The Infrastructure Magazine UG May-June'18

Inside: Which business model should the new Uganda Airlines take?

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The plastic pollution problem

OIL & GAS

Uganda's oil and gas logistics challenge

AVIATION

Interview with Kenya Airways CEO

LOGISTICS

Tanzania Ports Authority charms Uganda’s business community

Kaliro Sugar/Sugar & Allied Industries Limited, was established in 2011 with the aim of meeting the regional sugar deficit and giving Uganda 100 per cent sugar self-sufficiency. The establishment followed research that showed that Kaliro district, strategically placed between Lake Kyoga and Lake Victoria, had the best climate for growing premium sugar cane that would make delicious sugar.

Casements Africa Ltd, Rwanda in Kigali, Rwanda is a branch of Casements Africa Limited Uganda, some of the notable projects it has carried out has the residence of the Rwandan President among others.

Casements Complex, 5th Street - Plot 86/90 Industrial Area, P.O. Box 4641, Kampala, Uganda.

Tel: +256 414 234 001, +256 414 234 001, +256 414 234 001 Fax: +256 41 234 301

Rhino Footwear Ltd: Located in Kampala was established in 2009 but is currently one of the major players in footwear manufacturing in Uganda. Its Rhino brand gumboots are of unparallel quality and the field foot wear of choice in Uganda. Rhino brand products are now distributed and well received in neighbouring countries like Rwanda, Burundi, the Democratic Republic of Congo and South Sudan.

Oxygas Ltd: Located in Nakawa, Kampala is the leading manufacturer of medical and industrial gases in Uganda. With its state-of-the-art, 200m2/ hr Gas plant the company supplies the different types of gases to the government of Uganda (National Medical Stores) for medical purposes and other private sector manufacturers like Century Bottling Co. (Coca Cola), Nile Breweries Ltd, among others for brewing and other industrial uses. Oxygas Ltd is ISO 9001: 2008 Certified.

Website: www.alam-group.com Email: alam@alam-group.com

Plot 2901, Block 214, Kisasi – Kyanja Road, P.O. Box 70602, Kampala Tel: +256 414 572 318, +256 392 946 521 Mob: +256 712 472 568, +256 701 492 568

Services offered Construction of Buildings Electric power installation systems Architectural Drawings Construction and design of Roads & Bridges Construction of valley and hydro dams Construction Supervision Services

Projects costing & evaluation Construction of Water Supply Systems Surveying, Designing & Documentation of Water Supply Systems General Hardware Dealers Transportion services

Contents www.infrastructure.co.ug | May - June 2018

The Infrastructure Magazine is Published by

2nd Floor, Ntinda Shopping Centre P. O. Box 11670, Kampala, Uganda, Tel: +256 414 667 688; +256 700 665 775; Mob: +256 776 477 751; +256 752 665 775; E-mail: editor@infrastructure.co.ug; inquiry.acl@gmail.com; Website: www.infrastructure.co.ug www.acl.co.ug Editor Simon E. Omoding Sub Editor Arthur Matsiko Writers Benjamin Mukose, Nelson M. Muhoozi, Jackie Asasira, Daniel Otto, Roger Kyazze Guest Writer Rosa Malango Marketing Team Leader Martin Ariko Sales Executives Brenda Wanyenze, Gaston Atusiimire, Grace Ajulong, Provia Namanya Design/Layout Peter Mugeni Wanyama Slick Republic Limited ISSN: 2523-191X (Print); ISSN: 2523-1928 (Online)

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Cover Photo: Innovations Academy-Uganda

10 COVER STORY

The plastic pollution problem

05 From the editor 06 News Round-up Analysis 09 Uganda Airlines: Which business model?

Feature 12 The logistics challenges awaiting oil supply chain Interview 18 Kenya Airways needs to change its business model to survive – new CEO Oil & Gas 28 UNOC: Taking care of state commercial interests in oil and gas Mortgages 31 Mortgage financing remains expensive, but growing

Let us be serious about the plastics problem Every year, June 5 is celebrated as the World Environment Day, all over the world. The theme for 2018 celebration is “Beat Plastic pollution.” This theme reflects the big problem that plastics have become to the world. According to the UN Environment, plastic is easily the world most produced material today. And the problem with it is that once produced, it is difficult to degenerate. Over the past few months, the global media has been awash with the menace that plastics have become-on the lakes, rivers, oceans, soils, food systems, to name a few.

U

ganda is no exception to this problem.

Plastics- especially the type used once and thrown away (such as shopping bags, bottles, etc.) are the commonest in Uganda. The National Environment Management Authority (NEMA) says the cost of reckless use of plastics can be seen in clogging of water channels, deterioration of soil, etc.

Many countries are taking action to manage the use of plastics. As Erik Solheim the UN Environment chief says, the problem is not plastics per se, the problem is how they are used. Uganda has been making some steps forward, some more backward on the management of plastics (especially bags). The country needs to come up with a clear solution that recognises that plastic are a critical part of the economy, but at the same time put in place measures to manage and use it without doing harm to the environment.

That’s quite a feat, but it can be done.

In this issue, we also feature an interview with Sebastian Mickosz, the new CEO/Group managing director of Kenya Airways. Mickosz

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Many countries are taking action to manage the use of plastics. As Erik Solheim the UN Environment chief says, the problem is not plastics per se, the problem is how they are used.

gives some insights into the business of running a national airline. As Uganda debates and moves towards reviving the national carrier, some of these insights are good food for thought, and debate. One of these, is one issue that has largely been missing in the Uganda (airline revival) debate, i.e. what model should the new Ugandan Airlines take? Should it be conceived as part of the national infrastructure whose success is judged from its contribution to the country’s Gross Domestic Product (GDP)-growth and development –through for example, boosting tourism, trade, investment, exports? Or should it be conceived as a private company whose success will solely be judged by the profits it makes and dividends it pays to the national coffers? That debate needs to be had in Uganda.

Plus many more interesting articles. Good reading.

Simon E. Omoding Editor

5 May - June 2018

Qatari investors meet a Ugandan delegation to explore investment opportunities.

Foreign direct investment to East Africa falls to US$7.6 billion

T

otal foreign direct investment coming to East Africa fell by 3 per cent down to US$7.6 billion in 2017, according to a UN report. Released in early June, the UN Conference on Trade and Development (UNCTAD) 2018 report said Ethiopia and Kenya remain the biggest investment dollar destinations in East Africa.

The fall, according to UNCTAD was attributed to “lingering effects from the commodity bust” of the past few years. Overall, inflows to Sub-Saharan Africa declined by 28 per cent, down to US$28.5 billion. Flows to Central Africa decreased by 22 per cent to US$5.7 billion, while inflows to West Africa fell by 11 per cent to US$11.3 billion, largely due to Nigeria’s depressed economy. Investment flows to Nigeria fell 21 per cent to US$3.5 billion, the same amount as Ethiopia.

Kenya saw FDI increase to US$672 million, up 71 per cent, due to strong domestic demand and inflows in information and communication technology. The report however recognises East Africa as “the fastest-growing region in Africa.”

6 May - June 2018

In general, foreign direct investment (FDI) flows to Africa slumped to US$42 billion in 2017, a 21 per cent decline from 2016. FDI flows to North Africa went down 4 per cent to US$13 billion.

Investment in Egypt was down, but the Arab country continued to be the largest recipient in Africa. Morocco the other leading economy was up 23 per cent to US$$2.7 billion, mostly to its sizeable investments in the automotive sector.

