Thursday, 27 January 2011

Uganda’s NSSF taps new equity managers


Posted on 15 September 2010
From Globalpensions.com: Uganda’s National Social Security Fund is signing on new asset managers to help it manage its equities portfolio. Board chairman Vincent Ssekkono said: “In order to get maximum value of its shares and participate more actively in other listed companies, the fund is in the final stages of contracting fund managers and brokers to handle its equities business.”
An asset allocation was not provided, but Ssekkono said the NSSF invests in equities, real estate and fixed 

Tulow Oil "approaching the finishing line"


LONDON (Dow Jones)--Tullow Oil PLC (TLW.LN) is "approaching the finishing line" in talks with the Ugandan government to resolve a tax dispute that has held up for months its plans to bring in new partners to develop oil discoveries there, the company's chief financial officer, Ian Springett, said Thursday.
Tullow expects to reach an agreement that will allow it to proceed with its plans to sell a share of its Uganda assets to Total SA (TOT) and China National Offshore Oil Company (CEO) no later than a few weeks after ...

Wednesday, 26 January 2011

US considers selling arms to Uganda


US embassy cables: 

Thursday, 06 December 2007, 12:56
S E C R E T SECTION 01 OF 02 KAMPALA 001848 
SIPDIS 
SIPDIS 
STATE FOR PM/WRA - STEPHANIE PICO 
EO 12958 DECL: 06/18/17 
TAGS MARRMASSPARMPGOVPRELUG 
SUBJECT: UGANDA MAY BE OPEN TO MANPADS STRATEGY 
REF: STATE 156001
Classified By: PolOff Jarahn Hillsman for reasons 1.4 (b) and (d).
1. (S/NF) Summary: Post has considered reftel Horn of Africa MANPADS Acquisition Engagement and Plan of Action Strategy for Uganda. Mechanisms proposed to help the GOU address counter-proliferation and destruction are feasible and timely. Post is confident that the GOU would welcome greater USG involvement. We have also determined that a Yemen-like acquisition plan could support GOU efforts to control MANPADS proliferation, but do not believe it to be necessary at this point. There are no political impediments to immediate engagement with GOU officials on the proposed MANPADS strategy. A sucessful strategy would incorporate a larger weapons accountability and destruction program to enlist wider GOU support for MANPADS destruction. End Summary.
-----------------------------------------
GOU Shares Counter-Proliferation Concerns
-----------------------------------------
2. (S/NF) The GOU has demonstrated its willingness to work with the USG to combat terrorism and further East African security initiatives, particularly in the area of weapons proliferation. Military and civilian authorities, starting with the establishment of the National Focal Point on Small Arms and Light Weapons in 2001, have deepened collaboration to tighten arms control regulations and have actively sought international partners to advance objectives. We therefore believe that the GOU would be receptive to U.S. assistance in drafting export control legislation and determining priorities. Given that the majority of the MANPADS currently in Uganda were purchased by the government, U.S. intervention with the "supply country" might not be welcomed by the GOU. Such action would be considered by some as meddling in internal security matters.
--------------------------------------------- --------------
GOU Committed to SA/LW DESTRUCTION; Open to U.S. Engagement
--------------------------------------------- --------------
3. (S/NF) The GOU in 2007 worked with SaferAfrica, UNDP, the U.S., and other international partners to identify and destroy small arms and light weapons stockpiles, including MANPADS. Minister of Defense Crispus Kiyonga reaffirmed this commitment publicly, and expressed Uganda's desire to work with the U.S. and other international partners to meet the country's obligations under the UN Program of Action on Small Arms and Light Weapons, the Nairobi Protocol, and the National Action Plan on Small Arms and Light Weapons. We believe that the GOU would welcome greater U.S. engagement in the area of stockpile management and destruction. However, a more broadly focused assistance package that helps with overall weapons accountability and destruction would likely garner wider GOU support.
--------------------------
Yemen Acquisition Possible
--------------------------
4. (S/NF) A Yemen-like acquisition plan could be reached with the GOU. The primary Ugandan counterpart would be the Ugandan People's Defense Forces (UPDF). Currently, we do not believe there is black market activity to warrant such a program.
-----------------------
Timing And GOU Partners
-----------------------
5. (S/NF) The GOU has demonstrated political will to tighten arms proliferation, combat global terrorism, and push forward on East Africa peace and security initiatives. This commitment suggests that Uganda would be open to immediate engagement.
6. (S/NF) The primary GOU interlocutors would likely be the following:
--Ministry of Defense;
--Uganda People's Defense Force (UPDF);
--National Focal Point on Small Arms and Light Weapons;
--Parliament's Committee on Military and Internal Affairs; and
KAMPALA 00001848 002 OF 002
--Ministry of Foreign Affairs.
--------------------------------------------- ----
Pitfalls OR Challenges to Strategy Implementation
--------------------------------------------- ----
7. (S/NF) The GOU's military sales relationship with North Korea might hinder engagement. For three years, the GOU has refused to allow us access to its classified budget, which could potentially include the sale of MANPADS by the GOU. CHRITTON

