Executive Summary

April, 2017

EXECUTIVE SUMMARY

o much is going across all the sec- June this year. Kenya Pipeline Company tors we cover in Uganda. Cnooc, recently signed a three-year lease agree- Sa company that prefers to stay in ment to take over the facilities of Kenya the shadows, is slowly positioning itself Petroleum Refineries Limited at Mom- in preparation for the construction of basa, the last point that the crude will the crude oil pipeline from Uganda to be received before it is exported out of Tanzania. the country. This report goes further to Dao Marble Uganda Limited, the show what else Kenya Pipeline is doing company that once promised to take and what that means for the region. Uganda’s marble to foreign markets to In Tanzania, Africa’s richest billionaire, compete with other first-class gems, is Aliko Dangote, has managed to get the limping as a result of financial troubles. government there to extend power to One bank, company staff and other ser- his cement company. The Dangote group vice producers are hounding a top Dao was increasingly getting frustrated at the Marble official over unpaid dues. huge amounts of money it was spend- The Uganda Electricity Generation ing to buy diesel to power its machines. Company Limited is drawing up new An executive order from President John rules of engagement to deal with Chi- Pombe Magufuli has seen Tanzania Pe- na International Water and Electric, the troleum Development Corporation en- Chinese contractor at Isimba dam, after sure that gas power is taken to the plant. a series of letters and approved engi- The first power plant to serve three neering designs were ignored. Short of East African countries was launched in that, Uganda could launch a dam that Rwanda. The energy output from the has defects it will need repairs in its ear- 80MW Rusumo power plant will be ly life. equally shared among Rwanda, Tanzania With Kenya heading for its general and Burundi. The plant, to be built along elections in August, East Africa’s biggest River Kagera, brings renewed hope of economy is in a race against time to more of such cross-border infrastructure prepare for its first export of crude by being undertaken. OIL AND GAS

Oil players tap Equatoria Guinea’s Obiang as logistics firms eye deals

Equatoria Guinea's President Teodoro Obiang Nguema Mbasogo

ome oil players are aggressively Elly Karuhanga, the chairman of the lobbying President Yoweri Musev- Uganda Chamber of Mines and Petro- Seni’s handlers to have him come leum, told us it is almost certain Obiang along with Equatoria Guinea’s President will attend one of the events. The addition Teodoro Obiang Nguema Mbasogo for a of a logistics expo to the annual oil con- logistics expo and an oil convention slat- vention adds further weight to the events. ed for April 25 – 27 at Kampala Serena Uganda’s logistics industry is slowly re- hotel. Although the Uganda Chamber of covering from a difficult period of low Mines and Petroleum has confirmed that sales and is looking to exploit the oppor- Museveni and Obiang will be chief guests tunities within the oil industry by holding at the annual oil convention, State House an expo that, among other things, seeks continues to keep the two heads of state’s to raise debate of the possibility of the programme guarded. country becoming a regional hub. There are few synergies, if any, between The expo, which is being organised by the oil industry of Equatoria Guinea and the Uganda Freight Forwarders Associ- Uganda’s. However, the attendance of ation, will be held ahead of the fourth Obiang could open the way for companies annual oil convention, which is hosted by to consider engaging in partnerships be- the Uganda Chamber of Mines and Petro- tween the two countries. Equatoria Guin- leum. ea is one of Africa’s main oil producers. The logistics industry could see its- for TO NEXT PAGE OIL AND GAS

FROM PREVIOUS PAGE Equatoria Guinea’s Obiang to speak- at oil and logistics forum tunes revived at a time when Uganda has nearly ground to a halt during the protracted signed key agreements, such as those for an negotiations between the major oil firms and export crude oil pipeline, for the development government over tax and some key investment stage of its oil industry. Uganda is also prepar- decisions such as the amount of recoverable ing to kick off the next stage of oil exploration, oil. Logistics companies such as ThreeWays where the logistics companies will be required have publicly pointed out how the low activity to move drilling equipment to the oil wells. in the oil industry hurt them, while partnerships Possibly no sector was hurt as much as the among some logistics firms collapsed. logistics industry when Uganda’s oil industry French major Total takes firm hold of East Africa

French firm Total has firmly positioned itself as the main oil player in East Africa after acquiring Gulf Africa Petroleum Corporation’s (Gapco’s) assets in Kenya, Uganda and Tanza- nia. The acquisition completes Total’s ambitious footprint in East Africa’s oil market chain, where it is set to tussle it out with Vivo Energy, the company running the Shell brand, in the downstream segment. Under the deal, Total acquired two logistics terminals in Mombasa, Kenya and Dar es Salaam, Tanzania, as well as a retail network of more than a hundred service stations in all the three countries. Total, however, remains unrivalled in the heavily capitalized upstream market where it is leading the construction of a crude oil pipeline between Uganda and Tanzania. The Gapco deal was announced nearly a year ago but had to go through some regulatory hoops before it was rubberstamped. There is no official declaration of the value of the deal. East Africa presents a lot of opportunities for Total. Uganda’s oil industry, where less than half of the exploration areas remain untouched, and Tanzania’s gas reserves, discovered at a time a time of increasing consumption of Liquefied Petroleum Gas (LPG), all present the French company’s opportunities to tap into for a region, whose consumption of petroleum products averages a 10 per cent growth. OIL AND GAS

