NOVEMBER, 2016 OIL AND GAS

Oranto to have majority stake in Ngassa oil well

Oranto Petroleum Limited is current- the Ngassa well to Oranto. ly negotiating with government for an Oranto and the Uganda government are exploration license for the Ngassa oil well, expected to sign an agreement by the a couple of months after the company second week. noted it was not comfortable with Ugan- The Ngassa oil well is said to have as da’s decision to award an equal stake in much potential as the giant Kingfisher the well with fellow Nigerian firm, Niger field that holds more than 500 million Delta Petroleum Resources, our sources barrels of oil. have told us. Oranto’s vast experience - it holds licens- In pushing out Niger Delta, Oranto has es in Nigeria, Ivory Coast and Namibia - is executed its first major boardroom coup no match for Niger Delta. and made a statement of intent of its In late July, Niger Delta Exploration plans in Uganda. & Production Plc, the parent company In August, the Uganda government, in of Niger Delta Petroleum Resources, completing the country’s first competi- announced that a funding exercise that tive round for oil blocks, awarded equal started in 2013, where the company exploration rights over the deep Ngassa sourced for $80 million from the issu- oil well, which is located on the banks ance of convertible loan notes, had been of Lake Albert, to both Oranto and Niger completed. Delta. However, Oranto protested on The Ngassa oil well requires substantial grounds that Niger Delta did not have the amounts of investment. Tullow Oil, the financial resources to invest in the explo- previous holder of the license over the ration of the well. well, wrote off an exploration bill of $67 According to our sources, the Uganda million in 2014 after the company con- government wrote to both companies, ceded that any further investment would assuring them that it had reconsidered not make business sense. its position and agreed to an 80 per cent At one point, Tullow Oil described the to 20 per cent stake in favour of Oranto. Ngassa well as one that had “the po- The government asked both companies tential to be the largest oil field in the to make comments over this change in basin...” ownership. However, we have been told The Ngassa-2 is a deviated well with a that Niger Delta did not respond to the total depth of 3,392 metres beneath Lake changes within the agreed time frame, Albert. The well has the features of the prompting government to consider Kingfisher, which is operated by Chinese awarding full ownership of the license to firm Cnooc. OIL AND GAS

Land acquisition takes shape as talks over oil pipeline intensify Throughout the month of No- Montrose, drew up for one of the with more registered rights and in- vember, the ministry of Energy and oil companies last year. terests,” the civil society writes in Mineral Development, together The draft framework will be the its joint submission. with the three main oil companies first time that the three oil compa- The Land Acquisition and Reset- – Total E&P, Tullow Oil and Cnooc - nies have undertaken a joint land tlement Framework comes after held numerous consultations over acquisition plan even though their government has identified the the draft Land Acquisition and Re- areas of operation have distinct route for a 1,445km long and 24- settlement Framework as Uganda features. Access to land for differ- inch diameter heated crude export tries to have a clearer plan on ac- ent oil-related infrastructure such pipeline to the Tanzanian port of quiring land for oil-related infra- as central processing facilities, in- Tanga. Tanzania is yet to finalise structure and managing expecta- ternal pipelines, terminals, among with its route though. tion. others, is seen as one of the most On December 1, the govern- The framework is expected to of- contentious issue that oil compa- ments of Uganda and Tanzania fer ways of avoiding some of the nies have to deal with. awarded a contract for the Front pitfalls that government found- it A number of civil society organi- End Engineering Design, with the self in while acquiring land for the zations like Global Rights Alert have study expected by December 2017. refinery. Throughout the process already raised their concerns over Different committees compris- of acquiring land for the refinery, the draft framework to the oil com- ing government officials of Ugan- speculators bought land on the panies, with one of their key con- da and Tanzania meet every four cheap and sold it on the high; iden- cerns being how the acquisition of months to assess the progress of tification of the tenants was prob- customary land will be done. the project. lematic; the valuation of the land “The peculiarities of customary Uganda and Tanzania are cur- was disputed; while some people tenure compared to other tenures rently negotiating an intergov- hated the areas they were relocat- require that special tools/proce- ernmental agreement that will be ed to. dures need to be adopted in its scrutinised by Parliament. The two Some of the sections of the re- acquisition to mitigate or avoid hu- governments are also holding dis- port are expected to borrow from man rights violations that may re- cussions over a harmonised fiscal a set of guidance documents on sult from treating the customary as regime. land acquisition that British firm, if it was just like the other tenures Uganda starts new search for refinery investor Government has received interest from more than 25 companies willing to partner with it in developing a refinery, Parliament heard recently. The government said it intends to choose a partner with whom it can share the cost of put- ting up a $4 billion refinery by June 2017. Kenya confirmed that it will take a 2.5 per cent stake in the refinery, while Tanzania is consider- ing a shareholding of eight per cent. Our sources say French firm Total E&P is also mulling over the idea of taking up a stake in the refinery, with some saying as much as 10 per cent. Speculation that Chinese firm Cnooc could also invest in the refinery are unfounded with our in- dustry sources telling us they are not interested. One of the sticky points that investors will ne- gotiate for is a guarantee of crude oil supplies to the refinery as the other oil companies push for oil resources for the pipeline. ELECTRICITY

