MINISTRY OF ENERGY AND MINERAL DEVELOPMENT

Transcription

1 MINISTRY OF ENERGY AND MINERAL DEVELOPMENT VOTE 017 VOTE 123 VOTE 311 FY2018/19 MINISTERIAL POLICY STATEMENT Presented to Parliament for the Debate on the Estimates of Revenue and Expenditure By Hon Eng. Irene Muloni MINISTER OF ENERGY AND MINERAL DEVELOPMENT 15 March

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3 MINISTRY OF ENERGY AND MINERAL DEVELOPMENT VOTE 017 VOTE 123 VOTE 311 FY2018/19 MINISTERIAL POLICY STATEMENT Presented to Parliament for the Debate on the Estimates of Revenue and Expenditure By Hon Eng. Irene Muloni MINISTER OF ENERGY AND MINERAL DEVELOPMENT 15 March

4 Table of Contents Foreword...i Abbreviations and Acronyms...ii Executive Summary...ix V1: Vote Overview...1 VII. Budget By Programme and Subprogramme...14 VIII. Programme Performance and Medium Term Plans...16 IX. Major Capital Investments And Changes In Resource Allocation...27 Sub Programme Annual Workplan Outputs...51 Staff List

5 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement FOREWORD Madam Speaker and Honorable Members of Parliament, In keeping with the provisions of the Public Finance Management Act, 2015, I hereby submit to you the Ministerial Policy Statement covering the Ministry of Energy and Mineral Development (Vote 017); Rural Electrification Agency (Vote 123); and Uganda National Oil Company (UNOC), Vote 311 for the Financial Year 2018/19. The mandate of the Ministry of Energy and Mineral Development is to Establish, Promote the Development, Strategically Manage and Safeguard the Rational and Sustainable Exploitation and Utilization of Energy and Mineral Resources for Social and Economic Development. In the medium term, the ministry s key priority areas are: i) Increase affordable Power Generation and expand Power Transmission and Distribution Infrastructure. ii) Increase access to affordable modern energy services through rural electrification and renewable energy development. iii) Promote and monitor petroleum exploration and development in order to increase the reserve base and achieve local production. iv) Develop petroleum refining, pipeline transportation, and bulk storage infrastructure. v) To streamline petroleum supply and distribution. vi) Promote and regulate mineral exploration, development, production and value addition. Other priorities include: i) Promote efficient utilization of energy. ii) Monitor geotectonic disturbances and radioactive emissions. This Ministerial Policy Statement provides a review of sector performance for the first half of the FY 2017/18. Planned outputs and the expected key outcomes for the FY2018/19 are presented. The indicative budget ceilings have been rationalized in line with the sector priorities and National priorities as communicated in the Budget Call Circular and in the Presidential Directives. I therefore submit the estimates for Vote 017 for the FY 2018/19 as follows: Total budget UGX 1, Bn of which; Wage Recurrent is UGX Bn; Non-Wage Recurrent is UGX Bn; GoU Development is UGX Bn and the Development Partner contribution is UGX 1, Bn. Under Vote 123 the ceiling is UGX Bn of which UGX Bn is for GoU Domestic Development and UGX Bn is from external financing. The indicative budget ceiling for Vote 311 is UGX15.2 Bn, of which UGX9.586 Bn is wage and UGX5.614Bn is non-wage recurrent. I beg to move. Hon Eng. Irene Muloni MINISTER OF ENERGY AND MINERAL DEVELOPMENT i

6 Ministry of Energy and Mineral Development Ministerial Policy Statement Vote: 017 Ministry of Energy and Mineral Development Abbreviations and Acronyms AEC Atomic Energy Council AfDB African Development Bank ASM Artisanal and Small Scale Miners BFP Budget Framework Paper BOOT Biuld Own Operate and Transfer Bopd Barrels of Oil Per Day CDAP Community Development Action Plan CGGC M/S China Gezhouba Group of Companies DFI Development Finance Institutions DGSM Directorate of Geological Survey and Mines EA Exploration Area EAC East African Community EAPC East African Petroleum Conference EDT Electricity Disputes Tribunal EECB Energy Efficiency and Conservation Bill EIPL Energy Infratec Pvt EM&HM Electro mechanical and Hydro Mechanical EPC Engineering Procurement and Construction ERA Electricity Regulatory Authority ESIA Environment ans Social Impact Assessment FEED Front End Engineering Design FMO Netherlands Development Finance Company G&G Geological and Geophysical GOU Government of Uganda HRT Head Race Tunnel HSE Health Safety and Environment IAEA International Atomic Energy Agency IDB Islamic Development Bank IPP Independent Power Producer JST Jinja Storage Tanks KFDA Kingfisher Development Area KNNN&KW Kaiso-Tonya, Kigogole, Nsoga, Ngege, Ngara and Kasamene, Wahrindi kv Kilo Volts KWR Karuma Wildlife Reserve MEMD Ministry of Energy and Mineral Development ii

7 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement MOU MPSA MW NEMA NEU ERD NTR PAPs POL PPA RAP REA SEAMIC TBT TPC TRT UECCC UEDCL UEGCL UETCL AFD GETFiT MV LV UWA UNBS SMEs AEC AfDB ASM BFP BOOT Bopd CDAP CGGC DFI Memorandum of Understanding Model Production Sharing Agreement Mega Watts National Environment Management Authority Nuclear Energy Unit Energy Resources Directorate Non Tax Revenue Project Affecetd Persons Petroleum Operating License Power Purchase Agreement Resettlement Action Plan Rural Electrification Agency Southern and Eastern Africa Mineral Centre Tail Bench Tunnel Technical Petroleum Committee Tail Race Tunnel Uganda Energy Credit Capitalisation Company Uganda Electrricity Distribution Company Limited Uganda Electricity Generation Company Limited Uganda Electricity Transmission Company Limited French Devalopment agency Global Energy Feed in Tariff Medium Voltage Low Voltage Uganda Wild Life Authority Uganda National Bureau of Standards Small and Medium Scale Enterprises Atomic Energy Council African Development Bank Artisanal and Small Scale Miners Budget Framework Paper Biuld Own Operate and Transfer Barrels of Oil Per Day Community Development Action Plan M/S China Gezhouba Group of Companies Development Finance Institutions iii