Cnooc prepares to build Uganda Tanzania crude oil pipeline hinese firm Cnooc is set to construct the crude export pipeline Cfrom Hoima in western Uganda to the Tanzanian port of Tanga, according to a source within Cnooc. We have been told by different sources that a number of staff from China have already flown into the country and are working intensely to have the designs in place in preparation for the construction of the pipeline. Also, meetings between Total E&P and Cnooc – the two main joint venture companies - are said to have intensified lately the crude pipeline, and we were told ited, a waste treating company, is over- as the they race to have a pipeline in place there has not yet been a definite position seeing the waste treatment process at by 2020 at the earliest. on who will construct the pipeline. the Kingfisher field, undertaking what is Top managers at Cnooc were expected “Following the completion of the Front technically known as a treatment of Con- to fly to Tanzania in April to continue with End Engineering Design by Gulf Inter- taminated Synthetic Based Muds. the route survey for the crude oil export state Engineering (GIE), the US (Houston) At least two things are happening at pipeline. A survey for the Tanzanian route based company selected to undertake the Kingfisher field with regards to waste was supposed to have been completed the basic engineering study to provide treatment: All Ways is recovering waste by December, according to a ministerial detail and finalise the technical design of oil. The company will also treat the waste. statement that Uganda’s Energy Min- the project, several calls for tenders will The entire process of recovering the oil ister Irene Muloni made to Parliament be launched to select the best company and treating the waste is supposed to late last year. It is not clear why there has for the detailed engineering, procure- take six months, but it will take more time been this delay. The Ugandan part, Mulo- ment and construction of the East African because, according to our source, some ni told Parliament then, was completed. Crude Oil pipeline project,” Total’s Corpo- of All Ways’ equipment was damaged The crude oil export pipeline is estimated rate Affairs manager Ahlem Friga Noy told while being transported to the site. to cost about $3.5 billion. According to us. In March, Cnooc contacted Tullow Oil what our source told us, French firm Total Uganda’s crude oil, which solidifies and officially made its interest in buying E&P will mainly come up with the studies quickly, is expected to be heated through- half of the 21.57 per cent stake that the and the sourcing for the financing, while out the 1,445km stretch to Tanga. UK firm had agreed to sell in its Uganda Cnooc will construct the 24-inch diame- Away from the pipeline, Cnooc is cur- fields to Total E&P. ter pipeline. Tullow Oil, the third partner rently undertaking waste treatment at The completion of the transaction, in this joint venture partnership, will be a its Kingfisher field, which is located on which is subject to government approval, non-operator and will only contribute its the banks of Lake Albert. The Kingfisher will see Total and Cnooc have an equal share to the financing of the pipeline. remains one of the largest oil fields in shareholding of 44.08 per cent each in We asked Total E&P, the company lead- Uganda, holding more than 500 million Uganda’s oil fields. Tullow Oil will retain ing the Uganda-Tanzania crude pipeline barrels of oil. an 11.76 per cent non-operated interest project, about these developments on All Ways Environmental Services Lim- in the oil basin. ELECTRICITY

Inside Eskom Uganda’s troubles Questions are being asked of Eskom Ugan- da’s ability to meet its set goals of operating on foreign companies such as Umeme and and maintaining two crucial hydropower dams Eskom to commit huge amounts of capital, and run the show, in the energy sector, there – Nalubaale and Kiira - after a recent meeting Plant reliability is at 97.5 per with the regulators at the Electricity Regulato- appears to be a growing fatigue among ry Authority heard of a series of problems that cent, far below the 99.7 per cent Ugandan technocrats in the way foreign the South African firm was facing. target. companies are doing business. The Electricity Regulatory Authority wrote The Electricity Regulatory Authority, re- to Eskom on March 23, 2017, where the reg- Of deeper worry, though, is that gardless of its limited capacity, now has the ulator said Eskom was performing poorly. ERA two units - number three and guts to stand up to foreign companies such based its assessment on the fact that Eskom as Umeme and decline to approve their in- exceeded the forced outage hours by more number 10 - that generate 18MW vestment plans. The Uganda Electricity Gen- than 600 per cent, with some of these outag- each are not working; infact eration Company Limited has also built its es coming on the recently refurbished unit six. capacity; it now has full supervisory powers Eskom was thereafter called to explain why it they have not been working and generation licenses for the Karuma and was facing such dire issues. for the last Isimba power dams, and is currently nego- tiating a 100 million Euros loan from- Ger During a meeting on April 3, officials heard three that basic equipment such as the fire systems many’s Kfw, which it intends to invest at the at the Jinja offices were not working, while the years. Nalubaale and Kiira dams. speed governors at the Nalubaale dam were This level of confidence among Uganda down for 330 hours a year, nearly for 15 days technocrats appears to be exposing foreign each month. Part of the reason, according to firms such as Eskom to intense scrutiny, insider sources we have spoken to, is down to where some of the findings are quite embar- lack of spare parts to fix the problem. rassing. That is not all. Plant availability at the Na- But how did it get to a point where Eskom lubaale and Kiira dams was estimated at 94.7 appears to be neglecting its mandate of per cent, below the 96.9 per cent target, operating and maintaining the Nalubaale which, by industry standards, is quite low. and Kiira dams efficiently? It helps to Plant reliability is at 97.5 per cent, far be- go back to the time Uganda decided low the 99.7 per cent target. to disband Uganda Electricity Board Of deeper worry, though, is that two TO NEXT PAGE units – number three and number 10 – that generate 18MW each are not working; infact they have not been working for the last three years. To offer all these problems a financial value, we used the loss time and Eskom’s power tariff of US cents 1.12 to come up with a figure. We estimate that Es- kom is losing up to $2 million a year in unre- covered revenues as a result of these problems. To the country, the problems at Eskom mean that the public is not receiving enough power, and that the country is spending more of taxpayers’ money to build other power plants and yet Nalubaale and Kiira, which have a combined capacity of 380MW, are performing below their target. The problems at Eskom are emerging at a time when Uganda’s electricity sector is wit- nessing a dramatic shift. After more than a decade where Uganda has depended heavily Thozama Gangi, the chief executive officer of Eskom ELECTRICITY