U.S. embassy warns of possible attacks in Uganda


Poltical Risk Increases 

American urged to stay away from large public gatherings, especially those with large numbers of westerners and no obvious security measures.


The U.S. embassy in Uganda is warning its citizens in the east
African nation that local terror groups are interested in attacking
 American interests.
clearpxl
The embassy is particularly concerned about the month of February
 because Uganda will be holding presidential elections at that time.
The embassy on Tuesday advised U.S. citizens to stay away from
 large public gatherings, especially those with large numbers of
westerners and no obvious security measures, reports stated.
The warning also urged Americans to always keep a charged
cell phone on hand and report any suspicious activities.
The U.S. embassy in Burundi issued a similar warning to
American nationals there.
Islamic militants fighting Somalia’s U.N.-sponsored interim
 government have threatened attacks on Uganda and Burundi,
which lend troops to an African Union peacekeeping mission
 in Somalia.

Kenol angles for Uganda oil with Phoenix buyout



A Kobil petrol station. Photo/FILE
A Kobil petrol station. Photo/FILE 
By VICTOR JUMA  (email the author)
Posted Wednesday, January 26 2011 at 00:00
Oil marketer KenolKobil is set to acquire a Ugandan oil dealer as it eyes that country’s oil find, which threatens to hurt Kenyan oil firms’ export earnings.
The firm has signed a deal to acquire Phoenix Uganda Petroleum Limited, a depot with a capacity for 1,800 cubic metres of fuel and three service stations, raising its total depots and service stations in the Ugandan market to two and 66 respectively.
Uganda will from next year start building an oil refinery to meet local demand and later scale up capacity for exports, a move that is set to cut off petroleum imports from Kenya, hurting oil marketers.
More than 700,000 tonnes of petroleum products — including liquefied petroleum gas —consumed in Uganda annually is supplied by Kenyan oil firms.
Kenol says the expanded footprint will put it in a position to make up for an expected reduction in the oil export business.
“The oil transit business from Kenya will be diminished and the extent of business loss will depend on the range of products Uganda will be refining,” said Patrick Kondo, the head of mergers and acquisitions at Kenol.
He said the company sees an opportunity in exporting finished oil products from Uganda to other regional markets, including Kenya that are expected to start importing oil products from Uganda that are set to be cheaper, saving on freight and insurance charges.
Uganda will refine 25,000 barrels per day (bpd) to meet its local consumption and later refine up to 200,000 bpd targeting the export markets of Kenya, Rwanda, Burundi and DRC, which are served from the Kenyan market.
Landlocked Uganda relies heavily on Kenya to import over 700,000 tonnes of refined oil products annually but its discovery of 2.5 billion barrels of crude oil deposits is set to change this.
Building of the refinery begins next year and it is expected that by 2016, Kenya’s export of refined oil products to Uganda will cease as the oil-rich country consumes its home-made products, hurting the fortunes of Kenyan oil marketers.
This has seen firms like Kenol scout for new opportunities as they seek to diversify away from the Kenyan market that rakes in most of their revenues.
Mr Konda said Kenol is looking at other acquisition opportunities in Uganda and Burundi.
The latest acquisition is the second for Kenol in the Ugandan market after the firm took over Galana Oil Uganda Limited in 2000.
Kenol sells liquefied petroleum gas (LPG), bitumen, petrol, and diesel in Uganda.
Aside from the expansion of its service station and depot network, Kenol is also planning to build a modern LPG filling plant that will have capacity to meet its needs and those of its rivals.

