rights alike. The education system has made Uganda’s labor high quality and competitive. Unskilled labour is also readily available. The table that follows gives a picture of the average labor costs for various categories of workers.
Monthly Staff & Labour Costs
Preliminary Financial Viability Analysis of the Proposed Investment
Estimated Capital Costs
Major Input Requirements
Unit cost for the main Raw material inputs
Estimated Production Costs and Operating Expenses
Estimated Annual Sales Revenues
Financial Analysis
Profitability
Profitability
Feasibility
NPV = 74,842,846
2.3 Manufacture and marketing of charcoal briquettes
Purpose of the project
Uganda’s largest population of about 80 percent relies on the use of firewood and charcoal as their major source of fuel. There is a growing preference of smokeless solid fuel in Uganda and this makes briquette use a viable option.
Projected capacities and sales and preferred technology
The plant will manufacture 70 tons of briquettes per day which will be marketed as a replacement for firewood and charcoal. The raw material will be dried organic Municipal Solid Waste (MSW) collected from households and surrounding markets in Kampala.
Recycling Business Model of Municipal Solid Waste (MSW)
The project design calls for an average of 8 ton/hr pellet press producing pellets for households with diameter 30 mm and large logs with a diameter 60 mm for institutional kitchens.
Estimated Total Investment Costs (US$)
The investment cost includes all the costs such as licenses, land, and connection to utilities, initial training, infrastructure and utilities which account for 44% of the total investment.
The detailed investment costs for the whole project
Main Production Inputs Locally Available
The raw material for briquette production will be dried organic municipal solid waste collected by individuals, organizations and town councils. Agricultural residues such as banana peelings, sawdust, coffee husks etc exist in large quantities and are available for processing into fuels. Biomass used in the process will be 100 percent locally available; this is illustrated in the Table that follows.
The raw material for briquette production will be dried organic municipal solid waste collected by individuals, organizations and town councils. Agricultural residues such as banana peelings, sawdust, coffee husks etc exist in large quantities and are available for processing into fuels. Biomass used in the process will be 100 percent locally available; this is illustrated in the Table that follows.
The composition of the organic waste generated in Kampala city
(Source: Lars Petter Bingh, 2004)
The waste collection services in Kampala are decentralized and privatized. However Kampala City Council still maintains a fleet of garbage collecting trucks to compliment the efforts of private garbage collectors. Kampala City, the capital city of Uganda, generates over 1,500 tons of organic waste daily; this garbage has a high potential to be used as a raw material for briquette production.
Raw material cost
Selected Factor Costs
Infrastructure available at the proposed site
Uganda’s transport sector has over the years registered tremendous growth as depicted by the number of both passenger and cargo vehicles. Uganda’s road network has been improved and expanded significantly, increasing the number of roads addressing village-to-town road connectivity (Ministry of Works and Transport, 2006).
The information and communication technology sector is growing rapidly as government and investors meet demand for both telephony and internet services. These services are penetrating the country at a rapid rate and are available at Kampala Industrial Business Park, Namanve that is proposed to be the location of charcoal briquettes manufacturing.
Infrastructure available at the proposed site
Uganda’s transport sector has over the years registered tremendous growth as depicted by the number of both passenger and cargo vehicles. Uganda’s road network has been improved and expanded significantly, increasing the number of roads addressing village-to-town road connectivity (Ministry of Works and Transport, 2006).
The information and communication technology sector is growing rapidly as government and investors meet demand for both telephony and internet services. These services are penetrating the country at a rapid rate and are available at Kampala Industrial Business Park, Namanve that is proposed to be the location of charcoal briquettes manufacturing.
Utility costs for the first year
Personnel and Labor Costs
Uganda has the most flexible and competitive labor market in Africa (Doing business 2007, World Bank). The work force is well educated, English-speaking and low cost. The education system has made Uganda’s labor high quality and competitive. The table that follows gives a picture of the average labor costs for various categories of workers.
Uganda has the most flexible and competitive labor market in Africa (Doing business 2007, World Bank). The work force is well educated, English-speaking and low cost. The education system has made Uganda’s labor high quality and competitive. The table that follows gives a picture of the average labor costs for various categories of workers.
The annual labor costs
Preliminary Financial Viability Analysis of the Proposed Investment
The financial and economic analysis is given in US dollars based on the exchange rate of 2,100 UGX. The financial analysis focuses upon the viability of the production unit only. The project as a whole does have many other direct and indirect benefits.
The financial and economic analysis is given in US dollars based on the exchange rate of 2,100 UGX. The financial analysis focuses upon the viability of the production unit only. The project as a whole does have many other direct and indirect benefits.
Estimated Capital Costs
Major Input Requirements
Estimated Production Cost 
Estimated Operating Expenses
Estimated Sales
Organization and Management Aspects
Project Implementation Plan
Financial Analysis
Feasibility Analysis (US$)
Profitability Analysis (US$) 
Net Present Value Analysis (US$)
Payback Period Analysis
Return on Investment
2.4 Acquisition, installation & services of micro hydro dams in Uganda
Purpose of the project
The project aims at constructing Micro hydro power dams and a number of Pico Hydro power schemes to address the acute energy deficit in rural areas as well as unreliable grid power in small towns that are off-grid. The current installed hydro capacity cannot meet Uganda’s electricity demand, therefore having more micro hydro sites being exploited will partly address this deficit and promote rural electrification, thus contributing to Uganda’s Poverty Eradication Action Plan (PEAP).