Inside Eskom Uganda’s troubles FROM PREVIOUS PAGE (UEB), the state parastatal that governed tracts were handed to these two compa- to approve its capital investments, which the energy sector. nies, which some people feel were unfair it will recoup from the tariff, but invest Facing pressure from external donors, to Uganda. Eskom was to earn a 12 per less than what it promised. This assertion Uganda was forced to split UEB, which was cent return on investment, while Umeme is supported by the fact that Eskom’s net being weighed down by a pile of debts, into got a 20 per cent return on investment profit is almost equal to its investment, three separate entities: Uganda Electricity locked into their contracts. according to its 2015 financial figures, Generation Company Limited, Uganda Eskom Uganda Limited, according to which means that Eskom is not bringing Electricity Transmission Company Limited, our investigations, had a $6.8 million loan new money to the table; rather, reinvest- and Uganda Electricity Distribution Com- from Eskom Enterprises, the finance arm ing the profit it makes, which comes with pany Limited. Uganda then scouted for of the group, from which to draw from. a sweet return. foreign firms to operate and maintain its But in 2003, the company decided to bor- It would be too harsh to heap everything assets in the generation and distribution row just $2.7 million of that amount, and on Eskom. Uganda’s energy sector is still at fronts. In 2003, government awarded Es- it took years before it even considered the an infant stage, with about 15 per cent of kom a 20-year concession to manage the option of drawing down on the remainder the population connected to the grid. The generation bit, at Nalubaale and Kiira, of the money. However, Eskom said it had low demand makes it hard for operators to while Umeme, in 2005, was also handed a invested $20 million by 2014. make huge investments. Also, the financial 20-year concession to be in charge of the This behaviour of low investment, ac- problems that Eskom’s parent company in distribution side. The transmission part cording to the different figures we have South Africa is facing means the Uganda was left as it was. looked at, appears to have informed Es- operation cannot get the support it needs. The foreign companies – Eskom and kom’s business strategy – invest very little Still, that does not relieve Eskom Uganda Umeme – then found a country that was but make as much profit. The trick is sim- from dealing with basic issues such as fire desperate for a change of fortune. Con- ple: Eskom simply convinces the regulator engines.

UEGCL plans new ways to fix Isimba dam The Uganda Electricity Generation government – such as the agreed bill at both the Isimba and 600MW Karu- Company Limited will have to em- of quantities – and the many times the ma dam, lobbied hard to take control ploy new rules of engagement with Chinese have failed to reply to letters of the full supervisory powers of the China International Water and Electric from UEGCL that enraged the board. two dams. Corporation if the defects at the Isimba Take the cylinders for the dam’s gates. The result finally led to the sacking power dam are to be rectified. Government and CWE agreed that of three long-serving commissioners During a site visit to assess the prog- the cylinders would be stainless steel. in the ministry of Energy and Mineral ress of construction of the 183MW Instead, CWE imported the far-cheap- Development, and a transfer of the dam, the board was disturbed to find er ceramic coated cylinders. Since supervisory powers to UEGCL. that China International Water and the ceramic-coated cylinders will be Harrison Mutikanga, the chief exec- Electric (CWE) Corporation was vio- immersed in water, engineers say they utive officer of UEGCL, said the board lating some basic principles for such a will corrode and require replacement, would come up with decisions over large project. an additional cost to the operation and how to deal with CWE. One of the de- For example, the absence of the con- maintenance of the dam. cisions that have already been under- tractor’s project manager, a key staff It is unlikely that Isimba will be able to taken is the withholding of payment to who is supposed to ensure that the launch before its target year of 2018. CWE for some equipment such as the engineering designs are followed to But it also appears Uganda will be left cylinders. the dot, was something that the board with high operation and maintenance The Isimba dam is estimated to cost took issue with, raising worries that the costs because the agreed engineer- $568 million. Construction works were dam could encounter more defects. ing designs are not being properly estimated at 76 per cent as at the end However, it was the complete dis- followed. of February 2017. At least $225.7 mil- regard of the contractual terms that The conduct places UEGCL in a tight lion has been already paid to CWE for China Water and Electric signed with spot. UEGCL, concerned by the cracks the works done so far. MINING