Investing in real estate in Uganda


Investing in real estate
Uganda has witnessed a boom in real estate.  
By James Abola and Philip Karugaba  (email the author)
Posted Thursday, January 27 2011 at 00:00
Real estate simply refers to land. In law, land includes any buildings on that land.
Since 2000, Uganda has witnessed a real estate boom. There has been an increase in the number of real estate agents and a transformation in the nature of their business.
The old National Housing and Construction Company (NHCC) de facto monopoly has long since been shattered with many private developers now putting up more housing units than NHCC has done recently.
There are also more banks offering loan products for the purchase of real estate, a business once done exclusively by Housing Finance Company of Uganda (Hfcu).
RELATED STORIES
So how does one gain by investing in real estate?
There are essential two sources of income from real estate, one is reaping capital gains from buying and selling land and the other is by developing the land and collecting rent from its use and occupation.
To demonstrate the capital gain on land, in 2002 an acre of land at Kiwatule was advertised for sale at Shs60,000,000. In 2009 the same acre sold for Shs400,000,000; if you could find it! The price increase represents capital gain.
Where to find property
Find a good broker, call them what you will, brokers (bulokas) or real estate agents. It is still an unregulated market and anybody can become an estate agent.
While some agents have wide market knowledge and can source you a property anywhere you please, many are localized in particular areas. You could scout your target neighbourhood and look out for the signs. Alternatively, you could browse the property pages in newspapers.
Another good source of property is court bailiffs, selling off property under orders of court or auctioneers selling off mortgaged property. If you have got the time or fuel or both, you can drive around and with a bit of luck find the kind of property you are looking for.
Due diligence
Several stories abound about real estate scams. You can avoid becoming part of this statistic by conducting due diligence. Once you have identified the plot you should do your homework on it.

Title search
Obtain a copy of the title deed and have a lawyer conduct a search on it at the land office and give you an opinion. The search helps to confirm the validity of the title, its proprietorship and whether it can be so sold.
It is very important that the land has a title and that the person you are dealing with is named as owner on the title, except for sales by banks or under court orders.
Boundary opening
It is also advisable to have a surveyor open the boundaries on the land and confirm to you in a written report. This will keep you out of boundary disputes with your neighbours. You will be amazed how angry your neighbour will be if you stray so much as a foot into his plot.
Location of the property
Location should be the first, second and last item on your due diligence checklist. The difference between an excellent property and a poor one is usually down to the location. Location is in turn determined by several factors, of which we shall discuss a few. What is in the neighbourhood of the property can improve or depress its location; a rubbish dump, sewage treatment plant and a chemical-intensive industry are neighbours that depress a location while a good school, a shopping mall, an upcoming residential estate are neighbours you would love to have. Availability of amenities such as power, water and a sewer line help to improve the location of a property. A good access road is another important locator; some people have acquired plots of land that have no access roads and have had to painstakingly negotiate with several neighbours to lease access roads to them. Another important locator is the view that the property commands; hilltop properties and lakefront properties tend to command good prices because of the view they offer.
Understanding land titles
A land title is the document that proves ownership of registered land. It may also be called the certificate of title, title deed or duplicate certificate of title (for technical reasons relating to the law of land registration).
Uganda recognizes different systems under which land can be held and this is called land tenure. Each system has its own peculiarities and these get reflected in the certificate of title.
While the different forms of land tenure have interesting history, we consider that beyond the scope of this book and focus on the particular distinctions between the different land tenure systems and how they are shown in the certificate of title.