8 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement DGSM EA EAC EAPC EDT EECB EIPL EM&HM EPC ERA ESIA FEED FMO G&G GOU HRT HSE IAEA IDB IPP JST KFDA KNNN&KW kv KWR MEMD MOU MPSA MW NEMA NEU ERD NTR PAPs POL PPA Directorate of Geological Survey and Mines Exploration Area East African Community East African Petroleum Conference Electricity Disputes Tribunal Energy Efficiency and Conservation Bill Energy Infratec Pvt Electro mechanical and Hydro Mechanical Engineering Procurement and Construction Electricity Regulatory Authority Environment ans Social Impact Assessment Front End Engineering Design Netherlands Development Finance Company Geological and Geophysical Government of Uganda Head Race Tunnel Health Safety and Environment International Atomic Energy Agency Islamic Development Bank Independent Power Producer Jinja Storage Tanks Kingfisher Development Area Kaiso-Tonya, Kigogole, Nsoga, Ngege, Ngara and Kasamene, Wahrindi Kilo Volts Karuma Wildlife Reserve Ministry of Energy and Mineral Development Memorandum of Understanding Model Production Sharing Agreement Mega Watts National Environment Management Authority Nuclear Energy Unit Energy Resources Directorate Non Tax Revenue Project Affecetd Persons Petroleum Operating License Power Purchase Agreement iv

9 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement RAP REA SEAMIC TBT TPC TRT UECCC UEDCL UEGCL UETCL AFD GETFiT MV LV UWA UNBS SMEs AEC AFD AfDB ASM BFP BOOT BoPD CDAP CGGC DFI DGSM EA EAC EAPC EDT EECB EIPL EM&HM EPC Resettlement Action Plan Rural Electrification Agency Southern and Eastern Africa Mineral Centre Tail Bench Tunnel Technical Petroleum Committee Tail Race Tunnel Uganda Energy Credit Capitalisation Company Uganda Electrricity Distribution Company Limited Uganda Electricity Generation Company Limited Uganda Electricity Transmission Company Limited French Devalopment agency Global Energy Feed in Tariff Medium Voltage Low Voltage Uganda Wild Life Authority Uganda National Bureau of Standards Small and Medium Scale Enterprises Atomic Energy Council French Development Bank African Development Bank Artisanal and Small Scale Miners Budget Framework Paper Build Own Operate and Transfer Barrels of Oil per day Community Development Action Plan M/s China Gezhouba Group of Companies Development Finance Institutions Directorate of Geological Survey and Mines Exploration Area East African Community East African Petroleum Conference Electricity Disputes Tribunal Energy Efficiency and Conservation Bill Energy Infratec Pvt Electro Mechanical and Hydro Mechanical Engineering Procurement and Construction v

10 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement ERD ESIA FEED FMO G&G GETFiT GoU HRT HSE IAEA IDA IPP JST KFDA KNNN&KW kv KWR LV MEMD MoU MPSA MV NEMA NEU NTR PAPs POL RAP REA SEAMIC SMEs TBT TPC TRT UECCC UETCL Energy Resources Directorate Environment and Social Impact Assessment Front End Engineering Design Netherlands Development Finance Company Geological and Geophysical Global Energy Feed in Tariff Government of Uganda Head Race Tunnel Health Safety and Environment International Atomic Energy Agency Islamic Development Bank Independent Power Producer Jinja Storage Tanks Kingfisher Development Area Kaiso-Tonya, Kigogole, Nsoga, Ngege, Ngara and Kasamene, Wahrindi Kilo Volts Kilo Volts Karuma Wildlife Reserve Low Voltage Ministry of Energy and Mineral Development Memorandum of Understanding Model Production Sharing Agreement Mega Watts National Environment Management Authority Nuclear Energy Unit Non Tax Revenue Project Affected Persons Petroleum Operation Licence Resettlement Action Plan Rural Electrification Agency Southern and Eastern Africa Mineral Centre Small and Medium Scale Enterprises Tail Bench Tunnel Technical Petroleum Committee Tail Race Tunnel Uganda Energy Credit Capitalization Company Uganda Electricity Transmission Company Limited vi

11 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement UEDCL UNBS UWA AEC AFD AfDB ASM BFP BOOT BoPD CDAP CGGC DFI DGSM EA EAC EAPC EDT EECB EIPL EM&HM EPC ERD ESIA FEED FMO G&G GETFiT GoU HRT HSE IAEA IDA IPP JST KFDA Uganda Electricity Distribution Company Limited Uganda National Bureau of Standards Uganda Wildlife Authority Atomic Energy Council French Development Bank African Development Bank Artisanal and Small Scale Miners Budget Framework Paper Build Own Operate and Transfer Barrels of Oil per day Community Development Action Plan M/s China Gezhouba Group of Companies Development Finance Institutions Directorate of Geological Survey and Mines Exploration Area East African Community East African Petroleum Conference Electricity Disputes Tribunal Energy Efficiency and Conservation Bill Energy Infratec Pvt Electro Mechanical and Hydro Mechanical Engineering Procurement and Construction Energy Resources Directorate Environment and Social Impact Assessment Front End Engineering Design Netherlands Development Finance Company Geological and Geophysical Global Energy Feed in Tariff Government of Uganda Head Race Tunnel Health Safety and Environment International Atomic Energy Agency Islamic Development Bank Independent Power Producer Jinja Storage Tanks Kingfisher Development Area vii