Where is Dao Marble’s Mohammed Aoun? A manhunt for Mohammed Aoun, the class minerals on the international mar- loan. Aoun instead made promises to pay but chairman of Dao Marble Limited, is on. ket. never came good on his word. More than a dozen service providers Instead, different stories are emerging Other service providers demanding payment – including a bank, lawyers, a television out of Dao Marble Limited. According to from Aoun include the television station NTV, station, among others – are looking for one story, in 2012, the year it officially Bukoto Heights Apartments, owned by busi- Aoun, seeking payment for services of- launched services, Dao Marble Limited nessman Sudhir Ruparelia, among others. fered. Aoun’s whereabouts remain un- went to Global Trust bank and got a loan. In Karamoja, according to our source there, clear with all his known phone contacts It is not clear how much money the com- workers of Dao Marble Limited have since quit off. pany borrowed. However, later that year, the company and relocated to another mining The episode places a stain on Ugan- in September, Bank of Uganda took over company owned by the popular Pastor Samu- da’s mining industry, where questions Global Trust bank after it failed to meet el Kakande. The staff quit over non-payment are bound to rise about the credibility of the minimum reserve capital require- of wages. some investors being attracted to the sec- ments. Bank of Uganda later on handed Dao Marble has since defaulted on its rent tor, and whether the country carries out the assets and liabilities of Global Trust arrears and its offices in Kampala remain inac- strong due diligence before issuing min- bank to dfcu bank. Lat- cessible. The operations at its processing plant ing licenses. We, too, tried to call Aoun er on, dfcu bank also at Kinawataka have also come to a standstill. but his known phone contacts were off. added Dao Marble More information we have gathered so far We also called Tharun Uday, the former more credit. points to shareholder disputes in the compa- managing director of Dao Marble, on Dfcu bank has ny, a problem that has impacted on the com- his known phone number but he did over the years pany’s finances. Dao Marble faces lawsuits not pick up our calls. held meetings over unremitted dividends to shareholders, Dao Marble Limited is supposed to with Aoun to and also unpaid salaries. We could not estab- be the main company mining mar- have Dao Marble lish the total value of these arrears. ble in Rupa in the Karamoja region in Limited pay the Dao Marble was portrayed colourfully in the the northeastern part of the media. The company appeared to have the country. The company blessing of President Yoweri Museveni after also has a processing making promises of transforming the mining plant at Kinawata- of marble in the country. ka, Mbuya, in the TO NEXT PAGE outskirts of the capital Kampala. In September last year, Aoun told one of our writers of how the company would embark on a $40 million expansion plan for its processing plant, and why Ugan- da’s marble would compete with other world-

Mohammed Aoun, the chairman of Dao Marble Limited MINING

Where is Dao Marble’s Mohammed Aoun? FROM PREVIOUS PAGE The company, however, received its first blemish in early Now, a dozen of lawsuits against Dao Marble Limited are pil- 2014, when a Human Rights Watch report pointed out how the ing up in the courts with the whereabouts of the key defenders company was abusing the land rights of the indigenous people still a mystery. of Karamoja. Dao’s problems are not expected to hurt Uganda’s prospects In a reply to the report’s findings, Dao Marble Limited said of mining marble in the Karamoja area considering how attrac- “People having surface rights over our area of operation were tive the mineral is to other investors. all compensated for their land and the company entered into The government estimates that about 300 million tonnes of an agreement with the indigenous people endorsed by all the marble resources are located in Karamoja region. leaders and the people themselves.” Black Mountain borrows $750,000 for Namekara lack Mountain Resourc- “The funding comes at a time of es Limited has secured a positive growth for Black Mountain, B$750,000 loan from one of which recently confirmed repeat its key shareholders, LB Internation- orders during January and February al, to finance its activities at the -ver 2017 from a number of strategic miculite mine in Namekara in the customers in Europe that original- eastern Ugandan district of Mbale. ly purchased product in November The Australian company an- and December 2016, resulting in an nounced that the loan, secured at increase in production.” an interest rate of 10 per cent per In March, Black Mountain also annum, will be used to ramp up released an upgraded resources production and improve operations statement and new information at Namekara. about the demand for the vermic- “The funds raised through the ulite at Namekara. agreement will be used to meet the The company said it had drilled increasing demand for high-quality, about 10 per cent of the area, and large and medium-flake vermiculite from that it has come up with an from Black Mountain’s Namekara indicated mineral resource status. mine and processing facility. Funds According to the results of the drill, will be primarily to improve operat- the indicated mineral resource con- ing efficiencies and working capital tains 870,000 tonnes of vermicu- at the mine which, in turn, drive in- lite, with the company saying it is creased production and improved producing approximately 30,000 margins,” the company announced. tonnes. 870,000 LB International is associated with Black Mountain Resources add- Richmond Partners Master Limited, ed that the new mineral resource tonnes which is controlled by Luca Bechis, status, would enable it “to carry a non-executive director at Black out mine planning and convert the of vermiculite, with the Mountain Resources. area into a probable reserve.” The company saying it is Black Mountain Resources said company said: “…it can be assumed producing approximate- the money could not have come at Namekara has the potential to be a ly 30,000 tonnes. a better time. long-life mining operation.” KENYA