Karuma hydropower project

THE cost of the proposed Karuma hydropower project has almost doubled due to escalating prices of raw materials and high interest charges. A new engineering study has put the total project cost at $2.2b, up from the previous $1.2b.
"The capital cost for the project will be disbursed during the project construction period and escalation of 5% per annum has been considered for working out the completed cost of the project," the study said.

it was conducted by Infratech Private of India.Paul Mubiru, the director of energy in the energy ministry, was disappointed by the news.
"We expected the project cost, including the construction of transmission lines, to be about $1.8b," he said in an interview.
The project, which is expected to start in May, will last five years. The first 100 megawatts are expected to be commissioned in January next year.

The project, which will be upgraded to 600MW from a 200MW capacity, will come as a relief, not only to Uganda, but also to the East African states facing an acute energy deficit.
Power demand in the region is increasing, pushing up the need for electricity exportation.Uganda intends to execute the project through a public-private partnership and has already invited interested international firms. The firms are being evaluated.

"About 70% of capital costs of the project are considered as debt," the study disclosed, adding that the debt will be payable in 15 years after 62 months of construction and six months of moratorium (pause).The project shall be financed at an interest rate of 10%. This means that the end-user tariff in the first year will be $10.21 cents per unit. However, the average tariff for a period of 40 years will be $8 per unit.
The current end-user tariff is about 25 US cents per unit for electricity from diesel-powered thermal generators.The Uganda Electricity Generation Company will be the Government nominee and licencee of the project.

Uganda has for the past 10 years experienced erratic power supply, coupled with high power rates, losses and low access, which has slowed the development.This is because the impressive economic growth registered in the 1990s was not matched by investments in the power sector as demand outstretched supply.
An updated hydro-power master plan has indicated that Uganda's electricity demand is expected to triple in the next 10 years, assuming the current economic growth trends continue. This will pave way for increased investments in the energy sector.
"Based on the current economic growth, which is at 7%, domestic power demand will increase from about 370 megawatts to 1,130 megawatts in 2023," the plan indicated.

The challenge of housing in Uganda


Sunday, 16th January, 2011
E-mail articleE-mail article Print articlePrint article
Dilapidated houses at Naguru housing estate. Tenants have refused to vacate the estate for redevelopment
Dilapidated houses at Naguru housing estate. Tenants have refused to vacate the estate for redevelopment
By Paul Busharizi
THIS week the High Court threw out a petition by Naguru housing estate tenants to block their eviction by the Government. The Government has offered the area to developers planning a satellite city on the more than 150 acres of prime land. It is claimed that there are 100,000 residents of the area.

Related to this issue is the often bundied-around number that there is at a least a 50,000 house deficit in Kampala alone. To put this in perspective, this is the equivalent of about 60 housing estates the size of Bugolobi flats.

It is no secret how we fell behind in keeping up with the country’s accommodation needs. Housing is a long term investment that cannot be encouraged by the social and political unrest of the 70s and 80s.

It is baffling why with such pent up demand, the private sector has not jumped in more aggressively to bridge the deficit.

National Housing Construction Corporation has only recently got some private sector interest on board, but shackled by the structural deficiencies of the environment, are trudging along as best they can.

The challenge for many home -builders and real estate developers is of access to affordable finance. Mortgages rates run in double digits, ensuring that assuming a generous 15% interest over 15 years, you will end up paying more than one-and-a-half times in interest than the original principal.