Karuma completes excavations as steel, cement firms eye deals In the first week of December, China’s ma HPP, met with managers of Roofings House Entebbe, also in November, to Sinohydro Corporation Limited, together to brainstorm on how Ugandan-made discuss the issue of other local materi- with a team of experts and supervisions, products can be supplied towards the als being supplied towards the Standard will carry out durability test runs, to de- construction of the 600MW power plant. Gauge Railway and the Karuma HPP. The termine whether cracks will reappear in Roofings Limited, the largest producer meeting had trouble coming up with some of the structures it has built at the of steel in Uganda, will have to find ways what defines ‘local content’ and whether Karuma hydropower project. The test of reducing its prices in order to supply every company operating within the East runs could last a week or more. products to Karuma hydro power project. African Community should be given op- The power dam contractors have re- Nearly all the steel at the project site portunity in the spirit of integration. ceived a lot of criticism for the cracks that was imported from China, where the Already, Hima Cement Limited, Tororo appeared at the dam, which, according to price remains lower compared to that on Cement Limited and Kampala Cement investigations, were partly a result of the the local market. Limited have been cleared to supply ce- high temperatures within the mixture of According to Albert Byaruhanga, the ment to Karuma HPP after Savannah Ce- cement. project manager of Karuma hydro pow- ment of Kenya was stripped of its monop- Wang Yantao, the executive vice presi- er project, a tonne of steel from China is oly of being the only supplier of cement. dent for Sinohydro in East and Southern cheaper by $100. Construction of Karuma HPP, which Africa, has been in Uganda for more than Roofings officials said at that meeting is about 40 per cent complete, is set to a month, and has promised to stay around that they were ready to have their prod- embark on the next stage of concreting until the cracks have been dealt with and ucts subjected to any quality test. It’s the – where cement will be needed – after the project resumes on the right course. price and fluctuations in the foreign- ex excavation works, which had a 26km tun- In late November, officials of the Uganda change market that remain a challenge nelling, were completed. The project is Electricity Generation Company Limited, for Roofings Limited. set for commissioning in December 2018. the supervisors of the $1.7 billion Karu- Another meeting was held at State ELECTRICITY