In Southern Africa, FDI declined to US$3.8 billion. FDI to South Africa alone fell some 41 per cent to US$$1.3 billion, due to an under performing commodity sector and political uncertainty. FDI into Angola turned negative once again (down to US$2.3 billion from US$4.1 billion in 2016) as foreign affiliates in the country transferred funds abroad through intra-company loans. In contrast, FDI into Zambia increased, supported by more investment in copper.

James Zhan, UNCTAD Director, Division on Investment and Enterprise, said, “The

beginnings of a commodity price recovery, as well as advances in interregional cooperation through the signing of the African Continental Free Trade Area agreement, could encourage stronger FDI flows to Africa in 2018, provided the global policy environment remains supportive.”

The report showed that multinational enterprises (MNEs) from developed economies (such as the United States, United Kingdom and France) still hold the largest FDI stock in Africa. At the same time, developing-economy investors from China and South Africa, followed by Singapore, India and Hong Kong (China), are among the top 10 investors in Africa On the other hand, FDI outflows from Africa increased by 8 per cent to US$12.1 billion, reflecting a significant increase in outward FDI mainly by South African (US$7.4 billion) and Moroccan firms (US$960 million) firms. Outward FDI by Nigerian firms, in contrast, remained flat at US$1.3 billion, focused almost exclusively on Africa.

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News Round-up

Kenya gets her first oil out of the ground

C

oming after Uganda discovery; Kenya nonetheless officially launched her first crude exports in June. President Uhuru Kenyatta flagged off four trucks carrying just over 600 barrels of crude to symbolise Kenya’s readiness to export oil.

The trucks delivered the crude to Kenya’s Mombasa refinery where it will be kept awaiting export. So far, Tullow Oil has recovered 70,000 barrels of oil from the Ngamia 8 oil fields in Lokichar, Turkana East in the north of the country.

While flagging off the symbolic export under the Early Oil Pilot Scheme (EOPS), President Kenyatta said his government will be mindful to ensure that the oil benefits the people and that Kenya doesn’t suffer the oil curse, like some countries in Africa.

Tullow Oil expects to sell 2,000 barrels of crude a day. John Munyes, Kenya’s Petroleum and Mining minister said East

President Uhuru Kenyatta flags the symbolic export under the Early Oil Pilot Scheme.

African biggest economy had reached a “momentous time” as it exports oil from

East Africa; and that the economy will be emboldened by oil proceeds.

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News Round-up

Uganda and South Sudan officials after signing a Memorandum of Understanding for partnership in construction of a one stop border post (OSBP) in Elegu/Nimule towns on the Uganda/South Sudan border. Photo: TRADEMARK EAST AFRICA.

Works on Nimule One Stop Border post launched

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he Government of South Sudan in partnership with TradeMark East Africa in May launched construction works of key infrastructure at the Nimule One Stop Border Post (OSBP). The works include a parking yard, access roads, examination shed and drainage systems.

Seyani Brothers are undertaking the construction works. They were also the contractor for the Elegu one stop border post.

A statement issued by Trademark East Africa said, “ the Government of Uganda and that of South Sudan signed the agreement for mutual collaboration and partnership in construction of a one stop border post (OSBP) in Elegu/Nimule towns on the Uganda/South Sudan border in 2016 and today marked the commencement of infrastructure related upgrading, which will ease congestion and improve the border posts by reducing time and costs to clear goods including the humanitarian consignments.”

When completed, the works will improve market access and fasten border processes, and reporting of various NTBs that traders face along the route. This is expected to promote transparency and accountability among the respective country

8 May - June 2018

agencies operating at the borders.

The finished border post will also fast track humanitarian consignments and reduce the congestion at the border to enable these consignments reach South Sudan faster.

John Kalisa, TradeMark East Africa South Sudan country director said, “In addition to facilitating trade across the border, the Nimule OSBP will also improve

mutual interactions, create synergy, unity of purpose and sustainability. “ The function was officiated by Dr. Moses Hassan Tiel, the South Sudan Minister of Trade, Industry and EAC Affairs, David Martin, undersecretary South Sudan’s Ministry of Transport, Agak Achuil Lual, executive director South Sudan National Road Authority Eng. Kenyatta Warille among others.

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Analysis

Which business model?

The big discussion Ugandans need to have about the new Uganda Airlines

By Our Writer

Over the past few months, there has been an impassioned public discussion around the revival of the Uganda Airlines. The avid debates have centred on: Whether Uganda should revive the airline in the very first place; whether the country has the capacity to run an airline or not; and whether with the high levels of corruption in the country, the airline will survive or will just sink tax players’ money into some dark abyss.

A

ll of those though important questions seem to be behind us now. It is without any doubt that the business case for reviving the Uganda Airlines is more than compelling; there is a strong business case.

The real and most important question that Ugandans need to ask and debate, however, is what business model the new Uganda Airlines should take. A business model is a statement of direction and identity of a business. It is the underlying theory of business; how an entity proposes to bring value/money to its owner.

The question is should Uganda Airline

be run on a private airline model, driven by to grow the GDP. If the airline can do both, profit-making and generating dividends for even better, but that would be very ambiits owner(s)? Or should it be modelled as a tious for a re-start like Uganda Airlines. national interest airline that is built as part If it is a national airline, its value of the national infrastrucaddition would not be in making direct profits per ture intended to support the se, and paying dividends country to grow its gross doIf Uganda to its owner (the governmestic product (GDP)?

Airline makes In this latter case, the ment of Uganda), but to Uganda an airline would not necessarily contribute to the growth accessible tourist take the burden of keeping its of the country’s GDP, as destination, and eye strictly on profits and diva piece of national infradrives tourism idends to the owners. Rather structure, much like the numbers to tens its focus would be on facilitatstandard gauge railway or of millions every roads and bridges. ing business in the country

year, generating millions of dollars. That will be value added.

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9 May - June 2018

Analysis

If Uganda Airline makes Uganda an accessible tourist destination, and drives tourism numbers to tens of millions every year, generating millions of dollars. That will be value added. Equally, if it contributes to lowering the cost of doing business by making the country accessible to the world in the shortest time, and that drives investment and business activity in the economy, thereby driving up the volume of business in the country that is value addition. The airline may also make Uganda a favoured destination for international meetings and conferences, this way, making the country’s hotel rooms fully booked most days of the year that is still value addition.

In that sense the airline may not break even or even make profits from its operations, but its contribution to the growth of the GDP would be phenomenal; its value addition would be growth of the economy. With a booming economy, government would then be able to raise revenues from taxes in tourism, imports and exports, personal taxes, etc. from these national revenues, government would be able to subsidise the airline.

Indeed most airlines operational in the region take this model. Rwanda Air, Emirates, Gulf Air and even Ethiopian Airlines, all run this model. Their core business is not so much to make profits, but to support growth and development of their country’s GDP in various ways.

Take the Ethiopian airlines for example. Started in 1945, it has stayed a national flag carrier fully owned by the government. With the highest number of destinations in Africa and the African airline with the highest connections to destinations outside Africa, the airline drives millions of passengers annually through its hub in Bole international airport in Addis Ababa. The airline also conducts joint marketing events with other relevant agencies. For example, the Ethiopian airline together with Ethiopian Tourism Organisation co-conduct tourism-marketing events in Europe and other places, with the aim of providing attractive travel and tourism packages to travellers/ tourists to Ethiopia. This way the airline drives tourism numbers into Ethiopia, and in the process, generates its own ticket sales to Ethiopia and other destinations.

