Uganda Moves Closer to Landmark biofuels law

 Uganda, has joined the growing number of African countries moving to put in place legislations requiring the blending of biofuels into fossil fuels—a crucial stage in attaining sustainable development for the country’s nascent energy industry.

 President Yoweri Museveni has tasked members of parliament to pass the bill on bio-fuels by the end of the year.  In February Museveni commissioned a $35 million (€31.6m) bio- Ethanol power plant and distillery at Madhavani Group’s Kakira Sugar Works Ltd, in eastern Uganda .The plant has capacity to produce 32 million litres of ethanol fuel using the 74,000 tonnes of molasses a byproduct from the sugar production process.Speaking during the commissioning, Mr Museveni said the bill would be “expedited” to ensure that it’s in place within six months.

Should the legislation be passed as per the president’s set deadline, companies currently developing Uganda’s vast oil reserves will be compelled to mix their fuel products with at least 10% of the ethanol manufactured at Kakira sugar Ltd.The measure is expected to extend the life span of Uganda’s oil reserves, currently estimated at 6.5 billion barrels, in addition to lowering the pump price of fuel in the country.

According to the Joint Managing Director of Kakira Sugar Limited, Mr. Mayur Madhavani, the ethanol distillery, which commenced operations in November last year ,is already producing Kakira's Extra Neutral Alcohol ENA  for use in the beverages industry, and as a sanitizer in hospitals.

Uganda Breweries Limited UBL, a unit of UK brewer, Diageo Group are already using the ethanol to produce Uganda Waragi a popular local gin and a whole range of whiskies and spirits. Previously, Ugandan brewers would import ENA from South Africa and Mauritius but have since taken on Kakira as its leading supplier. For a country plagued with an ever widening trade deficit, it’s a welcome relief, analysts say.

 “If the bill comes into law and the nation adopts use of biofuels we are definitely going to see lots of benefits. Farmers will have many more crops that they can plant as sources of money and more job opportunities,” says Mr. Mayur

The bill which was tabled before Parliament by the energy ministry in December 2016 has been slow to pass. Under the parliamentary rules of procedure, once the minister has introduced the bill and it is considered read, as was the case in December, the bill is sent to the responsible committee to scrutinize it over a 45 days period before sending a final report back to Parliament for the second reading which is in this case is meant to be presided over by the minister of Energy. The 45 days have since elapsed without progress on the bill, prompting the president, who would nautically have the final say in the law to intervene.

Although Uganda already has policies in place, such as the Renewable Energy Policy 2007 and Energy policy 2002 respectively, which provide for the blending of biofuels such as ethanol with fossil fuels like diesel and petrol in regulated proportions, the oil companies have not shown strong enthusiasm to prepare for blending of the fuels when products are available.

Thus the need to provide a legal framework to compel the petroleum and oil marketing firms to not only carry out blending, but also regulate such blending by spelling out the ratios that would be followed.At 6.5 billion barrels Uganda’s oil reserves are the largest undeveloped reserves in the region and with blending, the life span can be extended by a further 10 years, from the current estimate of 50 years, says Irene Muloni, Uganda’s energy and minerals minister.

 “The oil we have in the ground is finite; we have to devise ways of prolonging its lifespan for the benefit of our people,” she says “Blending is one of those smart ways”

According to Frank Tumwebaze the minister of information and national guidance,the biofuels law is also, meant to enhance investment in the sector. Lack of a legal framework impedes investments in the biofuels production sector.

“Project developers in the field of biofuels require a secure market which has to be developed through legislation for them to invest in the sector”

“Legislation will enable the developers to access long term finance which is required in the biofuels industry, In addition, Legislation will create other incentives like tax rebates which will encourage investors to develop biofuels,” he says .Other than sugar cane, the avenues are enormous, including possible production from corn and other plants that are grown widely in the East African nation, which also grows more bananas than any other country in Africa.

 It is also envisaged that the biofuels law once in place will enhance mass production of biofuels crops such as maize, soya bean and sugarcane from which biofuels are made, and also lead to value addition through agro-processing and marketing, which would in turn increase rural earnings and open up employment opportunities in rural areas.

 Government of Uganda is also committed to reducing greenhouse gas emissions and contribute to the global fight against climate change. Biofuels production and utilization provides a cleaner and environmentally friendly fuel for industrial purposes, cooking, transport and power generation. 

In Uganda, only 10% of the population have access to clean energy and even less than 5% in rural areas according to statistics from the energy ministry. This has left many people cutting down trees for either charcoal or wood fuel.