ERA courts consumers as release of annual tariff draws closer The Electricity Regulatory Authority in dollars. Also, save for Kilembe money to the Uganda government, spent much of November on a charm Mines Limited, all the power purchase part of which will be used to pay for offensive of different consumers of agreements are priced in dollars. consultancy services for ‘Cost of Ser- power as it prepared for a showdown Power purchase costs contribute at vice and Affordability of Tariff Studies.’ of public debate on the tariffs – a key least 60 per cent to the overall tariff, ERA says: “The overall objective of the component in calculating the cost of according to ERA figures. The Pow- assignment is to develop an econom- production. er Purchase Agreement for Eskom, a ic regulation framework that ensures ERA met players from the manu- power generator, is priced in shillings financial sustainability of distribution facturing sector, and members of the although it is adjusted based on the companies in consideration of afford- Uganda National Chamber of Com- movement of the dollar. ability of the electricity tariffs.” merce and Industry, explaining why ERA is trying to deal with the tariff Like Kenya, the debate around a shift the tariff is set in the manner in which through a number of strategies. For from feed-in tariffs, which are inbuilt it is. example, the regulatory body had a in the project cost, to competitive ERA is about to announce the annual meeting with local manufacturers and auctions has gained traction. There tariff review for 2017, with the num- offered them an olive branch to sup- have been discussions on whether ber set to go up to mainly reflect the ply materials to the energy industry Uganda should move to a tendering movement in the exchange rate. As provided they meet the standards. At process, where they invite different an example of how the United States that meeting, which happened in No- firms to bid for a project mainly based dollar has moved against the Uganda vember, the manufacturers said they on the lowest tariff they can execute shilling, ERA used a rate of Shs 3,375 were ready to supply the industry the job, away from the inbuilt feed-in when it determined the retail tariff for with materials, such as cables for ex- tariff that investors demand. the fourth quarter of 2016. However, ample, and were confident they could Already, Uganda uses the compet- halfway through the quarter, the shil- match the price. itive auction for the solar industry. ling was trading at 3,557, depreciating The African Development Bank and However, the country is yet to come more than Shs 180. the EU-Africa Infrastructure Fund, up with a definite position on wheth- At least 85 per cent of the overall under the Uganda Rural Electrici- er it can scrap feed-in tariffs. costs in the energy sector are priced ty Access Project, have also offered Parliament approves $11.3m Kuwait power distribution loan

Parliament has okayed government’s pro- agreement of this loan in order for the com- posal to borrow up to $11.32 million from mitted funds to be released by the Kuwait the Kuwait Fund for Arab Economic Devel- Fund on time...” opment to finance the construction of the The distribution line will cover 285km (of 33kV and 11kV power distribution lines in which 25km is 11kV and 260km 33kV) in the the six districts of Kiryadongo, Kibaale, Neb- six districts. bi, Bushenyi, Kasese and Rukungiri. The Kuwaiti loan is non-concessional, and Members of Parliament on the committee is priced at a fixed interest rate of 1.5 per on the national economy went on a field cent per annum disbursed. The money from visit to Kiryadongo to assess the viability of Kuwait will cover 71 per cent of the total the project. In November, the MPs released project cost, while the government of Ugan- a report that called for “speedy fulfilment da will come up with the balance. of effectiveness conditions of the financing MINING