The airline has been successful in its role as a national flag carrier, but also making profits. In 2017, Bloomberg News reported that the airline made a profit of 3.53 billion birr (US$ 165.4 million) the year

10 May - June 2018

Take the Ethiopian airlines for example. Started in 1945, it has stayed a national flag carrier fully owned by the government.

before. For this reason, the government of Ethiopia has for many years passed a regime of policies aimed at protecting the national flag carrier. For example, in Ethiopia private airlines by policy are restricted from purchasing aircrafts of capacity more than 50 passengers. In other words, only the national carrier can purchase bigger aircrafts and therefore do international destination from Bole.

Rwanda Air is not known to make profits since it was established a few years ago, but the government of Rwanda keeps subsidising it for its strategic usefulness in breaking borders of “landlocked-ness.” Over the last few years, Rwanda has packaged itself as a choice destination for international events- conference, meetings, etc.

In May (2018), the International Congress and Convention Associations ( ICCA) named Rwanda as the 3rd most favoured country to host international events in Africa. Rwanda government sources reported that in 2017, Rwanda received 28, 308 dele-

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Analysis

gates up from 23,804 the year before, contributing 15 per cent of that country’s tourism revenues.

Rwanda has a MICE (Meetings, Incentives, Conferences and Exhibitions) strategy aimed at attracting international events to the country. The national airline is at the centre of this offer.

The second model that Uganda Airline could take is to be a fully-fledged business chasing for profits. If it takes this model, its operations will have to be built around ensuring that they maximise their routes to carry enough passengers to make profits.

In east, south and central Africa, Kenya Airways is the only one currently taking this model. This way, the airline would be a fully private entity.

Before its recent woes, following which the government of Kenya invested heavily (up to US$ 750 million in guarantees), the company was listed on the Nairobi, Dar es Salaam and Uganda stock exchange, and run like any private business in Kenya, although it carried the national flag.

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The company is regulated by the Capital Markets Authority meaning its transparency, accountability, reporting have to be public. Its employees are private employees, not state employees, and therefore they are able to negotiate their salaries and terms, form trade unions, etc. That is why it is common to hear about strikes by Kenyan Airlines pilots, and not those of Ethiopian airlines.

There are advantages and disadvantages for either model. The advantages with the national airline model is that the country’s economy gets integrated. The same way the SGR and roads are taken, the national airline is not necessarily preoccupied by making its own profits and paying its own dividends, but its preoccupation is to ensure that it services the other sectors of the economy; mining, tourism, agriculture, processing, services, thereby helping to grow the country’s GDP. The problem with this model is that the airline will always fall back to the national coffers to finance/subsidise its operations. However, given that it contributes to the growth of the economy in its own way, this is not necessarily a challenge as long as the airline actually contributes to the growth of the economy. The country will have to come to terms with the fact that there is need to keep the airline in the sky by funding it from the national coffers as it is a strategic enabler of economic growth.

The private business airline on the other hand will be tasked to build its operations around making profits. Some of the decision it takes will not actually be in support of the growth of the national GDP, but short term profits. In the end, the airline will focus on its own sustainability and forget the national duty to improve the GDP. The trouble with this business model is that it is governed by private sector rules of the game. The employees are hired and paid according to market forces. Employees are free to form trade unions and take industrial action as in the private sector. The airline has to declare its performance publically as required by private sector rules of the game. The burden on the airline is therefore huge, as the recent example of Kenya Airways has shown. In fact the new Chief Executive Officer of Kenya Airways is trying to get the Kenyan government to tread toward the national airline model (See interview on page 18).

Eng. Monica Azuba Ntege, Minister of Works & Transport

Rwanda Air is not known to make profits since it was established a few years ago, but the government of Rwanda keeps subsidising it for its strategic usefulness in breaking borders of “landlockedness.”

11 May - June 2018

Feature

The logistics challenges awaiting oil supply chain

By Daniel Otto

Experts say logistics in the oil and gas industry is one of the most complex exercises yet, compared to other business, and for a country like Uganda that is just entering the oil industry, the challenges are expected to be even bigger.

W

hen the government of Uganda finally signs off investments for key oil activities later this year, some US$15 billion is expected to be ploughed into the economy over the next few years. This will mainly be in form of equipment, services, goods and industry sundry for the upstream, midstream and downstream oil business.

As such, a big chunk of the capital investment will go to logistics; that is, the business chain responsible for delivering the equipment, machinery and other merchandise (like chemicals) from the manufacturers in different parts of the world to Uganda. In other instances, it is about relocating used equipment from other field stations to the various locations in a country where it is needed in the oil value sequence. Whatever the case, it involves clearing and forwarding, shipping, road, rail or air transportation, customs and taxation clearing, among others.

Writing in the Digitalist Magazine, Lisa Jacobsen, a logistics expert planner, said: “It’s hard to imagine an industry with greater complexity – or greater demands – than the oil and gas industry. As dwindling reserves force companies to operate in remote and even possible hostile environments, the high cost and difficulty of extracting energy is steadily increasing.”

Alex Ongom, a lecturer of Logistics Management in university, Kampala told The Infrastructure Magazine that “We, as country, have relatively poor infrastructure and un-developed systems. We can only expect that the oil logistics will –at least initially-be a challenge.”

12 May - June 2018

In Uganda’s case, the planned huge infrastructure include upstream (mainly continued exploration and production); midstream (the refinery and pipeline to the coast); and downstream (terminals and oil reserves). All these are expected to attract billions of dollars in investment. At the same time given the complex nature of the initial infrastructure, these will bring in huge equipment and machinery from different parts of the world to the site locations in Hoima and elsewhere.

Most of the equipment for drilling, production and the refinery will go to Kabaale in Hoima district. In spite of the fact that the roads in this region are being worked upon, the place remains remote and limited in infrastructure. Moreover, Uganda is a newcomer in the oil industry and, therefore data, statistics and experience in the operation of the industry will be relatively limited.

Yet time, in the industry, is of essence. A day in the oil industry can mean and cost millions of dollars. These, and other factors, will ultimately combine to provide a nightmare for people who work in logistics. These include clearing and forwarding, transportation, shipping and customs, to name a few.

“It is, therefore, important that companies that supply in this value chain already start preparing themselves for the challenge ahead. The company that will pull off the complex logistical operations that are bound to happen will be the leader in the logistics for the oil and gas and will, therefore, make the kill, “ Frank Mbonye, a Kampala based logistics planner, told this Magazine. “Companies that will be caught

An inland container depot. Photo: Bolloré Logistics. unawares and will not show adeptness, efficiency and business value, will fall by the way side.”

One of the challenges bound to occur is bureaucratic delays. Given that Uganda is landlocked, and necessarily these equipment and machinery will have to come either through Mombasa port in Kenya or through Dar es Salaam in Tanzania, there are probable customs issues either related to interpretation of the law, lack of understanding or previous experience in taxation within the East African region.

In the recent past, there have been instances when Kenyan and Tanzanian customs officials have acted in what Uganda interprets as going against the spirit and letter of the East African customs protocols. As a result, Ugandan goods have had to be held and instances shipped back, and orders cancelled owing to increasing costs occasioned by delays. This has hindered or delayed export of goods from Uganda to Kenya or Tanzania.

The Infrastructure Magazine could not

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Feature

the government of Uganda. verify whether Uganda has entered any “It’s very important that you understand agreements with any of her neighbours to local conditions and how customs works, ensure customs bureaucracies/clearance of and respect all the rules and oil equipment will be handled regulations embedded in expeditiously or if there is any Uganda is a your contract,” said Steve Harspecial arrangement to deal newcomer in with clearance of oil goods at ley, president of DHL Energy the oil industry the border posts.