It is estimated that Uganda annually loses about 100,000 hectares of forest cover to charcoal burners and firewood sellers. Figures from the 2014 Uganda Population and Housing Census indicate that 340,000 households in the capital Kampala alone rely on either charcoal or firewood or both. The production and use of biofuels is meant to help reduce this number.

It is further envisaged that biofuels production will reduce Uganda's dependence on petroleum products and also save Uganda valuable foreign exchange. Uganda continues to spend colossal sums on importation of petroleum products. Figures from Bank of Uganda show that in 2016 Uganda spent $3.7 billion on the importation of fuel.Other than sugarcane, a number of other agro fuel crops are being encouraged to ramp up production. These include maize, candlenut tree, Croton and Jatropha.

But activists warn that the law will enhance massive production of biofuels which could replace food crops and bring about hunger crisis in the country.Samuel Okulony the programme officer of renewable energy at Africa Institute for Energy Governance, a local Ngo, says that curbing fuel shortages is good for Uganda’s development, but biofuels projects should not compete for land with food crops. He warns that this could threaten food security.

“There is need for an all-inclusive dialogue involving all stakeholders and then a well thought-out law is passed to guide the development of the nascent industry” he says. “Otherwise, emphasizing biofuels alone does not create a win-win situation for our farmers.

To be sure, in neighboring Kenya, growing cultivation of a popular bio crop, Croton is already sending shockwaves in the hunger prone nation. Although the plant has been hailed as a game changer in the biofuel industry, some experts say it’s over cultivation poses one grave danger to food production, in a country that hosts more hungry people than any other in East Africa.

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The East African country of Uganda is rapidly developing its biofuels industry

Ugandan local sugar companies are racing against time to diversify into commercial ethanol production as they look to tap into the country’s increasingly lucrative energy sector. Leading the pack is the country’s largest producer, Madhavani Group’s Kakira Sugar Works, which is set to start ethanol production at its $35 million (€31.6m) distillery plant in September this year.

Once complete, the sugar firm hopes to produce 32 million litres of ethanol fuel using the 74,000 tonnes of molasses that it produces annually. Last year, Kakira contracted India-based Praj Pune Industries to build the distillery. According to Madhavani Group publicist Angella Kintu, the initiative will help the firm save 500,000 Ugandan shillings per tonne that it loses in the sale of raw black treacle to local dealers.

“These molasses are usually sold off to local gin producers and farmers at low prices,” says Kintu. “With our own distillery, we have a double-edged sword.”

The plant is designed to switch between the production of fuel-grade bio-ethanol and premium-grade extra neutral alcohol.

“It is expected to be complete by September this year. This will pave way for ethanol either being blended with petrol to run vehicles or being sold as neutral alcohol for making other products including sanitisers,” Kintu continues.

The timing appears to be right, with Uganda preparing to build a $4 billion oil refinery along its western border with Congo. The refinery will start with 30,000 barrels-a-day of refined fuel products. With refined petroleum consumption in the East African nation growing at 15% annually, the potential is enormous. The petroleum refinery can then blend petrol with ethanol, the Energy and Minerals Ministry says.

Sugar Corp. of Uganda (SCOUL) the third largest sugar producer in the country. It is also installing a state-of-the-art distillery with a production capacity of 35,000 litres per day of premium grade extra neutral alcohol. Currently producing 60,000 million tonnes of sugar annually, the company has embarked upon expanding its distillery and alcohol production plant to an annual 9 million litres by 2017 with products such as ethanol and extra neutral alcohol.

Governmental support

In the energy-hungry East African region, Uganda is the only surplus sugar producer and the chances of tapping into the biofuel sector will give the producers an added edge. The government of Uganda has expressed that biofuels production can solve the energy needs of the country, reduce dependence on imported fossil fuels, and encourage economic growth.

According to James Baanabe, Uganda’s commissioner of the Efficiency and Conservation Department at the Ministry of Energy and Mineral Development, biofuels provide cleaner and environmentally-friendly fuel for industrial purposes, cooking, transport, and power generation.

“Biofuels, especially ethanol, are good for powering vehicles. They do not produce toxic gasses when used,” he says.

The Ugandan government hopes to fast track biofuels development to secure a stable energy supply and diversify the energy sector for long-term economic development by 2040. It has demonstrated commitment to biofuels production by putting in place legislation, the Biofuels Bill 2015, which is still awaiting parliamentary approval and enactment. The bill will create incentives like tax rebates, which will encourage investors to develop biofuels. It is also meant to help project developers acquire a secure market in the sector.