12 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement KNNN&KW kv KWR LV MEMD MoU MPSA MV NEMA NEU NTR PAPs POL RAP REA SEAMIC SMEs TBT TPC TRT UECCC UETCL UEDCL UNBS UWA Kaiso-Tonya, Kigogole, Nsoga, Ngege, Ngara and Kasamene, Wahrindi Kilo Volts Kilo Volts Karuma Wildlife Reserve Low Voltage Ministry of Energy and Mineral Development Memorandum of Understanding Model Production Sharing Agreement Mega Watts National Environment Management Authority Nuclear Energy Unit Non Tax Revenue Project Affected Persons Petroleum Operation Licence Resettlement Action Plan Rural Electrification Agency Southern and Eastern Africa Mineral Centre Small and Medium Scale Enterprises Tail Bench Tunnel Technical Petroleum Committee Tail Race Tunnel Uganda Energy Credit Capitalization Company Uganda Electricity Transmission Company Limited Uganda Electricity Distribution Company Limited Uganda National Bureau of Standards Uganda Wildlife Authority viii

13 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement EXECUTIVE SUMMARY INTRODUCTION Government has continued to prioritize the Energy and Mineral Development sector as a primary growth enabler to the attainment of the national strategic direction towards a middle income status by In this regard, Government policy objective on energy is to ensure adequate and reliable supply of energy to support social and economic growth, while the Policy objective on the Petroleum sector, is to use the country s oil and gas resources to contribute to early achievement of poverty eradication and create lasting value to society. On the mineral sector, the policy objective is to explore, increase ore reserves and promote value addition of mineral ores in order to stimulate industrial growth and to create employment. All these policy objectives are in line with the attainment of a middle income status. ENERGY PLANNING MANAGEMENT AND INFRASTRUCTURE DEVELOPMENT Government is committed to improving electricity generation, transmission and supply to support industrialization as well as ensuring universal access to affordable, reliable and modern energy services. Already Government has made commitments at regional and international levels to improve electricity generation and power trade among partner states through the Eastern Africa Power Pool (EAPP). POLICY AND REGULATORY FRAMEWORK Review of the Electricity Act 1999: Review of the Electricity Act is being undertaken to promote efficiency and attract private investment. The Ministry of Finance, Planning and Economic Development has cleared the Bill and is to be presented to Cabinet to approve additional principles to be included in the review. The target is to table the Bill in Parliament this financial year 2017/18. Energy Efficiency and Conservation Bill (EECB): The Bill has been drafted and is to be submitted to Cabinet for approval before end of FY2017/18. Electricity Connection Policy: The policy was approved by Cabinet in January This policy is intended to enhance connection to electricity by consumers in the rural areas. Biofuels Bill 2017: Obtained Parliamentary approval of the Bill. This is awaiting for H.E. the President to ascent. POWER GENERATION PROJECTS Development of Karuma Hydropower Project (600MW): Overall progress of the works on this dam as at 28 th February 2018 was 74 percent complete. Isimba Hydropower Project (183 MW): Overall progress of the works on this dam as at 28 th February 2018 was 79 percent complete. Achwa/Agago HPP (83MW): the project is being delivered in phases: the 41MW Achwa 2 and 42MW Achwa 1 projects by ARPE Ltd. Construction of the 41MW Achwa 2 is ongoing and commissioning is in November RAP implementation is ongoing with the expectation of acquiring 50% of the corridor by July Overall progress for Achwa 1 is at 70%. Muzizi (48MW): Procuring the EPC Contractor is ongoing; Issuance of RFPs is scheduled for April, RAP Implementation is on-going awaiting approval of valuation report by CGV. Nyagak III (6.6MW): The contractor had mobilized equipment and personnel on site; Construction of temporary facilities such as workers camp and stores had been completed; Construction of ix

14 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement access roads around the project area stood at 75% completion; Construction of permanent structures such as the forebay, dam, water conductor pipe, penstock and the power house would only commence after KfW approval of the ESIA updated report and the contractor s ESMP and ESAP. KfW has since withdrawn the grant of Euro 6M towards the project citing incompetence of the private partner Hydromax. This has led to a stalemate of the Project. Kiba Hydropower Project (330 MW): This power project is to be developed as an Independent Power Producer on a Built Operate and Transfer arrangement. The developer is China-Africa Investment and Development Co. Ltd. (CAIDC). A Pre-Feasibility study was completed in The owner s consultant is getting the necessary statutory permits from NEMA and Uganda Wildlife Authority (UWA) to be able to do a full Feasibility study. The study is scheduled to be completed in eleven (11) months time. GETFIT Portfolio (156.5MW): All projects under the GETFIT Portfolio are currently under construction with 3 projects (Muvumbe 6.5MW, Siti I 6.1MW, Soroti Solar 10MW) totaling 22.6MW commissioned in FY 2016/17,and an additional three projects (Lubilia 5.4MW, Rwimi 5.5MW Tororo Solar 10MW) with an installed capacity of 20.9MW having been commissioned in the current FY 2017/18. More projects are expected to be commissioned before end of Nuclear Power Development: Eight (8) potential sites for nuclear power plants have been identified in the districts of Buyende, Kiruhura, Lamwo, Mubende and Nakasongola. A Memorandum of Understanding on cooperation in the use of atomic energy for peaceful purposes was signed with Russian State Atomic Energy Cooperation (ROSATOM) in June 2017 and another MOU with China National Nuclear Corporation (CNNC) will be signed in March The scope for bilateral cooperation with ROSATOM and CNNC include: development of nuclear power infrastructure in the Republic of Uganda; design, construction and operation of nuclear power plants; design, construction and operation of nuclear research centres; and human Resource Development; among others. POWER TRANSMISSION AND DISTRIBUTION Bujagali-Tororo-Lessos, 127km line (220kV): Overall progress is at 88% while RAP Implementation progress for Bujagali-Tororo is at 94%. Mbarara-Mirama line, 65.55km (220kV): Overall progress is at 98.4% while RAP Implementation progress for Mbarara-Mirama is 98%. Tororo Opuyo Lira line, 260km (132kV): Works contracted to Kalpataru Transmission Limited were temporarily suspended due to court injunctions in Tororo and Lira areas, but have now resumed after reaching an understanding with the local communities. Mbarara Nkenda line, 160km, 132 kv: Works are progressing with a time extension issued up to 30 th April The construction of resettlement houses for Project Affected Persons is ongoing; 45 houses have been completed out of total of 50 houses and 3 houses are under construction. Kawanda Masaka 220kV, 137km line: Foundation construction works are 99% complete (350 out of an estimated 352 tower foundations); Erection is 98% complete (345 out of an estimated 352 towers have been erected); A total of km (74%) of the 137km line has been strung. Nkenda-Fort Portal Hoima 220kV 227km: EPC contract and the substations were awarded. Supervision consultancy works are ongoing. RAP implementation is 92% complete. Detailed survey of the transmission line is at 99%, design is at 100%, procurement of material is at 99%. 613 (97%) of 633 foundations have been completed and 597 towers have been erected. x