Sector. and, therefore Efforts by this Magazine Upstream (exploration data, statistics to get a comment from the and production) projects reUganda Revenue Authority quirement by their very naand experience on any arrangements that ture tend be oversized, heavy in the operation they are making to handle loads, which need to be delivof the industry customs for the oil and gas ered urgently to remote areas will be relatively equipment and consumables with poor infrastructure. limited. were futile as our calls and Customs e-mails to Vincent Seruma the Assistant Commissioner Public Affairs, went Harley says: “Customs regulations unanswered. constantly evolve and (customs) regimes It is instructive to note that the oil induschange, so we have to be aware on a day to day basis of any changes. It would be nice try will naturally come with complexities of to see more regional coordination…. in an unpredictable regulations and adherence ideal world, uniform customs rules and regto international conventions that regulate equipment, chemicals and products, among ulations would make life an awful lot easier.” others that will require specific attention by The other factor that the industry has to

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contend with is price volatility. The price of crude per barrel one day could be US$70 based on which a procurement is projected. The following week it could plummet to US$40. This means that while commitment has been made based on a higher value, by the time the equipment and goods arrive, the market value is down to half. What this means is that the country and players in the logistics market need robust systems, information and data that can help them make calculated projections to hedge such loses.

According to Mbonye, “Uganda currently lacks data and information capacity related to oil and gas. If any information is available at all, it is generic information developed from practices elsewhere in the world. Until we have our own data and numbers, making projections and calculated risks remains a perfidious game.”

In a white paper released recently, DHL, a global leader in logistics, said: “Harnessing the true power of data-driven insight is the holy grail of future business. A wealth of this data comes from the supply chain.”

The paper stated, “while the information is there, companies are not yet capitalizing on its real value as a source of insight capable of shaping the future of the enterprise.” It added, “Data-mining, pattern recognition, business analytics, business intelligence – along with other tools – are coalescing into an emerging field of supply chain data science that has the potential to drive this evolution. These new intelligent analytic capabilities are changing supply chains – from reactive operations, to proactive and ultimately predictive operating models…. They will help map the blueprint for the next generation global company – the insight-driven enterprise.”

Unfortunately, for countries like Uganda, the amount of available information remains low, analysis and datamining is even non-existent.

The second part of this article will explore the capacities that different companies in Uganda have put in place in preparation for the oil logistics challenges.

13 May - June 2018

Cover Story

The plastic pollution problem

By Benjamin Mukose & Nelson Muhoozi

Baekeland developed what came to be known as plastic, which he patented on December 7, 1909.

However, it was only after the Second World War (1945) that the use of plastics really went into high commercial scale.

That innovation, just over 100 years ago, has been one of humanity’s most game-changing creations. Over the years, plastic has become the he challenge with shellac was that it was a cheapest, preferred material for packaging, conproduct of a biological process – excreted struction, manufacturing, industry by lac insects – and was thereand business. All over the world, plasfore prone to short supply. The world tic is now the most used material from needed an artificial and mass product retail business packaging, soft drink to service its needs. It was in the quest Over the years, bottles, food containers, cups, plates to fill this need that Baekeland, a PhD plastic has become to car and aircraft parts. holder in chemistry from the Belgian the cheapest, In construction, plastic is now alUniversity of Ghent, developed bakepreferred material most exclusively used in plumbing lite, a carbon synthetic from phenol for packaging, and, to a bigger extent, roofing and and formaldehyde. From bakelite,

In 1909, Belgian-American chemist, Leo Baekeland, sat in his home laboratory in New York to work out a synthetic resin to service various usages in order to replace the rare shellac that was in common use at the time.

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construction, manufacturing, industry and business.

14 May - June 2018

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Cover Story

flooring. Plastic is also easily the most used material for manufacture of household materials including toys, chairs, kitchenware, entertainment gadgets, beds and beddings. Plastic is literary the material of the generation; hence, this being called the ‘age of plastics.’

Plastic became a favoured material because of its non- electricity conductivity, heat resistance, malleability, low-cost, lightweight and long-lasting nature, among other benefits. Plastics are polymers – made from a synthetic repetitive process of multiplying the same type of carbon.

Andrea Sella, professor of chemistry at the University College London, once told the BBC Radio that to make plastic, “you take a simple organic molecule and you react it with itself again and again and again”.

“A little bit like a bicycle chain, you attach one link, and you click on the next one and the next one and the next one, almost ad infinitum,” she added.

Sella said the polymers’ shape that makes plastic is what gives its plasticity, ability to mould and shape into any form. The individual strands “can simply slide past each other,” she said. “Think of cold spaghetti.”

Because of these chemical qualities and properties, plastic cannot, and does not degenerate unless it is burnt at high temperatures. As a result, even years after it is disposed of, it stays on; in one form or another. In an article published in July 2017 in the Journal Science, Dr Roland Geyer (and others) wrote that by 2015, an estimated 8.3 billion tonnes of plastic had been made globally.

Plastic bottles are the commonest form of plastic in use. In 2016 alone, an estimated 480 billion plastic bottles were sold worldwide, by mainly beverage producers.

Dr Geyer wrote that some 6.3 billion tonnes of plastic has accumulated somewhere in the world; in the oceans, landfills, farmland, and others. He estimates that by 2050, some 12 billion tonnes of plastic would be in landfills alone, because of modern living – drinks, food, retail packaging, and so on.

In Uganda, the National Environment Management Authority (NEMA) estimates that the total volume of plastics in the environment goes into the millions of tonnes a year. Tony Acidria, NEMA’s

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Sam Cheptoris, Minister for Water & Environment.

Erik Solheim, executive director of UN Environment.

KCCA alone spends about Shs 7 billion annually to collect kaveera from the channels and drainage systems

public relations officer, told The Infrastructure Magazine that “approximately 1,000 tonnes of plastics are generated in Kampala alone daily”.

He said Uganda’s biggest problem is especially the throwaway plastic bags and containers, bottles, and packaging for clothing.

“KCCA alone spends about Shs 7 billion annually to collect kaveera from the channels and drainage systems,” Achidria said.

The throwaway plastics find their way to block the drainage systems causing floods, bursting of sewers and outflows. Some plastics are eaten by animals, and end up in our food system.

It is for this that plastic pollution has become an emerging global environmental problem; the reason why the World Environment Day, June 4, 2018 was themed: “Beat Plastic Pollution.”

Erik Solheim, the executive director of UN Environment, the UN agency responsible for global environmental matters, said “the planet is on the verge of a global plastic calamity”.

Sam Cheptoris, Uganda’s minister for Water & Environment, in his 2018 World Environment Day message said: “These polythene bags take hundreds of years to decompose, and as such pollute our soils, becoming a threat to agriculture which is the backbone of Uganda’s economy.”

Cheptoris added that plastics also pollute lakes and rivers, and are a threat to marine life, have caused loss of animals and as such hinder a number of economic activities that are a source of livelihood to many communities.

The unsafe use and indiscriminate disposal of polythene bags has been well documented to be toxic and harmful to human health. Thus, such practices have been listed among causes of non-communicable diseases such as respiratory infections, high blood pressure and cancer.

Recently, images of plastics floating on oceans and other water bodies have been the focus of global media. Lisa Svensson, the UN oceans chief, said: “This (plastic pollution) is a planetary crisis... we are ruining the ecosystem of the ocean.”

Plastic’s strength – a long life – is also its problem.

Indeed, many countries have taken one or other form of action in dealing with the menace.