The bill complements the Renewable Energy Policy for Uganda 2007, which provides for compulsory blending of biofuels with fossil fuels in regulated proportions to 20% of the former component. Kintu says that the bill could reduce the country’s cost of importing petroleum products and set terms of producing ethanol for domestic use and for export. She adds that the legislation will enable developers to access long-term finance for project development in the biofuels industry.

The benefits of biofuels

Over the past decade, Madhvani has invested $75 million in cane-crushing facilities and in a power plant using bagasse, a cane fibre. At the moment, the sugar firm at the moment uses 20MW of the 52MW it produces, selling the remainder to the national grid. With the discovery of abundant fossil fuel reserves, coupled with the promotion of investments and research in biofuels, Uganda is on its way to fuel self-reliance.

Uganda is set to begin pumping its first commercial oil in 2020 after substantial reserves were discovered near the country’s border with the Democratic Republic of Congo in 2006. Only 40% of the country’s potential has been explored so far and there is hope of further finds. A consortium of companies, led by UK-based Tullow Oil, Total, and China National Offshore Oil Corp. hope to produce up to 60,000 barrels per day, which could increase to 120,000. These oil companies will be obliged by law to blend fossil oil with bioethanol, up to the E20 standard. Banaabe says that blending petroleum products with biofuels will enhance the life of the Uganda’s oil fields through partial substitution. This also provides lucrative market for bioethanol.

Uganda meets more than 93% of its energy demand with biomass in the form of charcoal and firewood, 6% with fossil fuel combustion, and only 1% with electricity from hydropower, according to Ministry of Energy statistics. Only about 15% of the population has access to electricity, and in rural areas percentage sinks as low as 7%. This has resulted in the depletion of the country’s forests and woodlands. The loss of these fragile ecosystems not only has serious implications on Uganda’s biodiversity, but also compromises the nation’s ability to cope with climate change.

According to the Ministry of Energy, it is hoped that bioenergy will increase the renewable energy mix from 4% to 61% of total energy consumption by 2017. Uganda also has a national strategy for bioenergy development, including growing biofuel crops to contribute to the country’s energy balance. Investors have already shown interest in developing biofuel projects in Uganda. Last year an ethanol extraction factory was established in Lira District in northern Uganda. The $1.8 million Kamtech Logistics plant is located at Barlwala in Adekokwok sub-county. Farmers are no longer worried about a market for their cassava, as they sell it to the plant for ethanol production.

Opposing opinions

A few companies have also already established massive biodiesel feedstock farms in different parts of the country. Among these companies are Nexus Biodiesel, a US-based biodiesel company, and African Power Initiative (API). Nexus has planted more than 400 hectares of jatropha in Isimba, Masindi, which is three hours north of Kampala. API has planted about 4,000 acres of castor oil and jatropha in Namalu, Karamoja region. The companies are already producing diesel.

Kakira's entry into biofuels comes at a time when the price of crude oil is averaging at $50 a barrel, massively down from $100 barely a year ago, which is hurting the global biofuels industry. However, even as crude prices have been volatile, the biofuel industry remains lucrative as countries seek cleaner energy in the face of global warming. Blending also reduces over-reliance on the volatile global crude markets.

Biofuels production brings many benefits for Uganda by providing access to clean energy services. Production of ethanol from sugarcane and maize grain is likely to increase grain and cane prices, which in turn will benefit small scale farmers that work as growers for larger companies. This will also increase maize and cane grain output.

But environmentalists and food rights activists worry that although curbing modern energy shortages is crucial for Uganda’s development, the biofuel industry may have negative consequences especially on food security. They thus continue to oppose to the development of biofuels, which they say creates a shift from growing crops for food to growing crops for profits. Another argument is that biofuel crops demand large chunks of land and thus compete with food crops further. 

“Biofuel production is not sustainable as it does not lead to poverty alleviation or an improvement in livelihoods,” says Kabongo Isaac, the director at Ecological Christian Foundation, a local Ugandan non-governmental organisation. Farmers involved in growing feedstocks for biodiesel projects are already facing food shortages because they have neglected to grow food crops to sustain their families by committing all their farm lands and labour to growing jatropha and other feed-stocks as their mainstay, Isaac argues.

“The proceeds they earn from the sale of biofuel feedstocks are spent on buying food and other necessities from the markets. It will most likely worsen food shortages,” he adds.