Kenya hands over key refinery to state pipeline company

President Uhuru Kenyatta

enya’s main refinery Kenya government has been troleum Refineries Limited assets at the port of managing the facilities of began refurbishing its facili- KMombasa, which have Kenya Petroleum Refineries ties and later called tenders been largely idle ever since Limited. for civil works, part of which Indian firm Essar dropped Kenya Pipeline Company were to accommodate trucks its interest in running the fa- will now take over Kenya Pe- that would be offloading cilities last year, have been troleum Refineries Limited’s crude oil. Kenya has discov- handed to Kenya Pipeline facilities in its bid to boost ered about 700 million bar- Company as part of a grand the oil storage capacity of rels of oil. plan to smoothen the coun- East Africa’s largest economy. So much remains unclear try’s process towards export- Under the Early Oil Pilot about Kenya’s plan to export ing crude oil by June this Project, where Kenya intends crude oil. The country lacks a year. to move at least 2,000 bar- solid legislative framework to Kenya Pipeline Company rels of oil per day in heated govern the oil industry. With recently signed a three-year tanks stationed atop trucks trucks moving hundreds of lease agreement to use the from South Lokichar to the kilometers away from South facilities of Kenya Petroleum port of Mombasa, the oil will Lokichar to Mombasa, it is Refineries Limited, one of the be stored at the facilities of not clear how the country final points that will receive Kenya Petroleum Refineries would deal with the risks the crude before it is export- Limited in Mombasa. such as in the event of a spill- ed outside the country. The Late last year, Kenya Pe- age. TO NEXT PAGE KENYA

Kenya hands over key refinery to state pipeline company FROM PREVIOUS PAGE It is not clear whether some of the smooth flow of oil. The old line, which trucks from the road daily at maximum crude will be refined at Mombasa, and if has been in existence for 38 years, has utilization.” so, how much. At the signing ceremony been marred with all sorts of defects. About 3.5 billion litres of refined petro- for the lease, Energy Cabinet Secretary Kenya Pipeline Company said Zakhem leum products transited through Kenya Charles Keter hinted at the prospect of International has begun installation to the markets of Uganda, Rwanda, Bu- some crude being refined. works for the eight mainline pumps, rundi and the Democratic Republic of He said: “The KPRL is beneficial in that with the overall construction works es- Congo by 2016. it will boost Kenya’s oil stock levels. Ini- timated to be 82 per cent complete. KPC Kenya has moved to tighten its grip on tially our stock level was three days. said it has paid about 75 per cent of the the regional fuel market by introducing a Now we have 12 days and we need to contract sum to Zakhem and is currently 30 per cent discount on all transit prod- increase it to 30 days, since we rely heav- reviewing the other invoices to ensure ucts in Kisumu and Eldoret depots in the ily on oil importation. This will enable us the work was done. The new line is ex- western part of the country. According plan ahead for the open tender system pected to be commissioned by June this to the new approved rates, oil marketing which will make oil prices cheap.” year, a few weeks ahead of what could companies will now pay a promotional For now, Kenya Pipeline is ensuring be a heated general election season. tariff of $ 41.55 per 1,000 litres from the that Zakhem International, the company When commissioned, and operating current $59.32 per 1,000 litres. constructing the new Nairobi-Momba- at full capacity, KPC said, the new line, Demand for petroleum products in sa pipeline for refined products is com- with one million litres per hour flow rate, East Africa is estimated to grow at eight pleted as soon as possible to ensure the “will remove an average of about 700 per cent annually. Kenya readies for Africa’s largest wind power project Lake Turkana Wind Power says all the 365 turbines needed to produce at least 102MW of wind power are to be installed by June 2017. When installed, this would be the largest wind power project in Africa, and further improve Kenya’s energy mix. One year after the company began assembling the turbines, each with a capacity of 850kW, it said that at least “347 out of 365 turbines have already been erected, which is a clear indication that the project is on course for completion as per its original plan by June this year.” In a statement, Lake Turkana Wind Power General Manager Phylip Leferink said “the remaining twenty turbines have already been delivered on site and the technical team, from Vestas and Siemens, are working day and night to ensure that they meet the timelines as per the contractual obligations.” Lake Turkana has a target of producing 310MW of wind power, which will be fed into the Kenyan national grid. Kenya is trying to ramp up cleaner renewable energies ahead of the more 310MW expensive thermal power projects. The country is trying to develop another of wind power, which 100MW wind power project in Kajiado county, southwest of Nairobi. will be fed into the Turkana Wind Power also announced that Kenya Electricity Transmission Kenyan national grid. Company is constructing a double-circuit 400kV, 438km transmission line to evacuate the power from the 40,000-acre wind farm to the national grid. The cost of the project is estimated at $675 million. Kenya Power and Light- ing Company Ltd will buy the power from Lake Turkana Wind Power over a 20-year period. KENYA

