A visionary plan for Uganda’s economic growthJuly 15, 2022
Pamela Mbabazi, chairperson of Uganda's National Planning Authority (NPA), talks to The Energy Year about hurdles that need to be overcome in developing Uganda’s economy and the role the oil and gas sector could play in driving the nation’s growth. The NPA’s role involves building the national capacity for visionary and long-term planning and ensuring sustainable national development.
What is the NPA doing to foster economic growth?
A key task this year has been the preparation of the National Development Report. This includes an assessment of the performance of the economy, including the performance of energy, oil and gas, and minerals, especially in light of the Covid-19 impact. We are also preparing an end-of-term review of National Development Plan II and its associated core projects and a midterm review of NDP III.
Our key objective in NDP III is to improve household incomes and the quality of life of Ugandans using industrialisation as the driver. Our industrial master plan has been finalised and we want to begin its implementation this year.
Another priority is fast-tracking the development of the oil industry. The oil industry has three interrelated projects, namely: the extraction of crude oil, construction of the East African Crude Oil Pipeline to facilitate the export of crude oil, and the construction of the oil refinery to serve the local and regional market. We are aware that oil production and processing could turn the country around if we get it right. In terms of the power sector, we are prioritising power evacuation and transmission infrastructure.
We cannot industrialise without access to affordable and reliable power. Currently, we are generating more than we consume, but we still have challenges with evacuation, transmission and distribution. Hence, our priority in the short term is evacuation, transmission and distribution. But we are aware that as industrialisation picks up, we will need to generate more power. So generation also remains our priority in the short to medium term.
What changes in focus has the government undergone in relation to development initiatives?
Uganda has been praised for having some of the best plans and thinking regarding development. However, we have been criticised as lacking when it comes to implementation. Previously, there has been a siloed way of working in government, with each unit or ministry working on its own with no co-ordination or harmony with other parts. This prevents us from achieving our objectives. But with the new Program Approach, government is unrelenting in its efforts aimed at addressing this hiccup. Focusing on programmes and projects instead of sectors makes us more effective and efficient. Over the course of 2022/23, we will ensure that the strategic plans of all ministries, departments and agencies are fully aligned to the NDP III, including those in the energy sector. In addition, government has introduced the Parish Development Model to bring services closer to the people and address the plight of the 39% of households that still live in the subsistence sector.
What are the government’s targets for increasing LPG usage in the country?
Uganda’s energy consumption is mainly biomass (89%), comprising firewood (78.6%), charcoal (5.6%) and crop residues (4.7%). This is followed by oil products at 9.6%% and electricity at 1.4%. We want to bring back the discussion and focus on alternative sources of energy in 2023. We have targeted a reduction in the use of biomass energy for cooking from 88% in the 2018/19 financial year to 50% in 2025. Our trees are going down at an alarming rate, and we need to reverse this.
This means that we need to deliberately increase the use of alternative sources of energy, including LPG. While there is no current data on the use of LPG, trends indicate no significant change in its use over the last five years. Our goal is to raise national usage from 1% to 8%.
For this, we need investors to help Ugandans make a technology shift. There are clear business opportunities in this area, and Uganda requires investments to embrace LPG.
To this end, NPA undertook a study in 2020 to assess the energy demand for the country including the readiness and perception regarding the use of other forms of energy, especially natural gas. This was done at both the household and industrial level. The study established that the total primary energy demand in Uganda is about 772 PJ but about 89% of that is met from low-grade forms of fuels, especially biomass. This study is part of the bigger study to be conducted between Tanzania and Uganda, which will inform the construction of the natural gas pipeline from Dar es Salaam to Uganda. The study will also include identification of distribution routes for natural gas across the country and the requisite infrastructure. This will support the country’s efforts aimed at moving away from biomass as a major source of fuel for both household and industrial-level use.
How big of an opportunity is the country’s nascent oil and gas sector for local companies?
During the peak of exploration, national content was around 28%. Initial opportunities for local entities at the time were related to pre-drilling, preparation and construction-related supplies. However, the magnitude of investments has risen and presents a clear opportunity for more radical growth of Ugandan companies.
There will be a need of approximately 3 million tonnes of local construction materials such as murram, sand, aggregates and cement. Ugandans are now busy preparing to take advantage of this business opportunity. In addition, around 300 trucks will be required daily to transport the construction equipment and materials. Under the new local content law, government is promoting the set-up of joint ventures to ensure development of local capacity.
What key milestones has the country seen since it became independent 60 years ago?
There is much to celebrate but there are still many challenges. The government has laid down a strong foundation for the country to take off, with major oil and gas investments a testament to the State’s success. Political stability, sound macroeconomic policy and a focus on infrastructure investments are a good recipe for Uganda. Investments in increased access to power are beginning to industrialise.
The Covid-19 pandemic has helped Uganda rethink how we perceive the transformation of our country. Now is the time to do things differently and take matters into our own hands. We are ready to make Uganda a true African success story and take our economy to the next level.