Black Mountain makes first Uganda vermiculite sale Less than a year after it took over the aim here is to increase efficiency and are trying to improve their crop yields to vermiculite mine in eastern Uganda, reduce fuel consumption. feed a growing population. Most of the Black Mountain Resources Limited has The company said its key secured debt customers are in Europe, Japan, China produced its first saleable product, the providers, Seefeld Investment Limited and Australia. company recently announced. and Tychee Investments Limited, con- Still, Black Mountain is not yet certain The production of the first batch of firmed they would support the invest- how much vermiculite is at Namekara vermiculite is not expected to dramati- ment plan at Namekara by allowing it because previous holders of the mining cally change the outlook of the amount to continue making further drawings license did not divulge much. For exam- of mineral resource simply because of undrawn loan funds available under ple, in June 2008, Rio Tinto, which then there has been insufficient exploration their facilities. managed the mines, completed an in- in the past. Black Mountain is confident that the ternal mineral estimate. Just over a year Black Mountain said the sale of the investment will boost demand for the later, on July 23, 2009, Gulf Resources, vermiculite comes at a time when the vermiculite at Namekara. The company which had taken over the mines, un- company has activated its investment says demand for vermiculite is growing dertook its own studies, although the plan. The Australian firm intends to at 0.75Mt per year for all sizes, although results were never made public. spend just over $3 million in the first the large flakes of vermiculite at Name- In February 2016, Black Mountain Re- phase at Namekara. The largest amount kara make it of high quality. Vermiculite sources bought the mining rights from of this investment will go towards the is crucial in the agricultural industry as it Gulf Resources. The acquisition was upgrade of the processing plant. The is used in fertilisers. Many governments completed in late October. Sipa confirms large mineral system in Kitgum-Pader base There are more metals in Kitgum than ear- Sipa’s managing director, Lynda Burnett, lier thought, according to a recently-com- said “the recent drill program represented pleted drilling programme by Sipa Resourc- an important turning point in the evolution es Limited, the largest mining company in of the Akelikongo discovery, advancing the the area. project at a number of important levels.” Sipa recently announced that its drilling Sipa holds more than 6,000sq km of ex- programme had confirmed a large miner- ploration tenements in northern Uganda, alised system. with its main targets being Akelikongo, with “Sipa Resources Limited is pleased to ad- its potential for nickel and copper, and the vise that recently-completed drilling at the Pamwa hill that has a zinc, lead and silver Akelikongo nickel-copper prospect, part system. of its Kitgum Pader Base Metal Project in In a progress report that the company is- Uganda, has successfully extended the pre- sued recently, it said: “An independent re- viously-identified zone of massive sulphides view of the Akelikongo mineralisation and down-plunge, expanding the footprint of exploration model, commissioned by Sipa the discovery and confirming the presence and conducted by CSA Global Pty Ltd, has of a large mineralised system,” the company provided strong affirmation regarding Si- said in a statement. pa’s exploration approach at Akelikongo. A The results of the drilling programme, ac- key conclusion of the review was that the cording to Sipa, show that “the presence of nickel tenor is of good quality and should be economic grades of nickel and copper with- pivotal in the further discovery of massive in a system of this scale and fertility is an sulphide material.” important development which elevates and It is still not clear how much mineral quan- strengthens the potential of this system.” tities are in the area. KENYA

Civil works heighten as Kenya plans to move crude oil by road A number of tenders to prepare tenders to companies that can show pending on the contracts that the oil Kenya for its first export of crude oil experience of working in large oil firms will have signed with govern- by June 2017 are being issued. and gas installations. The company ment and county chiefs. The scheme In what it terms as an Early Oil Pilot says it will award the contract in the is expected to run for two years un- Scheme, East Africa’s largest econo- week after December 19, and there- til mid-2019, with the oil moving in my looks to move crude oil in trucks after expect the works to be com- heated tanks on the trucks. Kenya oil from the Lokichar basin in the north- pleted within eight weeks. is said to have the same features as ern region of Turkana to the south- KPRL has already requested EMC Uganda’s with the crude solidifying eastern port of Mombasa, more Corporation and SGS Kenya Limited quickly. than 400km away. to undertake an environmental and In 2019, Kenya is expected to Kenya Petroleum Refineries Limit- social impact study as the company switch to a crude oil export pipeline ed (KPRL) in Mombasa – where the prepares to receive the crude oil. from Turkana to the port of Lamu. oil will be stored and then exported Also, Kenya has embarked on road Some of the oil on this pipeline will from – is busy refurbishing its facili- works along the Turkana – Mombasa come from South Sudan, with whom ties, with the company recently call- route. The Kenya National Highways Kenya will share the cost of building ing for bids for civil works. Authority launched the Eldoret – Ki- the pipeline. The civil works include the widen- tale – Lokichar – Amosing road in UK firm Tullow Oil, together with ing of a road that will accommodate June this year and awarded seven its partners, Africa Oil and Maersk, parking space for two trucks that will separate contracts for rehabilitation have discovered just over 750 million offload crude oil, putting in place and reconstruction works. Through barrels of oil in the South Lokichar pump foundations and fire fighting its Early Oil Pilot Scheme, Kenya in- basin, with further exploration still structures. tends to at least produce 2,000 bar- ongoing. KPRL says it is only willing to issue rels of oil per day by June 2017, de- KENYA