Goldplat secures loan to double Kilimapesa gold The amount of gold produced at Kenya’s Kilimapesa mine is set to be doubled after Goldplat Plc, the operators, secured a $2 million one-year loan, with some proceeds expected to be channeled towards expanding the processing plant. The loan, which will be shared throughout some of the group’s operations in Ghana and Kenya, is bound to relieve the company some financial pressures it was facing considering it was financing the Kilimapesa gold project from internally generated funds. Goldplat announced it would produce 120 tonnes of gold per day from the current 60 tonnes after the expansion of the processing plant. Goldplat received the loan facility from Scipion Active Trading Fund. In a statement, Gerard Kisbey-Green, the CEO of Goldplat, said: “We stated in our inter- im results announced on 20 February 2017 that we were looking at various forms of debt capital raising with a view to restructuring the group balance sheet and I am very pleased to have agreed this loan facility with Scipion. We will use the funds initially to complete stage two of the processing plant expansion at Kilimapesa and to repay the capital made available to Kilimapesa Gold Limited from other group subsidiaries for goods and services rendered. The result will be a cleaner and more appropriate group capital structure and availability of working capital for our recovery businesses.” Goldplat recently launched a new processing plant and a tailings deposition facility. The company said the purpose of the new facilities is to “decrease operating costs, optimise overhead costs and to return Kilimapesa to profitability.” TANZANIA

Tanzania to build gas power facilities for Dangote Cement

Aliko Dangote anzania has started the reserves of about 500 million plant hurt its margins for 2016. process of building nat- tonnes of limestone, enough to With an agreement with the Tural gas power facilities feed the country, which has had Tanzanian government now towards Dangote Cement’s a per capita cement consump- in place, things are looking up plant at Mtwara, in line with tion of about 50kg per annum, for the Dangote cement plant President John Pombe Magufu- for decades. in Mtwara. The company an- li’s directive, a move that eases Dangote group said although nounced it is to build a perma- the tension that had earlier built its cement plant is farthest from nent coal/gas power station up when Africa’s richest billion- the main city of Dar es Salaam, later this year at a cost of $100 aire threatened to shut down compared to its competitors, million. The company will also his company over weak govern- it quickly gained a 26 per cent ensure that the kilns will be able ment support. market share by July 2016, five to run on gas as well as coal. Tanzania Petroleum Devel- months after it had launched its The company is also trying to opment Corporation recently operations, according to its an- build its distribution fleet to 600 agreed a number of issues with nual report for 2016. This was trucks to capture a wider market Dangote group of companies after it had sold 600,000 tonnes this year. over power supply to the ce- of cement at a competitive price There are a couple of risks for ment firm. One of the key issues that put pressure on the oth- the company though. Demand that the two parties agreed on er cement companies to lower for cement in Tanzania is mainly was the price of the natural gas their prices. driven by growth in the real es- that is to be supplied to the ce- The prospect of being the main tate sector and government ex- ment plant. The two parties put cement producer in Tanzania, penditure on new infrastructure pen to paper on March 8 and 13, however, came under threat projects, especially roads. 2017. Nigeria’s Aliko Dangote when the company failed to at- However, in the wake of damp- remains Africa’s richest man. tract enough incentive to carry ened economic growth and a Dangote Cement launched the on with the plant’s operations. pick-up in the country’s debt cement plant in Mtwara, 400km Of particular concern was the levels, government expenditure away from Dar es Salaam, in costs the company was running on infrastructure has been sub- February 2016, describing its to power its cement plant. The dued. Dangote group is optimis- capacity as the largest in the company said the cost of run- tic Tanzania’s economic growth country. The company said it has ning diesel gensets at its power will rebound in 2017. TANZANIA

OreCorp gets $15.5 million for Nyanzaga gold project OreCorp Limited is to embark on The placement provides OreCorp fur- that the capital cost to produce gold at the definitive feasibility study for the ther incentive to move from being just the site is about $50 million. Nyanzaga gold project after it raised a developer to a gold producer. Orecorp Some of the company’s costs, such as AU$20.6 million (US$15.5 million) from is developing the Nyanzaga gold project those it is paying for power at the site, institutional investors through a private with Acacia Mining. are estimated to reduce when the Tan- placement. The study will, among oth- OreCorp also said the funds offer it a zanian government commissions a 35km er things, offer the company deeper in- leeway into targeting new mining sites transmission line that it has promised to sight into the kind of drilling needed at around the Nyanzaga gold project. construct to the gold site. the Nyanzaga gold project, which should Studies that OreCorp has conducted There are no artisanal miners on the inform it the different ways of cutting show that the Nyanzaga project holds a Nyanzaga gold project, greatly reducing costs. lot of potential. The company estimates the chances of any land dispute.