15 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement Karuma-Kawanda 400kV 254km, Karuma-Lira 132kV 75km, and Karuma-Olwiyo 400kV 60km: RAP implementation is ongoing for the evacuation lines for the hydropower plant; corridor acquisition is 68.5% for Karuma-Kawanda section and 70% complete for Karuma-Lira segments. Isimba Interconnection 132kV, 40km: The RAP implementation is ongoing with 950 disclosures (96%), 929 agreements (94%) and 89% completion of the transmission line corridor. Industrial Parks and associated substations (Namanve South-Namanve 132kV transmission line 10km; Namanve-Luzira 132kV transmission line 31km; Nalubaale-Namanve 132kV transmission line, Mukono T-off (5km); Nalubaale-Tororo 132kV line; Tembo Steels Ltd T-off (12km): Preliminary designs were completed. Geotechnical study for Namanve and Luzira was completed. Geotechnical study for Mukono and lganga is ongoing. RAP implementation is at 33% completion. Mutundwe- Entebbe 132kV line: Procurement of EPC works contractors (Lot 1; 132kV Transmission Line and Lot 2; Associated Substations) status is as follows: Lot 1: 132kV Transmission procurement was concluded on 12 th October 2017 with a signed EPC contract between UETCL and National Contracting Company (NCC); Lot 2 - Substations: a physical due diligence after re-evaluation was done between 22 nd and 28 th November Report recommending contract award to Xian Electric Engineering Co Ltd. was submitted to the Board for approval. RAP implementation: Paid transactions are 640 (60%) of the 1075 transactions required for the 23.5km corridor. GRID BASED RURAL ELECTRIFICATION The target for FY2017/18 is to achieve 2,241kms of Low Voltage lines and 3,909kms of Medium voltage lines by the end of June Contractors have received imported materials and works are progressing well as illustrated below:- JICA Phase III Supplementary works under Mayuge-Namayingo, Lumino-Namayingo, Namayingo- Bumeru, Lutolo-Lufudu: The lines were completed and are under Defects Liability period. BADEA/OFID: Construction of 33kV distribution lines of Kayunga and Kamuli: Overall progress is at 36% completion of works. Lot1: Kamuli, Buynde-Engineering Design and survey works were completed; Lot2: Jinja-pole erection was ongoing at 90% Completion; Lot3: Kayunga-Pole erection was ongoing at 90% Completion; and Lot4: Buikwe,Mukono-Pole erection was ongoing at 90% completion. GOU Community Cost sharing Schemes were all completed and are under Defects Liability Period. BADEA/SFD Projects: Lots 1-2 were completed and are under Defects Liability Period whereas Lots 3-8 were under preparation for project closure. The lots are as follows: Lot1: Kasambira-Bugulumbya; Lot2: Kapchorwa-Bukwo; Lot3: Mayuge-Bwondha Landing Site; Lot4: Mityana(Hoima); Lot5: Lake victoria Free trade Zone; Lot6: Hoima-Nalweyo; Lot7: Apac- Chegere; Lot8: Kitgum-Namakora/Padipe. OPEC Energy Development and Access Expansion Project in Seven Towns in Uganda: All the Lots 1 & 2 were completed and are under the Defects Liability Period. The Lots are as follows: Lot1: Ntenjeru-Mpenja, Biafra-Nakusubyaki, Ziba-Namaseke-Nansagazi, Kiwale-Buyiira-Lugonjo- Ntimbe-Bukasa-Kisimbize-Buzzu-Banda-Kalambya-Natyole, Lukonda-Wangege Village, Nansagazi- Ssenyi Landing sites. Lot2: Aduku-Cawente, Aduku-Nambieso, Anduku-Inomo-Lira-Bala-Aloi-Omoro-Dogapio-Atura, Muhanga- Rwamucucu-Kisiizi-Kyempene with Tee-offs to Rugyeeyo via Nyakishenyi. xi

