Mubiru (Right) and Dr. Maalanti exchange the MoU's
Sunday, 24th February, 2008
KAMPALA City, Entebbe and Mukono municipalities’ garbage is going to be converted into energy. The conversion is going to be done by the energy and mineral development ministry and a joint energy company, Taylor/Sesam Energistics One Limited.
This article clearly spells out how it can be difficult to initiate a huge project in an African country. You might know all the policies and procedures of government, but what happens if the're no particular procedures in some parts of your business execution arrangements and yet you still have to move forward with your venture?
Read this story to understand how might have to tackle some of those business situations without a straight forward answer.
The ministry’s acting permanent secretary, Eng. Paul Mubiru, signed a memorandum of understanding on behalf of the Government while Dr. Noah Maalanti, the chief executive officer of the company, signed on their behalf to produce 33 megawatts of power from solid waste.
The company will finance the project, which is expected to cost $88m (about sh50b). “The memorandum gives us confidence as investors. The government has opened all doors for the project implementation and take-off,” says Sam Julius Lukwago, the company’s executive director for critical business links.
He added that they are looking forward to signing another memorandum with Kampala City Council (KCC) to allow them utilise all the waste.
Lukwago told The New Vision that the KCC memorandum will finalise the working document which consists of environment and social impact assessment, a long term waste management contract and the power purchase agreement.
“It will also update and conclude our feasibility studies review after gathering more data on waste availability and securing land for the project. We have land in Lubya but are waiting for a land title from KCC,” he explains.
A letter written by the local government minister, Kahinda Otafiire, at the beginning of last year to his permanent secretary, grants the company permission to collect as much waste as possible from KCC and the surrounding areas.
The purpose of the energy ministry’s memorandum is to guarantee access to garbage stocks in the three towns and assuring them of exclusive rights to ensure continuity.
Other requests in the memorandum are a government guarantee to Sesam/Taylor to buy down their economic unit cost by 10-35% and to give them a permission to proceed with concluding the draft power purchase agreement.
“We are yet to see the gazetting of the project by the Electricity Regulatory Authority, so we can go for public hearings. The Austrian government has agreed to fund the process of clean development mechanism certificate, which is a prerequisite,” Lukwago says.
Maalanti says the most important feature of the Taylor system’s environmental performance is that it minimises the amount of carbon converted to methane, which has 21-23 times more the global warming potential of carbon dioxide.”
The project has a multi-sectoral contribution to the economy.
The energy sector has security guarantee. Its source of energy is not affected by water levels or absence of sunlight at night. Uganda will have a demand of between 411 and 649 megawatts by 2010. The current 370MW is inadequate.
According to the Uganda Investment Authority 2005 report, Uganda’s electrification rate is one of the lowest in the world, with a grid access of only 5% and 2% in urban and rural areas respectively.
Only 200,000 customers are connected to the grid with an annual growth rate estimated between 5.5 and 7.5%. Some of the population use car batteries, solar and generators.
Maalanti says the initial 33MW will be enough for 30,000 households. “The generation will increase to 70MW, when an efficient waste collection system is put in place,” he adds.
“The project will also break the cycle of sanitation related epidemics by streamlining waste management,” he says. The cost of total garbage disposal management for the next 15 years is estimated at $42,000,000.
Currently, the Government spends close to $1m every year to manage about 40% collected waste. The project is to cut the cost by over 85% in the first five years of operation and could eliminate this cost after expansion of the gasifiers to consume 100% waste generated in the city. Only about 3% of the processed waste will be taken to the landfill.
The Kiteezi landfill lifespan remains with less than one and half years to reach capacity. At the same time, the population in Kampala is increasing at 3.7% per annum projecting 2,009,857 for the next ten years. About, 60,000 tonnes of waste will be generated monthly from the current 42,000 tonnes.
The Government requires in excess of sh400m monthly to achieve 100% collection. It collects only 40%.
Lack of electricity is one of the leading factors hindering investment in the country, according to the Uganda Investment Authority, January – March, 2007 report.
About 50% of firms regard electricity as a major constraint to investment. The licensed projects were worth US$525.3m. This means that an additional $500m could have been lost during this period because of lack of electricity.
Maalanti says the project remains the only solution to the garbage problem and brings about sustainable economic development through concretising the energy security in the most economically sound manner, without compromising environmental stability.
At the same time, it is a cost-effective investment for any country.By John Kasozi
- The New Vision