ADB offers $29.8 million Heritage prepares loan for gas sector to drill first oil well Heritage Rukwa Limited, a sub- sidiary of Heritage Oil, is set to drill its first oil well in Tanzania in the fourth quarter of this year, the company announced. Heri- tage Oil, which made its first in- roads in East Africa by striking a large well at Uganda’s Kingfisher The African Development Bank has loaned towards Tanzania’s efforts in putting upa field in the western part of the Tanzania $29.8 million to help the country sound regulatory regime for the gas sector, country, is currently looking for exploit its gas resources, which are estimat- support government negotiation teams to contractors to undertake the civil ed to be enough to power the continent for ensure the country gets the best deals and works needed before drilling of weeks. formulate local content policies that will cre- the oil well. The ADB announced that the money ate jobs in the gas sector. The company announced that would “help the country mobilize domes- The ADB hopes that through this interven- it will soon “embark on a tender tic resources and unlock the potential of its tion, Tanzania can attract more investors, process for a civil enabling works natural gas resources through leveraging but also guarantee that more of the coun- contract for oil exploration oper- domestic markets and local content initia- try’s population and businesses utilize the ations within the South Rukwa tives.” gas resources, on top of exporting some of Tanzanian acreage.” The money is expected to be channeled it throughout the region. Heritage said “the proposed contract will cover all civil works required to enable drilling of one Wentworth Resources gets govt payments firm onshore exploration well A number of government institutions have es that were outstanding at the year-end, and is expected to start in the cleared some of their arrears with Went- and has also settled a 2015 invoice for line fill fourth quarter of 2017.” worth Resources Limited, about $4.9 million, gas volumes. In addition, we have received Some of the civil works that the offering the gas company some relief ata payment from Tanesco for five months of new contractor will undertake time when the firm was getting financially outstanding invoices. Combined cash re- will be the upgrade of the exist- distressed over its Tanzania operations. ceipts totalling $4.9m, net to Wentworth, ing access routes, opening up a Wentworth, which had threatened to stop have been primarily used to settle outstand- new access track, one new well- gas supplies from its Mnazi Bay plant, an- ing amounts that were due to the operator, site and associated infrastruc- nounced that Tanzania Petroleum Devel- Maurelet Prom,” the company announced. ture needed at a camp. Heritage opment Corporation and Tanzania Electric Wentworth is optimistic of its Tanzania also wants the contractor to put Supply Company Limited had made some prospects, saying demand for gas in the in place special measures to rein- payments to the company. country is stabilizing, offering it an opportu- state the well back to its original “So far in 2017, TPDC has settled in full the nity to push for more demand for its gas at form in case the company aban- November 2016 and December 2016 invoic- Mnazi bay. dons it after drilling. RWANDA Rwanda closes $350 million peat-to-power plant deal

n one of its biggest energy deals in more than a year, Rwanda has paved the way for the de- Ivelopment of an 80MW peat-to-power plant after it closed a $350 million financial package from a group of lenders. Africa Finance Corporation, the lead arranger for the project debt, said the power plant will increase Rwanda’s installed capacity by 40 per cent. About 25 per cent of Rwanda’s population of 12 million people has access to electricity. According to the terms of the deal, Africa Fi- nance Corporation arranged senior debt facilities of $245 million, contributing $75 million in loans and providing an underwriting commit- ment of $35 million. The other participants in this deal include Fin- nfund, the development financing arm of the government of Finland, Eastern and Southern African Trade and Development Bank, African Export-Import Bank (Afreximbank), Export-Im- port Bank of India, and Rwanda Development Bank. A consultant’s report noted that Rwanda has about 155 million tonnes of dry peat, with slight- ly more than three quarters of these reserves found near Akanyaru and Nyabarongo rivers and the Rwabusoro plains. Combined, these reserves are thought to be enough to put up a 1,200MW power plant. HQ Power is expected to put up the power plant. The company describes itself as the first private company to establish a peat power plant in Africa on a large scale. HQ Power is owned by a Turkish investor, HAKAN AS, and an international power company, Quantum Power, with a participation of a project development company Themis. President Paul Kagame RWANDA

Desert Gold shores up $300,000 amid talks with Rwanda investment firm Canadian firm Desert Gold Ventures recently managed investment firm, for a possible partnership. Desert Gold to raise $300,000 through the sale of shares for its mining Ventures hopes that if it signs a memorandum of under- operations in Rwanda and Mali as the company continues standing with Ngali, the state company will be able to invest to hold discussions with a Rwandese investment firm over substantial capital in the Byumba gold project. more money for its gold project. The company did not say how much money it was looking Desert Gold said the $300,000 will be used for “general for to invest at Byumba. However, international estimates working capital and development purposes at the compa- place an amount of about $5 million that junior firms such ny’s projects in western Mali and Rwanda.” as Desert Gold Ventures need to explore and produce gold In January this year, Rwanda granted a 10-year renewable at the initial stage. commercial mining license to Desert Gold to explore for gold The Canadian junior firm also said it is “actively applying over the Byumba project as the country seeks its first com- for other prospective gold exploration properties in the area mercial gold mine. of interest surrounding the Byumba deposit.” To get the gold project firmly on course, Desert Gold is Desert Gold says it has long-term plans of going into large- holding discussions with Ngali Holdings, the Rwanda state scale commercial mining in Rwanda.

