The challenge of housing in Uganda

Sunday, 16th January, 2011	E-mail article   Print article
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.




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

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

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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.

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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.

Energy consultancy firm hands over research report on oil to Uganda gov’t

June 4th, 2010 in News

APA-Kampala (Uganda) An energy consultancy firm – PFC Energy – that was recently tasked by the government of Uganda to carry out research and advise on the viability of the partnership between Uganda and three oil companies in the exploration and exploitation of the oil resource in the country, has handed over its report.

APA learns here on Friday that the Ugandan authorities received the report on Wednesday from Mr. Michael Rodgers who is PFC Energy partner for Asia who also led a delegation of consultants.

APA learns here on Friday that the report was handed over to the Ministry of Energy since Wednesday by Michael Rodgers of PFC Energy Partner for Asia, who also led the delegation of consultants.

Sources say that Mr Rodgers indicated that the partnership between the government of Uganda and the three petroleum companies – Tullow, Total and CNOOC – is beneficial as it will bring immense capacity to the development of the Ugandan energy sector.

Mr. Rodgers noted that the benefits of the partnership would include building of a strong financial capability, strong and advanced technological position, and a motivation to develop the oil resources quickly and more efficiently as well as provision of extensive large scale project management skills, among others.

The report calls on the government to give priority to the issues pertaining to safeguards in matters of training, cost control and employment to ensure safe and secure operations.

Commenting on the report, Mr. Rodgers noted that the partnership between Uganda and the three oil companies would go a long way in consolidating potential benefits.

“One way of consolidating all potential benefits would be the creation of a national energy hub and the proposed TTC (Tullow, Total, CNOOC) partnership, provides the best catalyst of achieving this objective”, he said.

APA leans here that the Ugandan authorities, led by Energy Minister Hilary Onek, commended the consultants on their findings and said that the government would study and put them into consideration.

PFC Energy is a consultant group that specializes in strategic advisory in global energy issues.

The group has previously carried out consultancy for energy companies in Asia, Europe, North America and the Middle East. In Africa, the group has been active in the Sudan for the past 20 years.

JM/daj/APA

2010-06-04

Uganda Court Keeps Oil Deals Secret

Source: upstreamonline.com  02/03/2010

The Ugandan government has defied pressure to disclose the terms of its agreements with oil companies, saying that would greatly weaken its position in future licensing rounds.

A Chief Magistrate's court in the capital Kampala dismissed the case filed by Charles Mpagi and Izama Angelo, senior journalists at local newspaper the Daily Monitor who described themselves as private citizens in their petition.

"Government business doesn't have to be necessarily in the public domain... The applicants have not demonstrated that public interest in this case overrides private interest," the judgment read.

Late last year, another group, Greenwatch, filed a similar case against the government.

Explorers discovered commercial petroleum deposits in 2006 in the Albertine Graben area that sits on Uganda's western border with the Democratic Republic of Congo. Production is expected to start later this year.

The journalists said in their suit that the government's refusal to disclose the PSAs protected the interests of a "handful of shareholders" against 31 million Ugandans in whose trust the government owned the petroleum.

They built their case around the country's Access to Information Act, meant to allow free access to information in public offices except where disclosure jeopardizes national security or privacy of an individual.

"We argued that. . .disclosure of these agreements is essential to achieving transparency. This is our belief and we might consider appealing," Mpagi said in a Reuters report.

Uganda has signed five PSAs. Among the companies operating in the country are Britain's Heritage Oil, Tullow Oil, Dominion Oil and Neptune Petroleum.

Uganda becomes oil producer

President Yoweri Museveni examines a sample of oil extracted from Waraga-1

© afrol News / Uganda govt

afrol News, 9 October - After years of painstaking exploration, Ugandans heard what they have been longing to hear - the discovery of oil in their country. The country's President, Yoweri Museveni, made the announcement at a national thanks-giving service for the discovery of oil this weekend in Ugandan capital Kampala. Commercial production should start in 2009, says President Museveni.

The elated President said Uganda's search for oil, which cost companies at least US$ 70 million, started in the country's western regions, with the oil blocks of Waranga 1, Waranga 2 and Mputa in 1989. An Australian oil exploration company, Hardman Resources Ltd, made the discoveries in June this year but the government was waiting for a fitting day to make the news public to its citizens.

Hardman is operator and holds a 50 percent interest in Block 2, which is located in the northwest of the country and covers the northern part of Lake Albert and the surrounding onshore area. The most recent discovery, Waraga, is similar to the original discovery well Mputa, in that it has essentially three zones of oil bearing sands, according to the company.

