Premier Rugunda Speaks Out On Uganda’s Oil, Mineral Development

The prime minister of Uganda RT. Hon. Dr. Ruhakana Rugunda has reiterated government desire to fully exploit natural resources sustainably to benefit all Ugandans.

In this slightly edited speech which the Prime Minister delivered at the two day 6th Joint Sector Review for the Energy and Mineral Development Sector at Speke Resort Hotel, Munyonyo, on 25th – 26th August 2016, Hon Rugunda emphasizes government’s plans to get the best of the natural resources spread across the country. Read on.

The Prime Ministers speech

It is my pleasure to preside over the opening ceremony of the 6th Joint Sector Review for the Energy and Mineral Development Sector. I am aware that this forum brings together key stakeholders who will review the Performance of the Sector for the Financial Year 2015/16, assess the extent of progress for the jointly Agreed Undertakings, the challenges faced, make appropriate recommendations and measures to address the challenges. In addition the Review shall inform the budgeting process for the Financial Year 2017/18.

I note that the theme for this year’s Review is “Towards a Middle Income status with Sustainable Development of Energy and Mineral Resources”. This theme rhymes well with NRM Government Strategic Direction of achieving a Middle Income status by the year 2020.

I also note the policy objective on energy is to ensure adequate and reliable supply of energy to support social and economic growth, while the policy objective on the mineral sector is to explore, increase ore reserves and promote value addition of mineral ores in order to stimulate industrial growth and to create employment.

In the Petroleum sector, Policy Goal is to use the country’s oil and gas resources to contribute to early achievement of poverty eradication and create lasting value to society. All these policy objectives are in line with the attainment of a middle income status.

In other words, we want to use our natural resources as engines for growth. You will all appreciate that investment cannot come into the country if there is no supporting infrastructure that lower the cost of doing business. Infrastructure development like electricity generation, transmission and distribution can only be enhanced when we, as Government, save money to invest and also entice our development partners to provide reasonably priced capital for project development.

Investment in energy, oil and gas, and mineral infrastructure remains a top Government priority. Government is committed to providing resources to the sector as the financial situation improves to match the demand arising from population growth and economic development needs.

Electricity generation

Government has continued to register further positive developments in the Energy and Mineral sector. Power generation projects including the 600 MW Karuma Hydropower and the 183 MW Isimba Hydropower project are in the development phase. In addition, under the Global Energy Transfer Feed in Tariff program, government is undertaking the development of seventeen (17) small-scale renewable energy generation projects which will also add 150.8 MW.

In order to improve power service delivery and cover most of the countryside with the grid network, Government has put emphasis on connecting electricity to district headquarters, productive centers like factories and trading centers and social services such as health centers, educational instructions and water supply points.

I am informed that 108 out of the operational 112 district in Uganda are supplied with electricity. During this financial year works will commence to connect the districts of Nwoya, Kaabong and Kotido. Buvuma District will be covered next financial year.

As most of us appreciate, the major constraint to accessing electricity is the inability, mainly of the rural and peri-urban dwellers, to afford connection costs. The NRM Government, together with some Development Partners, started a subsidy scheme to ease the burden of the high upfront connection costs. With the availability of this subsidy scheme the connections have increased.

Oil and Gas development

In the Oil and Gas sub-sector, the first phase for the refinery, of 30,000 barrels per day is expected to be in place by 2020/2021. Implementation processes are on-going for the development of a 60,000 barrels per day petroleum refinery in a phased manner starting with 30,000 barrels per day, crude oil feeder pipelines from the oil fields to an oil hub near the refinery, a 1445km long, 24-inch diameter crude oil export pipeline, and a 211 km long 12-inch diameter pipeline from the refinery to a storage terminal to be developed North-West of Kampala Capital city.

The acquisition of 29.5km2 of land to accommodate a petrochemical-based industrial park has been completed. The park will include a refinery, a crude oil export hub, an international Airport, logistics systems, utilities, and other petrochemical industries. A masterplan for the development of the industrial park is expected to be completed by February 2017. Also, an integrated infrastructure corridor which will accommodate a pipeline, a highway, Power Transmission and ICT infrastructure cable systems is being planned, from the industrial park at Kabaale in Hoima to Kampala.

The Minister has already discussed the progress made to grant Production Licences to existing Oil Companies as well as the eminent grant of Exploration Licences to new oil companies. This should be expedited

Addressing mining sector constraints

In the Mineral Sub-sector, the NRM government has intensified efforts to strengthen capacity of the mineral sector so as to address sectoral constraints i.e. the fiscal regime and the mining legislation to enable the sector to be attractive to investment.

Government is now reviewing the mining legislation and has increased monitoring and inspection of mining operations so that we can streamline the emerging sector challenges like speculation and mineral smuggling.

Government has already made good progress on geo-scientific surveys, human resources development and equipping the Institutions with tools for acquisition and management of geo-scientific data, and analytical laboratories that has enabled new mineral discoveries.

Arising out of the recent airborne geophysical surveys and ground follow-up geological mapping as well as mineral exploration, ore reserves of mineral deposits in the country have significantly increased.

For example, over 200 million tons of iron ore have been discovered in Southwestern Uganda as compared to the 3 million tons which was known to occur at Muko in Kabale and Kisoro districts. Over 300 million tons of limestone / marble have been proven in Karamoja region.

Vermiculite reserves have increased from 5 million tons to 54.9 million tons in Namekhala in Manafwa district. Several new mineral targets have been mapped in the country. These include Gold, Nickel, Platinum, Rare Earth Elements, Bentonite clays, among others.

Land disputes

Acquisition of land for infrastructure development projects still remains a challenge. There are delays arising from land owners who either oppose accessing their land or dispute the land rates recommended by the office of the Chief Government Valuer.

These disputes lead to escalating costs of the projects. This shows that the Land Law in the country may be a constraint to investment. I, therefore, strongly support and urge the Minister responsible for lands to conclusively come out with a solution to this problem.

I also wish to urge the local authorities to actively facilitate the acquisition of land for infrastructure projects in their areas so that there is timely implementation of the projects.

15. Government is committed to developing the energy and mineral infrastructure in a prudent manner that follows the required international practice, including competitive participation from investors, service providers and contractors.

We, therefore, encourage potential investors, private sector developers, and our Development Partners to give support to develop energy projects as private or under a public – private partnership arrangement.

As I conclude, I wish to commend the Ministry for having a forum which enables us to achieve sound principles of good governance. I wish to emphasize that feedback is a critical element of service delivery. There should be appropriate feedback on implementation, monitoring and evaluation.

FOR GOD AND MY COUNTRY