80MW Rusumo power plant finally launched $121 million for the construction of the transmission lines between the three countries. Dancers at the launch of the Rusumo power plant Construction of the much-awaited 80MW Re- River Kagera, is important as it will be the first gional Rusumo Falls Hydro-electric project kicked electricity project whose output is to be shared off recently, in a ground-breaking ceremony that by three East African countries. The project is ex- raised hopes of Rwanda further closing the ener- pected to offer a blue-print of the possibility of gy gap it faces. undertaking similar projects around the region. The World Bank is financing the power project, A joint venture of two Chinese companies - CG- which is shared between the three countries of COC Group Ltd and Jiangxi Water and Hydropow- Rwanda, Tanzania and Burundi, to a tune of $340 er Construction Company Ltd - will undertake the million. The African Development Bank is offer- civil works/supply and installation of hydro-me- ing a financial package of $121 million for the chanical equipment, while the consortium of construction of the transmission lines between Rusumo Falls Andritz Hydro GmbH (Germany) the three countries. and Andritz Hydro PVT Ltd (India), will supply All three countries are expected to receive and install electro-mechanical equipment for 26.6MW from the project, which could be com- the power plant. Rusumo Power Company Ltd, a missioned in 2020 if the three-year construction special-purpose vehicle, is the contractor of the time frame is met. project. The Rusumo power plant, which will tap into PEOPLE TO WATCH

Eng. Ziria Tibalwa Waako Eng. Ziria Tibalwa Waako has been appointed the chief executive officer (CEO) of the Electricity Regulatory Au- thority. Ziria replaces Dr. Benon Mutambi who in Decem- ber last year was appointed permanent secretary ministry of Internal Affairs. Ziria, who until this appointment was the director of the Technical Regulation Department, holds an MSc. and BSc. Electrical Engineering, both from Makerere University and a Master of Business Administration in Leadership from Walden University, USA. Ziria is a Registered Engineer and Member of the Uganda Institute of Professional Engineers with 23 years of work experience in the electricity sector, eight of which were at senior management positions. Ziria has vast knowledge and insights of the electricity supply industry and its chal- lenges, having worked in the sector throughout all her working life.

Eng George Tusingwire Mutetweka The Uganda Electricity Generation Company Limited has hired Eng George Tusingwire Mutetweka as its chief operations officer. A mechanical engineer with a postgradu- ate in Renewable Energy (Hydro Power specialist), George brings a wealth of over ten years’ experience in the operation and maintenance of hydro power plants. He boasts of an understanding of energy utility requirements for power generation, asset life preservation and extension, aggregate production planning and outage management, among others. George previously worked with Eskom Uganda Limited where he served for over ten years, rising from a graduate trainee to maintenance manager. During this time, George initiated innovative asset life extension projects such as automation of start and stop sequence. As chief operations officer, George is charged with preparation for the operation and maintenance of not only the two flagship hydropower plants of Karuma and Isimba but also other projects in the pipeline such as the Muzizi I.

Elison Karuhanga Elison Karuhanga has joined his father, Elly Karuhanga, at Kampala Associated Advocates – a top law firm - as partner. Elison moves from M/S Karuhanga, Kasaijja and Com- pany Advocates. While Elison is publicly known for defending the Elector- al Commission during last year’s petition that was filed by former presidential candidate Amama Mbabazi against the electoral body over allegations of wide malpractices, he is mainly cut out for the extractives industry. Elison is still representing Nilefos, a company associated with the rich Madhvani group, where the company is con- testing the manner in which Guangzhou Dongsong, the Chinese firm putting up a $620 million phosphate plant in Tororo, got its mining license. Elison holds an LLM (oil and gas law) from the University of Aberdeen. FINISH LINE

t is still early days to get excited about the prospects in Uganda’s oil and gas industry. As we head for the annual national bud- get in June, we shall get more clarity in the kind of thinking and policy initiatives Ithat the government has for the sector. What we know so far is that the economy, at the end of the current financial year, will have grown by about 4.5 per cent, which is below the previous year’s. An economy in this state does very little to attract high-risk capital. There are signs that growth will rebound in the next financial year. At some point, the political situation in the country was a little jittery after the brutal murder of a top police officer, Andrew Felix Kaweesi. The level of panic in the security forc- es saw a call for a seven-day re-registration of Sim cards, whose deadline has since been ex- tended. While we feel there are deeper issues within the security apparatus of the country, we feel the problem is not deep enough to scare away long-term capital. Commercial banks have been publishing their financial accounts, and everything points to a positive year where profits jumped. We are closely following events in Kenya. We have noticed that President Uhuru Kenyat- ta is aggressively pushing for the completion of some infrastructure projects ahead of the general elections in August. Still, we do not -ex pect some long-term investment decisions to be made in Kenya before the outcome of the election is known.

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