In East Africa, Kenya and Rwanda have outlawed the use of plastic bags. Further afield, Indian Prime

15 May - June 2018

Cover Story

Plastic bags (Kavera) in a dumping site. Photos: Innovations Academy-Uganda Minister Norendra Modi, during the World Environment Day 2018, committed to get the use of plastics outlawed in India by 2022.

Solheim was, however, somewhat positive: “The assessment shows that action can be painless and profitable – with huge gains for people and the planet that help avert the high downstream costs of pollution. Plastic is not the problem. It’s what we do with it.”

Classification of plastic Generally, plastics are classed into seven types, recognized by their resin identification code, normally written on every plastic.

The PEP (polyethylene terephthalate) is normally used for bottles of water, soft drinks, juices, mouthwash, ketchup and salad dressings. Although this is largely considered one of the stable and less toxic plastics, it has also been found that exposure to high temperatures such as sunshine makes it emit toxins.

The second type is the HDPE (High Density Polyethylene); also considered low hazard, is used for milk, water, juices and cleaning supplies. HDPE is also found in anti-corrosive use such as in plumbing and water piping. The PVC (Polyvinyl Chloride) is used for making plastic toys, tablecloths, and blister packs for medicines. It is rigid, but can also be soft and used in building/water resistance in construction.

The LDPE (Low-density Polyethylene) is used in

16 May - June 2018

bags for bread, fresh produce, house garbage, cold beverage cups, trays and basins.

The PP-polypropylene type has high heat tolerance and is used or making containers for yoghurt and medication. The PS-polystyrene type is used for making cups, plates and bowls. The seventh type is anonymous as it could be a combination of all of the above.

In Uganda, there have been zig-zag steps in regulating use of especially kaveera, which puts the country on a ticking time bomb.

“As a matter of fact, kaveera shouldn’t be burnt at temperatures above 100 degrees centigrade.

Cooking with kaveera is another danger as exposing kaveera to heat from household sources makes the it release carcinogenic chemicals into foodstuffs...” Achidria said.

Alternative packaging materials.

www.infrastructure.co.ug

Road Governance

Uganda Road Sector Support Initiative - Rooting for better road governance

By Roger Kyazze

For an organization that traces its beginnings on Kampala’s Colville Street, sharing office space with another company in 2009 and finally registering as a not-for-profit organization in 2010, it is hard to imagine how far Uganda Road Sector Support Initiative (URSSI) has come. Even harder to imagine is how much it has already influenced the country’s road sector governance.

T

he formation of URSSI came after a careful analysis of the state of roads in Kampala in the late 1990s through the early 2000s. At the time, the roads were in a very deplorable state. URSSI soon became preoccupied with the question: How do we get tempo to this state of affairs?

Soon, a strategy was planned – creation of a forum whose preoccupation was simply to get people talking about the challenges through debate and instigating solutions.

Stewart Mutabazi, URSSI director, told The Infrastructure Magazine that getting people to speak about road challenges was done on radio and television talk shows.

“This was successful as the public begun to engage in the discussion about the state of roads in Uganda. This eventually translated into increase in government budget allocation on roads from Shs 300 billion to Shs 1trillion the following year,” Mutabazi said.

The initiative immediately tasked itself with the responsibility of ensuring the money was put to good use. Accountability was divided in three categories: safety, well-made roads and improved road governance.

For eight years, URSSI has participated with the Civil Society Budget Advocacy Group (CSBAG) towards the achievement of better accountability of road funds.

Other partners in this endeavor include the World Bank, Kampala Capital City Authority, Uganda Bus Drivers Association,

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Stewart Mutabazi, URSSI director. and the UK Department for International Development.

Being a nonprofit organization, however, springs challenges of underfunding for URSSI, which has deterred the organization from achieving all its objectives.

To raise some funds, Mutabazi said the organization has embarked on provision of consultancy services.

“One of URSSI’s greatest achievements is the introduction of the road reserve law that was tabled and passed in Parliament. UNRA (Uganda National Roads Authority) then picked up the song, and immediately began demarcating road reserves. This has trickled down to the public, learning that they should not build on road reserves; leaving room for expansion of roads,” he said. “Sanity on Ugandan roads is slowly improving, but there is yet more to be done.”

Through its partnership with Ugan-

da Bus Drivers Association, URSSI has trained several bus drivers and through its road safety campaigns, it has reached out to boda bodas. Local leaders have also been reached through workshops on taking responsibility for planning their locations.

Working with other partners, URSSI are advocating for non-motorized transport systems (NMTS) where people can walk safely on the roads. The current proposal of turning Namirembe Road into NMTS may be evidence that this advocacy is beginning to work.

Mutabazi is critical of government’s laid-back strategy. “Cities should not grow by themselves, government designs them.

For example, government’s lukewarm implementation of the condominium law, which encourages people to co-own land and build vertically as opposed to building horizontally, is not having a big impact on city developments,” he said.

URRSI has had a major contribution in terms of marshaling initial interest of Ugandans in urban and transportation issues. Nevertheless, the country is yet to realize the full benefits of coherent urban growth given the slow adaptation of progressive policies and programmes, and people’s slow reaction towards better methods of urban living.

“We shall not wear out doing our work because in the very long run, both government and citizens will soon realize, and consequently embrace our message and call of creating livable cities,” Mutabazi said.

17 May - June 2018

INTERVIEW

Captains of Industry

Kenya Airways needs to change its business model to survive – new CEO In 2016, Kenya Airways, East Africa’s biggest airline, hit a turbulence that almost brought it down to its knees. The airline (flight code KQ) listed on the Nairobi, Dar es Salaam and Uganda stock exchanges, got a second lease of life only because of state intervention. President Uhuru Kenyatta’s government decisively moved in fast to save the airline from collapse. The restructuring process involved a plan drawn

by McKinsey, one of the leading global strategy consulting companies. An immediate outcome of that process was change of the airline’s senior management team.

P

olish Sebastian Mickosz (pictured) was brought in as the Group CEO and managing director to replace Mbuvi Ngunze who had been at the top seat of KQ only since the end of 2014. Mickosz, 45, in known to be experienced and skilled in the airline industry, one of his previous feats being reviving the polish national carrier, LOT Polish Airline, one of the world’s oldest existing airlines (founded in 1928). In this interview with CNBC Africa TV’s Charles Gitonga, the polish CEO bares his experience so far and gives a peek into his plans for the future of the airline dubbed ‘The Pride of Africa’. Below are transcribed and edited excerpts:

Now my role and my assignment is to guide or to push us through an industrial restructuring.

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Thank you so much for your time. It has been about a year since you were appointment (as chief executive officer/managing director). What is your personal experience at Kenya Airways so far?

It is overall a very good experience because I always wanted to stay and work in the airline industry. So here I am in the heart of the airline industry. However, in parallel, it was a discovery of Kenya as a country. I knew a little (about Kenya) before; I came here 21 years ago as a student.

Nothing comparable with the situation today, but it was like rediscovering or discovering a country with a completely different approach. Because now I live here, so it has become my country. The first year is also a little an emotional turnaround

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INTERVIEW

because you come to discover new places, new people. At the same time you have to make decisions and an intense path of [the] decision-making process of learning and doing or learning by doing. So the first year is positive even though it was tough.

You came in at a very critical point for Kenya Airways; it is right in the middle of financial restructuring. Today as it is, we have government as a major shareholder. We have ten banks owning a significant part of the stake as well. What is the financial status of KQ today?

I think that we have started what I would call a new chapter. There was a chapter that was closed at the end of 2017, which was really the moment where we could communicate that the financial restructuring was finished. It is always a very delicate moment for companies because you know there are things you can communicate publicly to the press, and there are those you cannot really communicate because of the pretty tough, very tough financial negotiations. There is always a question about the future (of the company). I am very happy that this chapter is behind us;

the shareholding is stabilized, and that is really the strong message to the market.