16 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement AFD Rural Electrification Schemes in North-Western, Mid- western, South western, southern and Rwenzori Electricity Distribution service territories: Overall progress was at 73% completion of works. Pole dressing and conductor stringing was on-going in all lots. Lot 1: North Western Service Territories(Hoima,Masindi,Kibaale,Kiryadongo Districts)-90% completion of works. Lot 2: Mid-Western,South and South Western Service Territories(Mbarara,Isingiro, Ntugamo and Kabale Districts)- 80% completion of works. Lot 3: Mid-Western and South Service Territories(Lyatonde, Rakai, Masaka, Lwengo, Sembabule, Bukomasimbi and Kiruhura)-70% completion of works. Lot 4: North Western and Rwenzori Service Territories (Kyenjojo, Kyegegwa, Kabarole, Kasese, Rubirizi Districts)-48% completion of works. In the FY 2018/19, a target of over 3,154 kms of Low Voltage and 5,794 kms of Medium Voltage networks located in all districts of Uganda is to be achieved by June The works will be financed by the Government of Uganda and Development Partners. District headquarters: Implementation of projects to connect districts of Kotido and Kaboong is underway while Buvuma district is planned for connection in the FY 2018/19. Once these are completed, all district the headquarters will be connected to the National Grid. Sub-Counties: A memorandum of understanding was signed with TBEA to connect the remaining sub-counties. REA is awaiting Loan approval from the Government of Uganda and China Exim Bank. Connections: In the FY2017/18, REA planned to connect 115,515 consumers to the National Grid and 43,560 connections have been made as at December The target for the FY2018/19 is 300,000 connections. PROMOTION OF RENEWABLE ENERGY SYSTEMS (Solar, Wind and Pico hydro Resources) Installation of two hybrid solar/wind systems for electricity generation in Kacheri- Kotido district, Lokopo in Napak district and Luffudu landing site Namayengo district were completed. Upgrade of wind turbine systems to hybrid solar/wind systems was completed. Installed one solar drying system for agriculture post-harvest in Kangulimira, Kayunga district and also mobilized Isuule community in Kasese district for development of a 50 KW community power project and the feasibility study has been completed. PETROLEUM EXPLORATION, DEVELOPMENT AND PRODUCTION PETROLEUM SUBSECTOR In the petroleum subsector, all the activities along the entire petroleum value chain are being undertaken to establish more petroleum resources; put in place the required infrastructure for resource exploitation and value addition and ensuring that there are adequate and reliable petroleum supplies in all areas of the country. Petroleum Exploration, Development and Production (Upstream) The country has generally progressed from the exploration and appraisal to the development and production phases of the petroleum value chain. Plans to put in place the required infrastructure such as processing facilities, pipelines and a refinery to support production are in advanced stages. xii

17 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement Front End Engineering Designs (FEED) and review of Field Development Plans (FDP): The FEED for the fields within the nine (9) Production Licenses are being carried out. The FEED for the Kingfisher Field Development Area was completed at the end of 2017 and submitted to Government whereas for the Tilenga project (Buliisa/Nwoya fields), it is expected to be submitted by June Issuance of Exploration licenses: Following the successful negotiations and signing of the Production Sharing Agreements (PSAs) for the Kanywataba (344 Sq. kilometres) and Ngassa (410 Sq kilometres) Blocks, the Minister subsequently granted the Petroleum Exploration License for the Kanywataba Block to M/s Armour Energy Limited on 14 th September 2017; and the Petroleum Exploration Licenses over the Ngassa Shallow and Deep Plays to M/s Oranto Petroleum Ltd. on 10 th October The exploration period for each of these licenses is four (4) years split into two (2) exploration periods, each of two (2) years. Other activities in the Upstream Petroleum subsector In a bid to promote further investment in the oil and gas exploration in the Lake Kyoga Basin (3,044 km 2 ), Hoima Basin (3,728 km 2 ) and Moroto-Kadam Basin (2,815 km 2 ), Government through the Ministry as a first step, undertook sensitization campaigns to the local communities in the districts of Moroto, Napak, Nakapiripirit, Kween, Kapchorwa, Bulambuli, Bukedea, Kumi and Katakwi about the planned oil and gas surveys. Having sensitized the communities around the Moroto Kadam basin, geological and geophysical surveys commenced covering a total of 60 line km of geophysical data and 70 sq. km of geological mapping. Midstream Petroleum (Midstream) This segment of the petroleum value chain deals with the promotion of oil and gas infrastructure development to realize value addition and other economic benefits that may be derived from the discovered petroleum resource in the country. Implementation of the refinery development activities: Negotiations between the Government and the identified Private Investor commenced after Cabinet approved the recommended Private Investor. This process is expected to be completed in the course of FY 2017/2018 and thereafter, its FEED and ESIA will be undertaken by the Private Investor. On Refinery Land and to-date, 98.3% of the Project Affected Persons (PAPs) have been fully compensated. The PAPs who were paid cash vacated the refinery project area and bought land around the refinery area where they have settled. These areas include Nyamasoga, Kabaale, Buseruka, Kyarusheshe, Nzorobi, Kigaaga, and Busenyi among others. The PAPs who opted for reallocation, construction of their resettlement houses were completed and handed over to them. The Health Centers that were constructed to offer services to the PAPs were also completed and handed over to Ministry of Health for management. For the remaining 1.7% of the PAPs who have never turned up for verification and disclosure, efforts through various media channels advising them to do so is ongoing. Support the development of the EACOP from Kabaale to the Port of Tanga on the East African Coast The launch of the East African Crude oil export pipeline (EACOP) in Uganda was done in Rakai and Hoima districts during the month of November, This was after Uganda and Tanzania signed the Intergovernmental Agreement (IGA) in May The IGA was ratified by Cabinet and laid on the floor of Parliament. Negotiations of the Host Government Agreement (HGA) between xiii