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Uganda Unveils its first Solar powered Bus

In the sprawling yard of Uganda’s upscale Serena hotel, Paul Isaac Musasizi looks over a pale white solar-powered electric bus, the first of its kind in Africa, an early dividend from a decades-long research work.

 “It has taken a lot of hard work and dedication, but we are up for the challenge” the 36-year technology engineer says, with a broad smile “We are along the equator and we want to use the abundant sunshine throughout the year to our advantage”   

A research trip to Massachusetts  university eight years ago convinced Mr.Musasizi  a former Makerere University engineering lecturer that he could build cars at home in Uganda. Now his company, Kiira Motor Corporation KMC, is building a car plant he says will be up and running to push out electric cars off its assembly line by 2018.

After successful designing of a hybrid electric sedan last year, the Kiira EV smack,Kiira motors corp recently launched a solar poweredbus, the beginning of Musasizis’ bigger ambition to kick start Uganda's solar-powered automobile industry.

The 35 seater bus also locally known as “Kayoola” can travel up to 50 Kilometers straight powered by two batteries. The primary battery supplies electrical energy to the propulsion motor while the secondary battery bank is available for charging using the onboard solar charging system or the plug-in charger system. The solar panels are mounted on the roof, taking full advantage of Uganda’s sun.

Musasizi says each battery takes an hour to charge. The bus is suitable for urban areas use because of the restrictions on how far it can travel. The savings expected per 100km using the Kayoola Solar Bus, compared to the conventional diesel powered buses is expected to be 63%, providing a lower cost mass transportation solution as well as assuring profitability when in service.

Most of the materials used to produce the bus were locally sourced, except for the synthetic leather, tyres, the steering wheel and software that were imported. The chassis is made of steel, its aisle of sheet metal and it also has pipe elements and square sections. Its seats are also made of steel and covered in cream leather.

Musasizi said the project which started in 2011, was initiated to explore the possibilities of using solar technology to support mass transportation that Ugandans commonly use. “We wanted to investigate those opportunities, particularly because Uganda being one of the 13 countries positioned along the Equator, gives us about eight hours of significant solar energy that can be harvested”.

It is against this background that the Kayoola solar bus project was executed. If mass produced, each bus would cost up to $58,000, which Mr Musasizi says is  a very competitive price.

Kiira Motors grew out of a project at Uganda's Makerere University, which is now a shareholder in the company.The project has  benefitted from government funding through the presidential initiative for science and technology innovations .This is part of President Yoweri Museveni’s  industrial development intervention plan to transform Uganda into a middle-income economy by 2040 through providing a platform with high intellectual convergence of disciplines aimed at establishing vehicle manufacturing capabilities in Uganda .Kiira motors was named after the Kira Nile river dam that supplies electricity to the company factory and many consumers in the country.

The ultimate goal is to establish Kiira Motors Corporation as the first Automotive Original Equipment Manufacturer in East and Central Africa and lure local customers away from pricier ­imports by producing 50 buses a year, eventually supplying pick-up trucks, sedans, light and medium duty trucks.

“We are here to celebrate the Ugandan innovator with a mission to industrialize our nation” said President Yoweri Museveni during the launch earlier last month/16^th Feb/. “Uganda is now ready to industrialize. The energy is ready; the infrastructure is ready; the economy is ready; and most important of all, our people are ready. This model bus is a symbol of our capabilities; this is the best way to use our clean energy sources”

He further stated that the project will create over 12,000 Jobs in the capital expenditure phase and over 2,000 in the operational expenditure phase.

Musasizi says the first 305 cars from KMC are expected to be rolled off  its plant, located in Njeru, around 70 kilometers out of Kampala by 2018. The plant’s capacity can rise to 50,000 units by 2039. Musasizi looks forward to attracting investors interested in green energy for funding and future staff training.

The company hopes to challenge global players with a strong presence on the continent including Nissan Motor Co. and Toyota Motor Corp.

Although the kayoola bus production and development by local engineers and suppliers is a significant milestone for Uganda's budding heavy manufacturing industry, the project still faces a number of major risks to its commercial success.

The limited availability and reliability of electricity due to the country’s poor energy supply in addition to limited availability of skilled labour will keep manufacturing costs substantially high for Kiira Motors Corp. Also, the production volumes will be unlikely to compete with other producers especially established Kenyan firms. Kenya remains the region’s largest automaker.

 The Ugandan new vehicle market also remains far too small to absorb the company's planned output, about 4,000 new cars are sold a year .The country also imports about 15,000 used vehicles annually. This raises the costs for the producer to engage in costly marketing and export operations elsewhere in the region.

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