Yes, we went through a shaky period.

I hope it is over in terms of finance. Now my role and my assignment is to guide or to push us through an industrial restructuring. Without the financial restructuring, we would not be talking today because we really reached the point at which you had to address it. As you mentioned, the Kenyan state has shown huge support and huge trust in the company. Of course, the airline is the national symbol, but you know providing a sovereign guarantee of US$750 million is not an easy decision for any country. That was a very heavy commitment.

I also have to say the fact that the banks converted their loans to equity and that they appointed their representatives to the company is a sign of normalisation of relations and was also a sign of trust. That pre-occupied the first months of my work.

I must also say that this was the period when company management, in fact all of us, were a little defocused or maybe apathetic – influenced by (uncertainty) what was going to happen in the country during the elections; not just the first one, but the second one as well. That was my big learning of Kenya by the way. I found it went very well. But I’m also happy that this chapter is closed, because our business was affected.

Let us talk about performance now that the restructuring we are hoping is done. So what are you focusing on now? What would you say has changed in the last one year from an operations perspective, because from the last financial announcement we saw some improvements; you cut loses by more than half, operating profit increased.

So what has changed in terms of operations?

We have to recognize always that the process of restructuring an airline never stops. I came in when the restructuring

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19 May - June 2018

INTERVIEW had been started. I just continued what had started. And what I can do is to put a different vision; maybe sometimes different from what was done the way it was done before, but we have to focus ourselves on continuity. You know in the airline (business) the problem is that today’s decisions influence things that are going to happen in 12, 15, 18 months. This process was already started two years before I came. Now I have to strengthen and focus on enhancing it by also reversing a little the paradigm.

I just had a meeting today with our pilots, and you know they kept telling me, ‘look, for so many years we heard things like cut jobs, cut network losses, so let’s focus on (doing) something more positive.’

Of course, we have to continue to cut losses. Of course, my target is to have Kenya Airways being a profitable company again.

There is absolutely no way we can do it the old-fashioned way. We have to acknowledge that competition is here, will be here and will be reinforced. The way we control our costs is a fundamental way; a fundamental difference in terms of approach but also I always believe that you cannot only cut cost without growing the revenues because that does not make sense.

There is no company that lives out of just cutting costs; you have to focus on growing the revenues. Therefore, the operational decisions of starting to grow the network, taking the aircraft back that we say please and preparing a long lasting development five-year plan that will allow us to really ramp up and regain what should be our position on the African continent.

And in doing that you expect the airline will need more capital injection even with a new shareholding or what’s going on according to your plan?

Capital injection is not something that we are aiming at right now. That is the part of the chapter that was just closed at the end of 2017. However, there might be a moment where we might think about finding new shareholders to increase the equity. At this moment, the board has not

20 May - June 2018

yet approved our five-year development plan. We have discussed the draft a couple of times. As soon as it is done, and I expect it to be done within the next weeks, then we will know what our balance sheet position is and what other equity we need to finance growth.

There is this partnership that we have seen; maybe you have seen some communications from the (Kenya) Capital Markets Authority regarding your partnership with Kenya Airports Authority. I want to understand what kind of efficiency that brings on board, and the specifics of this partnership that we are yet to see come to light.

I cannot answer this question without having a broader view of how the airlines that are our biggest competitors in Kenya are functioning. If you take seven or eight biggest competitors, starting from Rwanda Air to Ethiopian, Turkish, Emirates all the airlines that are very well managed and have grown their presence in Africa for the last 20-25 years, all have a different business model. We are the only airline that has a privately owned business model and when looking at the strategy of Kenya Airlines with the board, we just had an open discussion; why those airlines grow faster than us; how they do what they do differently than we do that allows them to be simply more aggressive in a growing market.

In this area, we are the only ones who are a public listed company. We have to observe full transparency, annual reports, communication to Capital Markets Authority, and so on. We are the only one that really has a very strong private presence.

The others are all fully state-owned. We have a completely different (set of) rules of relations with our employees; the other airlines do not have trade unions, they have regulated salaries and all of them are in one basket in terms of national interests.

Because of that, they are putting all their assets to work together not that much for the benefit of the airline but for the benefit of the country.

And that’s a very different mandate.

While discussing this potential partnership with Kenya Airports Authority, this is what we had in mind, and this is what we presented to the (Kenyan) government and the management board. We really have to look at what are the elements that will allow us to compete outside Kenya because we do not compete inside Kenya. Of course, we compete with other airlines in Kenya, but outside is where the biggest benefit comes from. We should be focusing as an airline in creating connectivity; so, bringing Kenya closer to other countries, create cargo capacity, create jobs and contribute to Kenya’s Gross Domestic Products (GDP) which is the role of many airlines. If I take the Gulf carriers competitors, their role is really to grow the GDP of their countries much (less) the growth of the benefit of the airline. That is the biggest difference between them and us that we should be really focusing on.

So what are the specific things in your proposals that you have made to the government that you think will make Kenya Airways effective in Kenya and profitable on the same line?

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INTERVIEW an African carrier and the connectivity into Africa is still at medium level. I think there is a much more opportunity of flying in between the cities of particularly central and southern Africa, the so-called sub-Saharan Africa, which is the heart of our network.

And I see in the next years quite a significant number of opportunities to connect to different points in Africa given the geographical size of the continent. We really are going to strengthen and develop this network of 40 years. It is just the two were the first.

There will be more new ones coming soon.

and Cape Town as well. We are looking Everything that we could say publicly has forward to that direct flight to the US. But been said at this stage. I think that there will before we talk about the US, these two be much more details in the next weeks and most recent in Africa, what months. Now there is a new do they mean for KQ? And process regulated by Kenyan why are they important to law. It is called PPP-public-priWe should you at this point? vate partnership; which is a be focusing new regulation. It was introYou know, the developas an airline duced like four or five years ment of the intra African in creating ago. We are focussing on network is the essence of our connectivity; so, delivering to the cabinet the business. So flying to Mauribringing Kenya necessary documents. I think tius was a long outstanding closer to other that once we have it and it is initiative; it is a partnership countries, create approved then there will be between us and Air Mauricargo capacity, time for you to know more. tius; so, they fly three times create jobs and I think that at this stage, we a week and we do four times contribute to already said quite a lot and a week. So it is a daily prodKenya’s Gross my biggest concern is that uct. Our customers can go Domestic competition is also reading back and forth daily to Cape Products (GDP) what we do. Therefore, I will Town. On top of that, we are which is the role stay more general on this at already flying through Victoof many airlines. this point. ria Falls. We fly a direct flight to Cape Town. But of course, it’s just the beginning of the development You have launched a couple of new of the African network. You know we are direct flights to Mauritius most recently,

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And the US of course, there’s a lot of excitement towards October, but I want you to make a sustainable financial business case for this direct route between Kenya and the US. How does it look for KQ going forward because obviously there will be other airlines coming in?

Yeah, it is a very big risk for us. I know the excitement part, I have lived it. On the first day of my work with Kenya Airways, everybody asked me: ‘when are you launching New York?’ In my first meeting with the pilots, same thing: ‘when are we opening New York?’ So everybody has like a collective agreement that we should be flying to New York.

But moving this from excitement to business is a completely different effort.