18 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement Government of Uganda and the Joint Venture Partners commenced. In addition, the FEED and EIA for the EACOP development are being taken forward. Petroleum Supply and Distribution (Downstream) Management of National Petroleum Information System (NPIS): billion litres (PMS, AGO, BIK and JetA1) petroleum products were imported by end of second quarter of FY 2017/18. Regional pump prices for PMS by end of Q2 FY2017/18 were UGX 3900, 3408, 3287, 3532 and 4702 for Kampala, Eldoret, Nairobi, Dar-es-Salaam and Kigali respectively. Regional pump prices for AGO were at UGX 3250, 3066, 2990, 2870, 3289, 4635 for Kampala, Eldoret, Nairobi, Mombasa, Dar es Salaam and Kigali cities respectively. The National Petroleum Information System (NPIS) is being upgraded and the Prototype of the final system will be integrated with URA ASYCUDA and Oil Marketing companies systems for easy coordination, monitoring and management. Development of Petroleum Operating Standards and conducting of petroleum products laboratory testing: As at end of Q2 FY 2017/18, 102 Construction Permits were issued to developers of petroleum facilities. 48 Construction Completion Certificates were issued to developers of petroleum facilities. 205 Petroleum Operating Licenses were issued to petroleum Supply Operators of retail, wholesale, and import nature to carry out trade in petroleum products. 91 Environmental Impact Assessments were received and comments sent to NEMA. 16 Environmental Audits were received. Eight (8) Technical Committee meetings on the development of petroleum standards on LPG and large consumer installations were held with good progress. Three thousand two hundred twenty-two (3222) samples of petroleum products were analyzed at the Central Laboratory by end of Q2 FY 2017/18. One thousand five hundred twenty-one (1521) retail outlets were monitored for quality by end of Q2 FY 2017/18 of which 99.3% outlets complied with fuel quality specifications. Cross-Cutting Activities in the Petroleum Subsector a. Legal, Regulatory and Institutional Framework The Local Content Policy has been submitted to Cabinet for approval. The Database for the M&E framework for the National Oil and Gas Policy is being populated and at the same time preparations to revise and update the National Oil and Gas Policy is underway. b. Institutional Infrastructure Development The contract to construct Phase-3 of the National Petroleum Data Repository, Laboratories and offices at Entebbe was awarded to M/s China National Aero-Technology International Engineering Corporation Ltd. Work commenced in February 2017 and is expected to be completed in c. Capacity Building for the Oil and Gas Sector The subsector continued with training of two (2) technical members of staff at postgraduate level abroad one in Information Technology systems and the other in Advanced Laboratory techniques. d. Participation in Regional initiatives i) State visit to the Republic of Equatorial Guinea The Ministry participated in the State visit to the Republic of Equatorial Guinea by H. E. Yoweri Kaguta Museveni, the President of Uganda, from 24 th - 28 th August This visit which was aimed at strengthening the bilateral cooperation in oil and gas among others, was a follow-up to the earlier State visit by the President of Republic of Equatorial Guinea H. E. Teodoro Obiang Nguema Mbasogo to Uganda in April During the April visit, a Memorandum of xiv

19 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement Understanding (MoU) on bilateral cooperation in Oil and gas was signed between the Ministry of Energy and Mineral Development (MEMD) and the Ministry of Mines and Hydrocarbons (MMH) of the Republic of Equatorial Guinea. ii) Uganda DR Congo Bilateral Meeting A bilateral meeting between the Republic of Uganda and the Democratic Republic of Congo (DRC) on Oil and Gas cooperation was held on 24 th November 2017, with the Minister of Energy and Mineral Development leading the Ugandan Delegation and the DRC Minister of Hydrocarbons leading the DRC delegation. The DRC delegation was exploring the possibility of tie-ins into the planned East African Crude Oil Pipeline (EACOP). The DRC delegation was given assurance that this was provided for by the Inter-Governmental Agreement signed with the Tanzanian Government and the modalities would be agreed on when petroleum operations in DRC were ready to tie-in to the EACOP. iii) Cooperation with the United Republic of Tanzania During the historic event of laying the foundation stone for the East Africa Pipeline in Tanga, H.E. Dr. John Pombe Joseph Magufuli, the President of United Republic of Tanzania and his counterpart H.E. Yoweri Kaguta Museveni, the President of the Republic of Uganda agreed on the bilateral cooperation on oil and gas exploration. Following this agreement and on the invitation of the United Republic of Tanzania, the Ministry led by the Ag. Permanent secretary has held two engagement meetings with the Ministry of Energy (MoE), Petroleum Upstream Regulatory Authority (PURA) and Tanzania Petroleum Development Corporation (TPDC) on the formulation and implementation of the framework for co-operation between the two countries regarding oil and gas exploration. THE MINERAL SUBSECTOR The mineral subsector deals with geological, geophysical and geochemical surveys, regulation of mineral exploration, mines, geothermal exploration to establish the country s mineral wealth and monitoring of geo-hazards. MINERAL SUBSECTOR LEGAL, FISCAL AND REGULATORY FRAMEWORK Mineral Policy and Mining Legislation: The Ministry finalized its review of the Mineral Policy and Mining together with the Principles of the Mining Act Amendment Bill and submitted to Cabinet. Geothermal Policy of Uganda: The Ministry is currently drafting the Geothermal Policy of Uganda. The draft policy and principles was presented to stakeholders for review and comments are being incorporated. Implementation of Mineral certification mechanism: The Plan for the Regional Certification Mechanism (RCM) for Uganda has been developed and the following were achieved: The International Conference on the Great Lakes Region (ICGLR) Bill, 2016 that domesticates the Regional Certification Mechanism (RCM) Protocol, alongside all other ICGLR protocols and the ICGLR Pact on Security, Stability and Development in the Great Lakes Region was passed by Parliament on 17 th May 2017 and awaits assent by H.E the President. A Statutory Instrument/Ministerial Orders to institutionalize the ICGLR Regional Certification Mechanism (RCM) and the (OECD) Due Diligence Guidance for designated minerals including gold, tin, tungsten, tantalite (3Ts) was drafted. The Mineral Certification Unit was put in place at the Directorate of Geological Survey and Mines. The Unit has supported the Ministry to: xv xv