The banks in their defence point out that with official interest rates at under 10%, it is unrealistic for them to charge any less, seeing as they load their administrative costs, risk and margins on this benchmark rate.

In addition, the banks are suffering a shortage of long term funds and by the law of supply and demand means these funds will come with a built in premium.

Aside from those among us who can out of pocket put down billions of shillings in cash to develop property, many developers have found a way around high lending rates, borrowing in hard currency, which allows interest rates of as little as 5%.

The challenge would be the exchange risk – the chance that the shilling can lose value against the dollar, forcing up your finance costs in shilling terms. They mitigate against this by charging tenants in dollars, a temporary measure that has persisted longer than it should.

The day a big-time developer finds a way to hedge against exchange risk and charge in shillings, the market will be irreversibly changed.

Who thought for instance that 14 years ago we would be paying for air time in shillings?

The issues dogging real estate development, therefore, are mainly structural and can be addressed by our planners.

To begin with, giving credit where it is due. The decision in the 80s not to impose rent controls must be lauded. Were rent controls imposed, there fore discouraging new investment in the sector, our housing situation would be far worse than it is now.

Seeing how National Housing most recent projects in Kiwatule and Namugoona were snapped up, it is clear that there is no lack of demand for new developments. The challenge then for the Government is encourage developers.

One way is to underwrite the laying out of infrastructure – roads and utilities in big housing estates.

This will not only lower the cost of development, but also lower the cost of the individual units.

In addition, we need to get the pension sector reform out of the way. By allowing other players beyond NSSF to collect workers’ savings, we will boost the pool of long-term savings in the financial sector for on-lending to developers, and for mortgages.

Running concurrently, the Government needs to streamline the land tenure system and its administration, as well as create greater efficiency in our court systems to tackle issues of foreclosures and land.

I like Equity Bank’s attitude. The management starts from the principle that everybody has a right to financial services and then work backwards tailoring products for anybody and everybody.

Their success in Kenya, where they control more than half the bank accounts, speaks to the success of this mindset.

Let us commit to the premise that every Ugandan has a right to decent accommodation and work backwards to effect this.

Construction is already one of the main drivers of the economy because of its ripple effect through job creation and market for local produced materials.

On a more intangible level, improved housing improves the emotional wellbeing of populations and reducing the risk of instability. 

Uganda launches feed-in tariff (FiT) program




January 25, 2011 -- Last week, Turkey revised its feed-in tariff (FiT) program, expanding it modestly, and added a new twist with bonus payments for "Made in Turkey" products. This week it is the US's former military foe, Vietnam, that dipped its toe into the feed-in tariff waters by announcing a draft wind energy proposal. But it is Uganda that, quietly, without fanfare, announced one of the most sophisticated FIT programs in Africa.

Ugandans have launched a program they call a Renewable Energy Feed-in Tariff (REFIT). Uganda follows South Africa and Algeria with early feed-in tariff programs. However, Uganda appears to have learned lessons from other programs worldwide. The Uganda program offers tariffs for a full suite of technologies, including geothermal and bagasse, detailed hydro tariffs, as well as technology-specific program caps.


Uganda announced one of the most sophisticated FIT programs in Africa.


Of particular interest in Uganda's FiT program are the highly differentiated tariffs for hydro projects from 1 to 8 megawatts (MW). The tariffs are in fact linear but presented in tabular form in increments of 100kW.

Further, the Uganda program specifies capacity caps for each technology by year. This is clear policy guidance on how much the country wants of which technology.