The business case exists because this is a nonstop flight. Therefore, despite the fact that there is huge competition, we are going to offer a unique product. You have to top it up with the fact that today you have 120,000 US customers, US citizens originating from the US who already come to Kenya through different routes a year, so that market exists. You have about 50 American companies, most of them with headquarters on the east coast of the United States, who elected Nairobi as their headquarters at least for the region. So there is a market, which we do not need to build; this market exists.

Now having said that, the problem with the New York market for me is that it’s so highly competitive that everybody goes

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INTERVIEW

there; everybody fights for the same group of customers. I believe that we really have a very nice offer on the East African side because when we fly people here, we can then fly them to Uganda, Rwanda, Tanzania, Mauritius, etc. On the US side, this is where the cut challenge comes, because customers in the US are ready to have so many offers and such a big price variety that we will chew and challenge ourselves and be very efficient on that route. We have taken at least not a natural decision of immediately flying a daily flight. That is part of the business case. You know when you want something you go for it. Yes, if you have a daily flight then you cater for customers from both sides.

But also from the premium leisure clients, these are the people who are ready to pay US$10,000 per couple, for a few days of holidays. They are busy and are expecting a product with flexibility they want. For example, to come in on Monday and be able to go back on a Wednesday or fly out on a Tuesday, come back on a Saturday. We are offering a connection every day of the week.

Normally you would ramp up, you start with a weekly flight, then may be five weekly, and then you go on a daily product. But we had this discussion internally and there was quite a lot of challenging of ourselves. What do we do and we decided we fight for it? Because of the excitement, because of the support but also because we believe that this is a little of a breakthrough, KQ should stop crying and complaining. We take the sword and the shield and we go fighting. That is how I would like to approach the US market.

And because you said it’s a big risk, the question is: do you have the muscle to accompany the amount of risk that might come out of you?

You know when you have too much muscle you do not move too fast; we are just at the moment where we have to take a fight just to believe that we can do it. Of course, there are risks but I think that both the company and the environment and just the fact

22 May - June 2018

that you’re asking me is just promoting this; so, I am absolutely confident but still very humble and a little scared.

Yes, I will gladly see the 28th of October coming but then it is not about the 28. It is about the next months and the growth of this market. So yeah, we are determined but (a little bit) scared.

Competition is always good. It is healthy. I do not think that lack of competition has brought any success to anyone; monopolies always ended badly. That is the economic history for the last 1,000 years.

For you what’s the biggest risk? Is it competition or is it the fact that you say there might be a lot of wide price variation between whoever else is offering what they are offering e.g. the US airlines coming in?

No, no US airlines would be more than welcome. I think all the things you mentioned are a risk for us. It starts with a commercial risk, but then operational risk. We have just had a discussion on this project; we discuss it literally every day. Just imagine

we will be leaving in October in the middle of summer in Kenya and reaching New York where there is good autumn and start of winter. So just a few days from operational perspective is a challenge; it is going to be a 14.5, 15 hour flight. We are going to have operational issues you have to balance the aircraft, take some cargo be sure that you go on time and you are back on time. In addition, as you mentioned, you know competition is not sleeping, and they will run after us because this is the market that everybody wants.

These are the things that we are looking after and I will be in New York in three weeks’ time to have the second set of our marketing efforts there. But yeah, it’s nice and exciting, you know.

Let us talk about the competition. Here

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INTERVIEW

Mickosz in the interview with Charles Gitonga.

I am looking at the region. Ethiopian Airlines that is coming in too quickly and not forgetting the government in Ethiopia is developing the airport to position it as an East African hub. Which means obviously, now Kenya will be facing the fire on that sector. There is also Rwanda Air, which is also investing quite a lot. Anytime we talk about these two airlines and many other airlines in the Gulf region, there’s always that, for lack of a better word, stronger relationship with the government, and its financial implications. So how then do you come in as a commercial airline that has a purely commercial, business strategy and face some of these people especially in light of the Air Train of the Open Skies policy now that we have in Africa?

Oh, there are many elements of your question. I think, I fully agree with you, and I would use the word strong relations with the government – of our competition. It

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brings me back to the vision I have. That they have a different mandate from the one we have, that is indeed a challenge which is not easy to overcome because we are having a mandate to pay dividends and to be profitable. Someone else next door with the same market access has a mandate to grow the GDP of the country; so, that creates completely uneven playing field. We play different games on the same market for the same customers.

There are two ways of answering this.

First, competition is always good. It is healthy. I do not think that lack of competition has brought any success to anyone; monopolies always ended badly. That is the economic history for the last 1,000 years.

So for me the fact that we have to run faster and have the muscle you asked me (about earlier) is very good because that shows us that we understand we need to work hard.

Second is the PPP project, and this is what we submitted to the government.

We cannot, on the other hand, be naive and think that just by being fitter and better we will fight this competition; we will not. Because we have completely different aims and just the board, which I am part of, has a different set of rules. By the way, there is also a different set of rules toward the shareholders because we are a listed company. From that perspective, I think of having a more Kenyan strategic approach of the airline and focusing more not on what the company can do. That is the second part of the answer.

Two are not mutually exclusive. This is not because we want to go more to (the state protection) direction so that suddenly it is okay, we sit and then just increase the cost and just be happy and be protected.

No. No, I think that the combination of both aspects, which by the way the Gulf carriers are doing, and yet remain very competitive. They are very well managed and they have excellent fleets, their operations are smooth, it is really something that I would look at as the future.

Briefly I want us to talk about two things: one; what do you think the next year is looking like for Kenya Airways – what are your expectations in terms of performance?

Improvement. Improvement. Improvement. We are far away from achieving what we should. We have many external factors that we have to deal with; volatility of fuel prices is one. When I came to Kenya, Brent per barrel was US$52, now it is US$74 this morning; so, a 25 per cent increase. Then of course competition, of course our internal challenges in improving our quality of service… So I think we should be focused on a longer view…. of three years, how to step-by-step, continuously go towards the profitability and towards the development of the network, more flights, and more connections. That is where we should be going.

Finally, you have been appointed to the board of governors of the International Airt Transport Association (IATA). Congratulations for that. In the next three years, what are some of the things that you would hope to contribute at that level?

You know IATA Board of Governors is the body that is supposed to look after the interest of the whole airline industry. So I am very proud to be part of this body because I will give my African voice to the debate.

What I am hoping is that African airlines keep being supported in their growth. But I am also hoping that within a period of time maybe two years, there will be an IATA General Assembly in Nairobi. That would be my personal ambition; to bring all these people from the airline industry here to Kenya and show them how our African market is growing in.

Thank you so much for your time.

Thank you.

Source: CNBC Africa TV . Transcribed through Google and by The Infrastructure Magazine’s Jackie Asasira.

23 May - June 2018

Feature

Uganda’s second largest airport to be completed in 2020

By Nelson Muhoozi

One of the immediate benefits Uganda will get from its oil, even before it comes out of the ground, is a second international airport. This facility is part of the infrastructure under construction as Uganda prepares to develop its nascent oil industry.

H

oima International Airport in Hoima district in western Uganda, is expected to be ready for full operation by 2021; making it the country’s second international airport after Entebbe. According to Eng. Tony Kavuma, the chief mechanical engineer in the Ministry of Works and Transport, who is also the team leader supervising the construction works, the project is making good progress.

“The project officially started on April and the preliminary construction work already started; construction of access roads and fencing off the 29 km2 [piece of land] that the airport will occupy,” Kavuma told The Infrastructure Magazine.

Work on the project includes building 3.5 km of takeoff and landing runways, development and drainage systems, asphalt, concrete, electromechanical installations, navigation and communications systems, construction of a terminal building for cargo, a control tower, and other residential and service buildings.