20 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement i. Carry out quarterly mine site validation exercises and collect relevant information which will feed into the ICGLR regional database; and ii. Develop a mine site Inspection Manual, Template and Mineral Export Certification procedures. Enforcement of compliance to mining Act, 2003: Government stopped all illegal mining activities in Mubende District and a Mineral Protection Police Unit was put in place to curb any further illegal mining in the country. In line with the new mineral policy and mining legislation, the Ministry in collaboration with the National Identification Registration Authority (NIRA) will biometrically register all artisanal and small scale miners (ASMs) in the country. REGIONAL INFRASTRUCTURE DEVELOPMENT Construction of mineral beneficiation centres: The Karamoja regional office block was completed. Two more will be constructed in Ntungamo and Fort Portal in FY 2018/19 Certified Mineral Laboratory establishment: The laboratory equipment at DGSM has been repaired and analysis of minerals such as gold, tungsten, tin, tantalite (3Ts) is now possible. HEALTH AND SAFETY IN MINES Registration of persons involved in artisanal and small-scale mining (ASMs) and those that purchase gold from the artisans is ongoing. 2,249 ASMs miners were registered in Mubende; 1,614 ASMs in Namayingo and Busia districts; 1,692 ASMs in Karamoja Region; and 830 ASMs in Kikagati, Mwerasandu, Kakanena and Rwengoma, Ruhama Sub County, Ntungamo District while 155 gold buyers were registered in Mubende under Mubende Trust Gold Buyers and Traders Association. Training of 160 ASM Trainers was undertaken in Entebbe, Mbale, Gulu and Fort Portal. These trainers will further train other ASMs in various ASM mine sites on how to register themselves into associations that shall be able to carry out best practices of mining, marketing of their minerals, preservation of environment and maintenance of their health and safety in their respective communities. Training of 180 ASM Trainers on Enterprise skills, market promotion, market analysis and mineral value addition was undertaken across the country. The trainings mostly targeted ASMs dealing in industrial minerals, dimension stones, stone aggregate, sand, clay and semiprecious stones. The trainings are aimed at helping ASMs effectively manage proceeds from their mining ventures. GEOLOGICAL SURVEYS The country s geochemical coverage still remains at 35% while geophysical surveys are at 80%. Eight (8) mineralized areas were discovered against an annual target of 3 and 6 potential Uranium resources targets against an annual target of two (2) in order to stimulate investment in the mining sector. Establishment of Mineral Wealth Potential: In terms of carrying out country wide exploration activities, the Ministry has so far done the following: i) Geochemical sampling and ground geophysical surveys in areas of Ndali in Fort Portal and the western part of Kitgum where uranium prospects have been established; ii) iii) iv) Geological mapping and ground geophysical surveys in areas of Rutenga, Kabale District and established additional 30 MT of Iron ore; Geochemical sampling of the Bukusu Carbonatite Complex in Manafwa District and established occurrence of Rare Earths Elements (REEs); Geophysical surveys in Buhweju and established a radioactive anomaly around Katara area; xvi

21 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement v) Geophysical studies in areas of Panyimur, Buranga and Kibiro and confirmed good geothermal potential fields that shall be followed up with deep borehole drilling; vi) vii) viii) ix) Geochemical surveys over meta-volcanics in Amuru District and confirmed occurrence of sulphide bearing minerals associated with Copper, Nickel, Zinc, Lead and Gold. Undertaken evaluation of bentonite at Kaiso Tonya, Hoima District and established reserves of 1.3 million tonnes. In the meantime, the Ministry finalised a Paper for establishing a Mineral Exploration Unit which was submitted to the Ministry of Public Service in October 2017 for review and for approval. Supporting and promoting the development of the first phase of the Sukulu Phosphate and Steel Project to be commissioned by end of x) Supporting and promoting the feasibility studies and development of the Wagagai Gold Mining Project in Busia. MINERALS LABORATORIES EQUIPPING AND SYSTEMS DEVELOPMENT The Ministry commenced implementation of a new Mineral Laboratory Project, designed to equip the minerals laboratories and to put in place systems for sustainable analytical and mineral value addition test services for Uganda's mineral sector. The progress is as follows: i) Procurement is underway for five (5) higher capacity and low detection limit analytical equipment for geological samples from mineral exploration activities. ii) Procurement is underway for a consultant to design, install and provide support services for a Laboratory Information Management System (LIMS) for the minerals laboratories. iii) Procurement is underway for services of an accredited institution to administer Laboratory Systems and Internal Audit Courses based on ISO/IEC 17025:2005 to technical laboratory staff so as to develop a management system based on ISO/IEC 17025:2005. iv) Remodelling for the refurbishment of one of the laboratory buildings to house the fire assay unit is underway. v) Design of dust extraction system for sample crushing unit and secure venting system for the chemical store of the minerals laboratories is underway. vi) Benchmarking of laboratories within Uganda for analytical and mineral beneficiation test techniques and technologies by laboratory technical staff is underway. GEOTHERMAL EXPLORATION The main geothermal areas are Katwe-Kikorongo (Katwe), Buranga, Kibiro and Panyimur located in Kasese, Bundibugyo, Hoima and Pakwach districts respectively. Of the four areas, Kibiro and Panyimur are in advanced stages of surface exploration and will soon drilling of the first deep exploration wells will be undertaken. Katwe-Kikorongo and Buranga are undergoing detailed surface exploration. The Ministry has undertaken geological, geochemical and geophysical studies in areas of Panyimur, Buranga and Kibiro and currently procuring a contractor to drill temperature gradient wells at Panyimur and Kibiro in the FY 2017/18 and FY 2018/19. The results will be used to update the current subsurface conceptual models that will be a basis for the feasibility study that will involve drilling deep geothermal exploration wells and setting up the first pilot geothermal power plant in Uganda. xvii

