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Vibrant energy on the move

Article - August 4, 2014
Various energy and mineral projects aim to tap into Uganda’s resource-rich soils to help meet domestic demand for power and add value to its mineral stocks.
UGANDA
Energy. Uganda has it in abundance. However the government sees energy not just as a source of power and revenue, but also as a prerequisite for development.

A driving force behind Uganda’s push to develop its energy sources is the need to bring electricity to the 85% of the population who does not have it at present. To achieve that goal, the government has made rural electrification a priority and has signed up to be one of the pilot countries for the United Nations’ Sustainable Energy for All initiative – a program that aims to provide universal access to modern energy services, to improve energy efficiency, and to grow renewable energy’s share of the global energy pie.

Power to the people 

Uganda is tapping into multiple energy sources to meet domestic demand, which is growing by around 10% a year.

“The government has lined up a number of projects in the energy sector,” says Irene Muloni, the Minister of Energy and Mineral Development. Projects of interest include tapping renewable energy sources like hydro, solar, geothermal, biomass, wind and bio-gas. Nuclear energy is also an option for the future.

The call of oil

The first commercial discovery of oil was made as recently as 2006. In just eight years, Uganda has gone from no reserves to proven crude oil reserves of 2.5 billion barrels, according to the U.S. Energy Information Administration. Ms. Muloni says reserves are closer to 3.5 billion barrels, and are located on just 40% of the Albertine Graben near Lake Albert in western Uganda – meaning the other 60% is waiting to be explored.

In February of this year, Uganda signed deals with Tullow Oil of Britain, France’s Total, and the China National Offshore Oil Corporation (CNOOC) to develop its reserves. Production is expected to start in two to three years, and the oil will be used initially for domestic power generation, according to the Minister. Eventually, however, Uganda plans to sell its oil internationally. Any revenues the country earns from its oil will be ploughed into infrastructure development so that “all Ugandans benefit from this resource because it belongs to us all,” Ms. Muloni says.

By 2017, Uganda plans to have a refinery capable of eventually processing 60,000 barrels a day.

As the country’s oil industry grows, the Ugandan government is setting up a regulatory agency and a national oil company that will do business on its behalf. There are also plans in the works to hold bidding rounds for exploration licenses for the unexplored parts of the Albertine Graben.

Ms. Muloni notes that with one of the lowest costs in the world for finding oil – less than $1 per barrel – and one of the highest drilling success rates, at 85%, Uganda is an attractive destination for international investors.

Mineral boom

There is also an alphabet soup of mineral riches to draw investors to Uganda, everything from bismuth to copper and coltan, gold and granite, iron ore and vermiculite, as examples.

Aerial magnetic surveys have been conducted on 80% of Uganda, allowing the authorities to better identify which minerals are where.

“By being able to identify things better, we are in a better position for investors to come in, conduct explorations and add value,” says Ms. Muloni.

Uganda is looking for investors who can add value to its raw materials, including its minerals. Uganda would benefit by selling its resources and investors would benefit from the 18% return on investment.

And that, says Ms. Muloni, “is going to be a win-win situation.”

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