The Waraga oil in all zones is believed to be of good quality. "This is an encouraging sign from both a reservoir flowing point of view as well as commercial standpoint where the crude may need minimal refining," Hardman notes, indicating that President Museveni's announcements are in tune with the oil company's predictions.

Mr Museveni said, soon his government would begin production and start building an oil refinery. Describing oil as a blessing for Uganda, President Museveni pledged to use the resource to fund development in the country. The Ugandan President said he expected production to begin in 2009, with initial production of 6,000 to 10, 000 barrels a day. This latest development may soon put Uganda among Africa's oil producing nations, chief among them Nigeria, Equatorial Guinea, Angola and Libya.

But President Museveni's speech fall short of disclosing how the oil will be produced or how the oil, how the oil fields will be put up for bidding or whether the government itself will do the exploration. He merely said Uganda has studied various oil production contracts around the world. He dismissed claims by some opposition politicians that oil could turn into a curse and lead to wars, as it had happened in other African countries.

President Museveni thanked God for at last turning successive layers of buried vegetation into crude petroleum of good quality. "Secondly, we thank God that he has given us the wisdom and foresight to develop the capacity to discover this oil while all the previous efforts had failed," he told his audience.

He said soon after he took over the government in 1986, he came in contact with the story of Albertine oil when a group of people representing Shell BP and Exxon wanted to be given oil exploration rights over the whole of Lake Albert.

"I later called in the civil servants and mining scientists first, led by Mrs Janet Opio, who was the Permanent Secretary in the Ministry of Water, Lands and Mineral Resources. I inquired from these civil servants whether there were people, in the whole of the Ugandan system, that were knowledgeable about petroleum. They told me that there was a petroleum 'expert' in the Bank of Uganda," he said.

"I requested them to bring me that 'expert'. The 'expert' came one evening. First of all, he was not a Ugandan; he was a Ghanaian; and, most amazingly, he was not even a scientist at all! He was an economist who worked in Bank of Uganda on import papers dealing with petroleum products," the Ugandan President told his amazed listeners.

He said as a result he refused to sign an agreement with Shell BP and Exxon because "I had nobody in Uganda knowledgeable on petroleum issues and I did not want to sell Ugandan interest at all." President Museveni went on saying his government was forced to send two young Ugandans to study first degrees in geology, physics or chemistry so that they could study masters in petroleum science abroad.

"Today, a core team of 25 professionals, 20 of them with Masters of Science degrees in these fields, has been put in place. It is this team that drafted our policy on petroleum exploration; did the aero-magnetic studies, using air-crafts that had started in 1982; did the seismological studies, based on land; as well as conducting some of the informed negotiations with the foreign oil companies," Mr Museveni boasts.

After an initial period of five years of training and capacity building, Mr Museveni said, the petroleum unit has been transformed into a department of petroleum exploration and production equipped with sophisticated equipment. The Ugandan president said after fifteen years of hard work, his government has now discovered "petroleum of good quality".

He added that the high oil prices on the world market couple with the erratic water levels on Lake Victoria, the Ugandan government has opted to pursue an Early Oil Production Scheme, which will involve setting up a mini-refinery to process a moderate amount of crude oil in order to produce diesel, kerosene and heavy fuel oil as well as develop a heavy fuel oil-based power plant to generate electricity.

He therefore urged Ugandans who panic about electricity to calm down. Uganda at the moment is consuming over 10,000 barrels of oil everyday and the import bill for its petroleum products stands over US$ 400,000 per year, Mr Museveni said while exploration continues, commercial production would start in mid-2009.

"Apart from discovering the oil underground, Uganda also has the capacity to produce bio-diesel - diesel from plants such as Jatropha (ekiroowa, etc) and Pongomia Pinnata (proposed to be imported from India). Some companies from Asia are ready to move in immediately. Government will establish joint ventures with some of them. In addition, of course, we are continuing with our plans to build Bujagali, Karuma, Ayago, etc. Therefore, the problem of shortage of energy, an unnecessary mistake in the first place, is on the way out."

A Ministry of Energy official in Uganda, Thomas Male, was quoted as saying that the three discovered fields in western Uganda have reserves of between 100 million and 300 million barrels. According to ‘Associated Press’, nor sooner than the discovery of oil was rumoured than wealthy Ugandans started scrambling to buy land in areas where exploration of oil is taking place.