Kenya to scrap electricity feed-in tariffs Eight years after it introduced the feed-in tariff commit funds to a project. A feed-in-tariff offers as a bait to attract investors into the renewable more clarity and acts as a security that an invest- power sector, Kenya has taken its boldest attempt ment in a project will generate the return that an yet to scrap the policy. The country’s ministry of investor would have predicted at the inception Energy and Petroleum has created a task force to stage. look into the power purchase agreements that However, there have been complaints in Kenya independent power producers signed with gov- that the feed-in tariff is one of the main reasons ernment, and assess whether amendments can as to why the country is paying high power tariffs, be made in the tariffs agreed. which have partly made their businesses uncom- The ministry noted in the statement that the re- petitive. Top country officials also say that the view from this taskforce “is not only confined to price of technology and equipment needed to the existing Power Purchase Agreements, but will undertake power projects has reduced drastically also include review of tariffs for ongoing negotia- and, therefore, it was unfair for Kenyans to pay a tions between Kenya Power and Lighting Compa- standard tariff that did not reflect the drop in the ny and independent power producers including costs of production. feed-in tariffs projects.” It is partly as a result of these factors that the For emphasis, the ministry says it “has suspend- feed-in tariffs have been revised three times since ed further processing of expression of interest they were introduced in 2008, creating uncertain- under the feed-in tariffs policy until the task force ty in a sector where predictability is critical for finalizes its work.” The task force is assessing such long-term investments. negotiations that government has entered into Kenya, according to different reports, is now with independent power producers in the solar, looking to shifting to competitive auctions, where wind and biomass energies, which total about investors will now bid on who can execute a pow- 3,600MW. The target here is mainly power pro- er project at the lowest tariff. The government ducers seeking to build plants with a capacity of will offer a clearer work plan on how it intends less than 10MW though. The task force has until to undertake competitive auctions after assessing December 31, 2016 to submit their report. the recommendations from the task force. The feed-in-tariff is a more predictable and in- built tariff that investors seek before they can

China spurs ilmenite exports from Kwale Australian firm Base Resources recently balance with excess inventories having been announced an increase in the shipments of substantially worked down. We have now one of its key minerals, the ilmenite, over the seen prices for our ilmenite improve from the five months from June 2016 as customers lows in the June 2016 quarter by around 90% from China, where the mining company has for deliveries in December 2016.” a strong presence, ordered for more of the Base Resources, which, in late 2013, started product. operations in Kenya at the Kwale mines, says In a statement, Keith Spence, the non-exec- it is the single largest importer of ilmenite utive chairman of Base Resources, said: “After into China. three years of consistently declining prices for Ilmenite is used as a colour pigment in the our products, we are now seeing strong signs manufacturing of flooring materials, cosmet- of the ilmenite and rutile markets returning to ics and pharmaceuticals, among others. TANZANIA