22 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement The current findings indicate subsurface temperatures of approximately ᵒC for Kibiro, ᵒC for Buranga, ᵒC for Katwe, and ᵒC for Panyimur. The temperatures are suitable for electricity production, for direct heat use in industry and agriculture, and for spas in the tourism industry. LICENSING / INSPECTION OF EXPLORATION AND MINES Licensing: The ministry licensed and inspected mining activities in the country to promote the application of environmentally friendly technologies and methods in mineral exploitation, and ensure adherence to health and safety regulations. In total, 716 mineral rights (licenses) are operational. Since July 2017, the Ministry has conducted 124 mining sites inspection and 80% of the mining companies complied with mining regulations. Non-compliant companies were given notices for compliance. Extension services were provided and awareness campaigns carried out targeting small-scale miners through their associations to improve artisanal and small-scale mining. Mineral inspection: The Ministry monitored mineral trade and sensitized customs and security officials at Goli, Paidha, Vurra, Lia and Oraba, Katuna, Bunagana and Mpondwe, Mutukula, Mirama Hills and Butogota, Busia, Nimule and Entebbe Airport. Sensitization of ASM operations to form associations and apply for location licenses is ongoing in Budde, Nakudi and Sigulu in Busia and Namayingo districts; Singo, Bukuya, Kayonza in Mubende district; Morulem, Rupa, Karita, Moruita in Karamoja. The Ministry also facilitated negotiations between ASMs and mining and exploration companies to zone out ASM areas. MINERAL SUB SECTOR INVESTMENT PROMOTION AND DEVELOPMENT The Ministry continued to promote and attract investments in the mineral sub-sector. The current capital investment by the private sector in key projects is over USD 1.63 billion as follows: i. African Gold Refinery to refine gold to 99.99% here in Uganda (USD 15M) ii. iii. iv. Guangzhou Dong Song planned commissioning of phosphate plant by 2018 and for steel by 2019 (USD 620M) Copper, Cobalt, Zinc, Nickel project in Kasese with estimated investment plan to revamp it to production level (USD 175M) African Panther commenced mining and processing of tin with value addition of concentrating the ore up to 75% as the first phase. The second phase will include a tin smelter (USD 10M) v. In regard to limestone and cement production, the Ministry has attracted more players in the sector to break the monopolistic tendencies in the industry. Currently, there are four cement production and development companies (Tororo Cement, Hima Cement, National Cement, Kampala Cement) which have invested and improved cement production in the country tremendously. The total combined investment is at least USD 500M. vi vii Consolidated African Mineral Resources has invested about USD 5M for 60BT of high grade graphite. M/s Kweri (U) Ltd in partnership with M/S Berkeley Reef Limited and M/S Rwenzori Rare Metals have carried out a feasibility study leading to an estimated reserve of 300 million xviii

23 Ministry of Energy and Mineral Development Vote: 017 Ministry of Energy and Mineral Development Ministerial Policy Statement tonnes of rare earth elements (REEs), with potential to increase up to 700 Million tonnes. Production is expected in SUKULU PHOSPHATE AND STEEL PROJECT: M/S Guangzhou Dongsong Energy Group Co. Ltd is set to develop the Sukulu phosphate resource into phosphates, steel, glass, cement and brick products. The company has so far constructed buildings to house staff and workers plus putting in place an administration block and a dining hall. The company has also carried out geotechnical site investigations and established the type of soils where the plant is to be set up. Earthworks and grading of the site are now underway and pre-fabricated plant machinery for the first phase of the project has arrived in the country. All plants, including the steel mill, are expected to be in operation by December So far, over 150 skilled Ugandan workers have been employed, and the number is expected to rise to over 1,000 by December 2019 when the plant is fully operational. KILEMBE MINES PROJECT: M/S Tibet Hima Mining Company Ltd (THMCOL) that was awarded the concession to revitalise Kilembe Mines had its license revoked after it failed to perform and Government is in the process of identifying a new operator for the Kilembe Mines. MONITORING OF GEOHAZARDS Earthquake Monitoring: Routine servicing and maintenance of the five (5) earthquake monitoring stations in Entebbe, Hoima, Nakawuka, Kabale, and Mbarara has continued to be undertaken. In addition, temporary earthquake recovery stations have been established in Gulu, Lira, Kumi, Agago, Kitgum, Kotido, Kaabong, Napak, and Amudat to monitor any occurrence of earthquakes in the country. Infrasound Network and Lightning Vulnerability mapping: Through desk studies and field investigation by the Ministry in Wakiso, Mpigi, Rakai, Masaka, Kiruhura, Mbarara, Isingiro, Ssembabule, Mubende, Kiboga, Mbale, Sironko, Budaka, Busembatya, Namutumba, Kibuku, Iganga, Jinja, Kalungu, Masaka, Lwengo Mpigi, Butambala, Bukomansimbi, Gomba, Mityana, Mbarara, Ntungamo, Rukungiri, Kanungu, Ibanda, Kabale, Rubanda Bushenyi, Sheema and Kiruhura found out that 80% of the population is highly vulnerable to lightening risk. Lightening and geo-hazards vulnerability studies revealed that at least 23% of the schools had lightening arrestors and 77% of the schools did not have lightning arresters. The establishment of infrasound network commenced in order to respond to mitigate seismic risk and geo-hazards and preparedness of the population to install adaptation and mitigation technologies to lightning. SECTOR CHALLENGES The key challenges are: - a) Land Acquisition for government projects is taking a long time and a considerable budget. b) Inadequate counterpart funding for compensation which delays disbursements by other funding partners. c) Procurement bottlenecks including lengthy bidding processes that require no-objections from the external financiers at each stage of execution. d) Low access of Rural Electrification which stands at about 20.6%. e) Management of the Uganda Electricity Board (UEB) successor companies (e.g. UETCL, UEGCL and UEDCL) which by law belong to the Ministry of Finance Planning and Economic Development. f) High power tariffs which are not attractive to the manufacturing sector. g) Illegal mining by the Artisanal Miners. xix