  • Project size cap: <20 MW
  • Inflation adjustment based on O&M costs of tariff
  • Administered by Uganda's Electric Regulatory Authority (ERA)
  • Tariffs based on the cost of generation plus profit
  • Hydro tariffs differentiated by size in 100 kW increments
  • Tariffs for eight different technologies, including geothermal
  • Program capacity caps by technology and by year

Oil Blocks Uganda



Uganda Eyes New Oil Future



Great Rift Valley 
Creative Commons - Attribution 2.0 Generic Creative Commons - Attribution 2.0 Generic
Great Rift Valley
Uganda’s recent oil discovery has the chance to reshape relations with its neighbors and the West as energy multinationals eye potential opportunities, Jody Ray Bennett writes for ISN Security Watch.
By Jody Ray Bennett for ISN Security Watch
The Great Rift Valley of East Africa - the birthplace of humankind - holds a reservoir of billions of barrels of untapped oil. Over the last four years, UK-based oil exploration and production company Tullow Oil has discovered reserves of nearly 2 billion barrels of oil in rural western Uganda, with the largest finds in the Lake Albert Basin.
In what is now being called the largest onshore oil discovery in sub-Saharan Africa in 20 years, Tullow believes that this drilling area will yield “several billion” barrels of oil; and at least 15 major strikes by various oil companies have been made throughout Great Rift Valley since Tullow’s discovery. (See this article to view Tullow’s drilling area with further analysis.)
Now as with any new resource discovery, especially on the African continent, and especially when it involves a private company from a former colonial power, questions begin to emerge about the host country’s negotiating power and the regional and international relations implications of the find.
Uganda is now at this point: It is a potentially new wealthy oil state, landlocked by its neighbors who are watching enviously as petro dollars promise to double Ugandan state revenues. The country is also being eyed by other international actors who wonder how oil might shape relations that were once based primarily on non-energy trade, the country’s captive labor pool and military training exercises with Ugandans as a part of a larger strategy to thwart terrorism in Horn of Africa.
Uganda’s oil discovery is also being compared to what is often cited as the Nigerian “petroleum curse” in which “billions of pounds in oil revenues [are] siphoned off by corrupt leaders while communities in the environmentally scarred, oil-producing regions still live in poverty.”
Still, others have identified the ongoing employment of Ugandans as private security contractors, trained and shipped off to Iraq by western private military and security companies, as a security advantage for Uganda. Their training in Iraq could come in handy on the front line of security for Uganda’s new oil infrastructure.
Securing the future
Uganda is in the same neck of the woods as the US military’s Africa Command (AFRICOM) regional military support apparatus. Furthermore, there are several EU energy and oil extraction projects throughout East Africa.
“One interesting dynamic is that while Uganda’s political risk will increase, western states will have less say in Uganda matters. In the medium term, once oil production starts, dependence on donor money will fall. Uganda will still need significant financing to build its oil infrastructure, both physical (refinery, pipeline, railway construction or rehabilitation) and institutional. But one should expect that there will be support forthcoming from non-western partners such as China, Iran, India, etc,” independent country risk analyst and publisher of www.ratio-magazine.com, Andrea Bohnstedt told ISN Security Watch.
“If Uganda takes this, it won’t need the West; if the West tries to muscle out those regimes, it can’t put conditions on its assistance. Remember what was seen in Chad where the West financed the pipeline, and tried to impose certain conditions on the government in return: They had limited impact, and when the president was under threat from rebel armies advancing on the capital, he basically threw all those restrictions out and did what he wanted and/or needed to do to save the regime,” she said.
While AFRICOM has security and economic interests in Uganda, for the time being, Bohnstedt said, “the largest African oil producers are Libya, Nigeria, Angola, Equatorial Guinea - and it’s not clear if Uganda will get anywhere near them in terms of reserves, and it’s still too fragmented to become a ‘hot oil region.’”
“Domestic security [in Uganda] will be closely related to political risk. Many Ugandans are frustrated with [President] Museveni’s seemingly interminable rule and the many contracts and business opportunities going to his family and entourage, and no longer think that they can achieve a change of government through the ballot box. That Uganda will be an oil producer just ups the stakes in the political contest,” Bohnstedt concluded.

Jody Ray Bennett is an independent writer, researcher and journalist. His areas of analysis include the global defense industry, private military and security companies, and the materialization of non-state forces in the global political economy.