Swala seeks market confidence amid financial troubles Swala Oil and Gas used its No- ploit that infrastructure. The dispute over the financing vember annual general meeting Swala has already contacted Ex- - depending on who you want to reassure the market that it otix, an investment bank based to believe - stems from a farm- still had a bright future ahead of in London, to source for $120 down of the Pangani license to it regardless of a spiteful court million to “acquire an interest in Tata Petrodyne Limited for $5.7 dispute with one of its partners, a producing asset” and called for million in late 2015. Swala says Otto Energy, and a breakdown in financial firms in Tanzania to par- it managed the farm-down and relationship with another -part ticipate in the transaction. that Otto owes it a balance of ner, Tata Petrodyne. It is the company’s troubles $160,000 from that process. The company, in one of its in Tanzania that could break its Otto, on the other hand, says the most-challenging years, said it back, though. Swala holds a 50 directors of Swala arm-twisted had applied to the Tanzanian per cent equal shareholding with the board into transferring funds government for a license exten- Otto Energy in the oil and gas Ki- from the farm-down, part of sion to allow it drill a couple of losa-Kilombero license. The two which was supposed to be remit- wells in 2017 even as its partners Australian firms used to hold an ted to its account. Swala denies show no signs of being part of equal shareholding in the Pan- this accusation. those plans. The company says gani license but relinquished it to Also, Swala says Otto and Tata it is ready to execute the 2017 the Tanzanian government earli- requested that the drilling pro- drilling programme on its own if er this year after it proved to be gramme of 2016 be pushed to need be. commercially-unviable. 2017. Swala declined, and added The junior firm also added However, disagreements on that the two owe it money for that it has decided to take up the financing and the drilling not committing funds to the ac- a license in Burundi, partly be- programme have ravaged the tivities that took place in 2016. cause a crude oil export pipeline relationship between Swala and Swala says its two partners have between Uganda and Tanzania Otto, with the dispute now be- acted in bad faith and, therefore, meant nearby Burundi could ex- fore a court in Australia. the joint venture remains risky. TANZANIA

General Electric gets Mbeya coal contract General Electric will supply equipment to the Mbeya mining right over the Mbeya coal mine to Tanzanian au- Coal to Power project after signing an agreement with thorities. Kibo Mining Plc to pull off a project that is at the centre of Kibo says that by the end of December “the MCPP will Tanzania’s coal industry. be fully-prepared and ready to transition into full funding The process to have GE supply the equipment has been mode, provided that the government of Tanzania has by made easier with Kibo receiving a draft of a financial mod- then completed the policy review process pertaining to el for the Mbeya Coal to Power project (MCPP) from its energy projects, which will allow the MCPP to proceed advisors ABSA/Barclays. with the conclusion of a power purchase agreement for Tractebel Engineering, which was contracted by Kibo the MCPP.” Mining, chose GE after the company proved it can match In early 2015, the government of Tanzania released international standards. the National Energy Policy that, among other objectives, Kibo Mining Plc is still waiting for a bankable feasibility sought to improve the supply of clean renewable energies, study that will show the commercial value of the project. promote cross-border electricity trade, and put in place a The company has already submitted an application for a fair pricing mechanism.

Tanzania reviews energy proposals for UK, Sweden financing window

The Rural Energy Agency is reviewing a cou- electrification activities into less-served, more ple of proposals for grants needed to build remote off-grid areas of the country for eco- renewable energy projects of not more than nomic and social development purposes.” 10MW after it opened a new co-financing win- Tanzanian authorities are looking to boost re- dow with European development partners as newable energy output using sources such as part of a plan to light up more than 120,000 solar, wind, and biomass. households. The Swedish and the UK governments are The agency says a “Results Based Financing supporting this initiative with a $67 million (RBF) approach will be used where capital package. According to the strategy, the mini- grant incentives will be offered to Green Mini mum amount that a project will receive under and Micro Grid service providers with realistic this arrangement will be $1,500, while the business plans...” maximum amount will amount to 75 per cent It added: “The private sector financing win- of total investment cost for isolated grids and dow will be used strategically to incentivize 75 per cent of total investment in the distribu- scale-oriented investors to enter the rural tion network for grid-connected mini-grids. electrification area and/or to expand ongoing PEOPLE TO WATCH

Ziria Tibalwa Waako

As a former head of the technical department of the Electricity Regulatory Authority, Eng Ziria Tibalwa Waako understands quite well one of the most contentious issues in the sector – the power tariff. Perhaps her most important assignment as the new acting chief executive officer of the Elec- tricity Regulatory Authority will be to navigate the emotional tensions that the increase of power tar- iffs evokes, especially right now as many compa- nies feel the brunt of a slowdown in the economy and the depreciation of the shilling to the dollar. Tibalwa, quite a cordial person but firm in her be- liefs, will remain in acting capacity until June 2017.