Purpose of the project
The project aims at constructing Micro hydro power dams and a number of Pico Hydro power schemes to address the acute energy deficit in rural areas as well as unreliable grid power in small towns that are off-grid. The current installed hydro capacity cannot meet Uganda’s electricity demand, therefore having more micro hydro sites being exploited will partly address this deficit and promote rural electrification, thus contributing to Uganda’s Poverty Eradication Action Plan (PEAP).
Projected Capacities and Sales
Planned products and services
These shall depend on the installed capacity at the various sites as the demand already exists due to low levels of rural electrification. The power generated from each head will depend on the available head and flow rate. The figure below depicts the various power outputs using E-Watt technology for a given water head and corresponding flow rate.
Estimated Total Investment Costs in thousands (US$)
Main production inputs locally available
Machinery and equipment:
There is no machinery locally available; however the e watt turbines could be imported from Vietnam.
Machinery and equipment:
There is no machinery locally available; however the e watt turbines could be imported from Vietnam.
Selected Factor Costs
Infrastructure Available at Proposed Site
Uganda’s road network has been improved and expanded significantly since 1986, increasing the number of vehicles on the road and addressing village-to-town road connectivity (Ministry of Works and Transport, 2006).
The information and communication technology sector is growing rapidly as government and investors meet demand for both telephony and internet services. These services are penetrating throughout the country at a rapid rate and are available in most locations where micro hydro dams can be constructed.
Estimated Annual Utility Costs
Personnel and labour costs
Uganda has the most flexible and competitive labor market in Africa (Doing business 2007, World Bank). The workforce is well educated, English-speaking and low cost. Uganda’s laws protect both workers and investors’ rights alike. The educational system has made Uganda’s labor high quality and competitive. Unskilled labour is also readily available. The table that follows gives a picture of the average labor costs for various categories of workers.
Uganda has the most flexible and competitive labor market in Africa (Doing business 2007, World Bank). The workforce is well educated, English-speaking and low cost. Uganda’s laws protect both workers and investors’ rights alike. The educational system has made Uganda’s labor high quality and competitive. Unskilled labour is also readily available. The table that follows gives a picture of the average labor costs for various categories of workers.
Preliminary Financial Viability Analysis of the Proposed Investment
Estimated Capital Costs
Major input requirements
Estimated Production Costs and Operating Expenses
Estimated Annual Sales Revenues
Financial Analysis
Profitability
Feasibility
NPV = US$ 4,838,424
3.0 OTHER CONSIDERATIONS AND ADDITIONAL INFORMATION
3.1 Location
The geographical location of the plant can have strong influence on the success of the investment venture. The plants can be located in gazetted industrial parks around Kampala; or any other appropriate location so as to harness amenities and other related benefits.
3.1 Location
The geographical location of the plant can have strong influence on the success of the investment venture. The plants can be located in gazetted industrial parks around Kampala; or any other appropriate location so as to harness amenities and other related benefits.
3.2 Environmental Issues
The National Environment Management Authority (NEMA) is the statutory institution responsible for the environment. It requires an Environment Impact Assessment (EIA) for certain projects to be carried out before start-off.
The proposed investments in energy development are bound to have both economic and environmental benefits/costs and are thus subject to EIA.
3.3 Investor protection
Uganda is a member of the Multilateral Investment Guarantee Agency (MIGA). Under this agency, foreign investors can insure their investments in Uganda against a wide range of non-commercial risks including expropriation, currency transfers, breach of contract and civil strife. Uganda has also signed bilateral investment protection agreements with a number of other countries.
With only 15 procedures to enforce investor contracts, Uganda leads the East African Community in ensuring investor protection. The Uganda Investment Authority is a one-stop shop facilitator for investors who are unfamiliar with the various procedures to establish operations in the country. Uganda offers an attractive incentive package to investors who engage in value-added investment activities.
3.4 Registration and Investment license
Memorandum and Articles of Association prepared by the investor are submitted to the Registrar’s office. Once approved, the investor is issued with a Certificate of Incorporation, which makes the business a legal entity, (Source: Registrar General’s office). Uganda Investment Authority is a statutory body responsible for issuing investment licenses (www.ugandainvest.com).
3.5 References
• Lars Petter Bingh, 2004 Opportunities for utilizing waste biomass for energy in Uganda
• www.ugandainvest.com
• www.nemaug.org, www.kcc.go.ug, www.comesa.int
• Uganda Bureau of Statistics, UBOS 2003
• Country Profile Table: The World Bank Group December 2002
• The Briquetting of Agricultural Waste for Fuel. FAO
• Biomass Briquetting: Technology and Practices FAO Bangkok 1996
• Proceedings on the International Workshop on Biomass Briquetting FAO Bangkok 1996
• Revised 1996 IPC Guidelines for National Greenhouse gas Inventories
• Munyagwa and Sentongo (2004) Frank Sentongo and David Munyagwa, Uganda Youth Voluntary Effort in Advancement and Environment Protection.
4.0 USEFUL CONTACTS
Main Contact
Government Agencies
Private Sector Associations
Banking