Stephen Isabalija

The fight on who supervises the Karuma power dam and the Isimba dam was short and brutal. By the time the fight over the two projects – with a combined value of just over $2 billion – drew to its climax, the public was shocked to learn that there were cracks at Karuma dam even before the proj- ect was halfway done; three long-serving commis- sioners in the ministry of energy had been sacked as a result of the scandal; and local cement play- ers were given a chance to supply products to the projects. Isabalija was one of the architects in the struggle for UEGCL to get full supervisory powers. He is expected to use his new appointment as permanent secretary in the ministry of energy to put in place systems that will oversee the next stage of Uganda’s oil industry as the old players embark on the production stage amid new explo- ration.

Eng. Proscovia Margaret Njuki

The ministry of Finance, Planning and Econom- ic Development is likely to appoint Eng. Proscovia Margaret Njuki as the chairperson of the Uganda Electricity Generation Company Limited. Njuki, an electrical engineer and a member of the board at UEGCL, is a strong candidate for the position even as squabbles over the position crop up at the min- istry. An ambitious campaign to have Frank Katusiime, the former chairman of the Uganda Electricity Transmission Company Limited, appears to have failed after it left an embarrassing trail of what looked like forged appointment letters. In Njuki, UEGCL will get someone who professes her faith of born-again Christianity to the core. She is the first female engineering graduate in Uganda and has been in the public service long enough to know how things are run. FINISH LINE

hanges within Uganda’s energy sector – both on the human re- source and policy level – point to a shift in mindset. The change of guard at Uganda’s ministry of Energy, where Stephen Isabalija re- placed Fred Kabagambe-Kaliisa as the permanent secretary at the ministry, was the most pronounced. CAs the former chairperson of the Uganda Electricity Generation Company Limited, Stephen Isabalija may lack the institutional memory of the energy sector, which might be a critical component for such a technical position, but has a strong management style that tends to influence strategy. He proved this when he played a critical role in government handing full supervisory powers to UEGCL for the 600MW Karuma power plant and 183MW Isimba plant in October. We suspect that Isabalija will go for an approach that requires the creation of strong systems at the ministry, away from the 800-pound gorilla stature that Kabagambe-Kaliisa had. Dr. Benon Mutambi’s transfer from the top position at the Electricity Regu- latory Authority to the position of permanent secretary in the ministry of In- ternal Affairs denies the industry a knowledgeable technocrat who had built a strong team. However, Mutambi left ERA in the safe pair of hands of Eng Ziria Tibalwa Waako, the former director of the Technical Regulation department. On the policy front, we are seeing a shift in the interpretation of tariffs. Ken- ya’s decision to move away from the feed-in tariff to competitive tenders fol- lows Uganda’s decision to steer clear of this policy within the solar industry. Tanzania is also undertaking the same. Through its Public Private Partnership (Amendment Act) 2014, it requires all solicited and unsolicited bids for energy projects to go through competitive bidding process as it seeks an efficient and effective energy pricing system. These policy changes target small energy projects of roughly 10MW and be- low, and we suspect this will attract more investors with technologically-effi- cient systems to place in bids. In the extractives and oil and gas sectors, a number of companies have been releasing their annual financial statements. Many of them reflect a tough 2016 although the rebound in some commodity prices and crude oil prices shows that the future will be better. A rebound in the oil prices should create some renewed optimism and attract more investments in the sector. The late November clashes in Kasese district, which led to the death of more than 50 people dead in a two-day bloodbath, and thereafter the imprison- ment of the region’s king, are the latest political tension that we are tracking. There are two important mining investments in the region – Hima Cement and Tibet Hima’s copper project. However, we feel that the allegations of reb- el activity in the region are being blown out of promotion. We expect the se- curity situation to return to normal. However, we are worried about the inter- national ramifications from the Kasese operation on the ruling government. Such ramifications could change the outlook for investors eying the region.

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