“The project is expected to be completed in three years because we are working with a tight schedule and we want to have the runway completed by May 2020. Phase one of the project will see the establishment of the airport serving mainly cargo aircraft and small passenger aircraft for the construction phase of the refinery and the oil fields infrastructure,” Kavuma said.

The new airport is expected to facilitate mobilization of equipment for construction of the oil refinery and help as well in the development tourism and agriculture in the region. The airport is located in Kabaale parish, Buseruka sub county in Hoima district, near the Kaiso-Tonya oil fields, also the planned location of the Uganda Oil Refinery. It lies 35 kilometres to the northwest of Hoima town.

Eng. Kavuma added that SBC Uganda, the Israeli company that constructed Entebbe International Airport, was the same company that won the ten-

24 May - June 2018

The project is expected to improve the income status of many residents of Hoima especially those neighboring the proposed airport through jobs and market for the local businesses.

der to Hoima job. SBI Uganda, another Israeli company, is the project consultant and supervisor.

Dr Micheal Nkambo Mugerwa, the General Manager of Uganda Refinery Holdings Company (URHC), which is overseeing the airport development works together with the Ministry of Works and Transport, said the airport will be large and capable of handling large passenger and cargo aircraft, sufficient to carry the equipment and staff to develop the oil refinery and the oilfields.

In pursuit of Vision 2040, government has com-

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Feature mitted a substantial part of the national budget to infrastructure development and is equally attracting heavy foreign investments and funding into the sub sector. The government’s target (through Ministry of Works and Transport) is to expand the country’s transport connections (road and air network) to facilitate production, movement and marketing of goods and services within the country and abroad.

Government acquired a Shs 1.3 trillion loan from Standard Chartered Bank and UK Export Finance to undertake the first phase of the airport construction, Kavuma said. “Looking at the project holistically, the agriculture sector will benefit in a big way in the sense of exporting horticulture products like flowers,” said Kavuma. “Instead of the plane going with space unutilized, these horticulture products will occupy the space and generate more income for the economy.”

Additionally, the project is expected to improve the income status of many residents of Hoima especially those neighboring the proposed airport through jobs and market for the local businesses.

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“The airport was deemed necessary after potential investors in the refinery and other oil-related projects voiced concern that Uganda’s narrow and weak roads would complicate transportation of heavy loads and equipment. Also, the airport would offer quick transport for human resources needed for the oil and gas projects close to Lake Albert and in western Uganda,” Kavuma said.

Local content Local content policy should add value, skill and knowledge, among others. While speaking at the fourth Local Content Conference on Oil and Gas recently, Patrick Mweheire, CEO Stanbic Bank Uganda, noted that the capacity of local contractors is still weak.

“I believe the policy exists, there is political will, but I believe we are failing miserably on partnerships,” said Mweheire. “How can we improve our ability to harness the partnerships in this sector?

There is no doubt that money is going to be spent.

The question is; what is going to be the piece of the pie that we get?”

However, during a visit to the Hoima International Airport site, State Minister for Works, Gen. Katumba Wamala, asked communities living around the planned airport to create businesses that can supply foodstuffs and labour. He assured them that SBC does not want to import workers because of the agreement to use between 30 per cent and 40 per cent of the workforce from the local content.

He, however, cautioned area residents against poor attitude towards work, poor work ethic and lack of trust.

During a panel session at the Energy Industries Council Forum in Kampala in November last year, Jimmy Mugerwa, general manager Tullow Oil Uganda, asked Ugandans to emphasised standards in the industry, arguing that they cannot be compromised.

However, being an infant industry, local companies need a lot of training to rise to the standards of international standards. Lack of affordable financing especially to Small Medium Enterprises (SMEs) is a big challenge for national participation in the industry, Mugerwa said.

Mihail Gorachinov, the senior project manager of SBC Uganda, during the site visit, said the company would complete the project within the stipulated time and would support the nearby communities with various projects to improve their welfare.

Hon. Irene Muloni , Minister of Energy and Mineral Development.

Dr Micheal Nkambo Mugerwa, general manager of Uganda Refinery Holdings Company.

Jimmy Mugerwa, general manager Tullow Oil Uganda.

25 May - June 2018

Comment

Tanzania Ports Authority charms Uganda’s business community Tanzania Ports Authority (TPA) regulates and licenses port and marine services and facilities in Tanzania. It operates a system of ports serving the Tanzanian hinterland and the landlocked countries of Malawi, Zambia, the Democratic Republic of Congo, Burundi, Rwanda and Uganda. Tanzania’s major ports are Dar es Salaam, Tanga, Mwanza and Mtwara. Ports under TPA mandate on Lake Victoria include Musoma, Mwanza and Bukoba.

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PA has come of age, and its recent aggressive entry into the Ugandan market has seen it deal with and overcome several challenges that have dogged its past. These include delays in cargo clearance, which has been resolved by getting all tax authorities to set up offices at the Dar port so that traders receive all services in a one-stop center within the shortest possible time. The major tax authorities include Tanzania, Rwanda and Uganda –the latest to setup shop at the Dar es Salaam port.

TPA has taken advantage of single customs territory (SCT), which is about achieving free circulation of goods in the customs territory in order to reduce the cost of doing business. Features of the SCT include taxes being paid at the point of destination when the goods are still at the first point of entry, a reality employed by TPA. Under the SCT, goods are monitored by electronic cargo tracking systems, meaning one is able to track their cargo right from the port en route to the final destination. Complaints too can be addressed and directed to concerned parties, online.

A separate dry port of Isaka has been constructed to handle un-containerized cargo to avoid congestion at the Dar es Salaam port. Traders will travel

26 May - June 2018

Ronah Kyokunda

Ronah Kyokunda is Accounts Manager at Tanzania Ports AuthorityUganda Liaison Office.

Dar es Salaam port. by road for two days and have their cargo cleared within five days. To avoid congestion at the port, a facility has been dedicated for Uganda-bound cargo, which will help in easing handling, monitoring and transportation.

The stakeholders along the southern corridor have come together to optimize operations by signing service agreements, working closely to avoid delays and inconveniences to customers including a promotional rate to increase traffic along the route.

TPA has offered a 30-day grace period to enable customers have enough time to clear without incurring extra expenses. The transit factor from Dar to Mwanza, which worried the Ugandan business community, has been addressed. Cargo takes four days from Dar to Mwanza using rail transport.

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Comment

Two ferries on Lake Victoria to transport cargo from Mwanza to Port Bell have been put in place.

The ferries, MV Umoja and MV Kawa, each have capacity to carry 19 wagons/19, 40ft containers or 38, 20ft containers. MV Kawa has capacity to carry 22 wagons, 22ft containers or 44, 20ft containers.

The Tanzania Railway Corporation and Uganda Railway Corporation have allocated 400 wagons along the southern corridor to handle cargo alone. Plans are underway to ensure more ferries are added on to the existing fleet to carry extra cargo in line with the rising demand.

TPA in partnership with Tanzania International Containers Terminals Services (TICTS) is streamlining container haulage and storage. After the standard grace period of 30 days offered to the client

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Tanzania Ports Authority has deployed modern technology at its cargo handling terminals. It has installed state of the art equipment that is fully automated

has expired, the client on returning the container to the shipping lines will attract freight charges of US$ 100 for a 20ft container, and US$ 150 for a 40ft container respectively.

The authority has deployed modern technology at its cargo handling terminals. It has installed state of the art equipment that is fully automated, which loads and discharges goods as quickly and efficiently as possible. This includes modern cranes.

The standard gauge railway under construction is set to improve further delivery of cargo in time.

It is anticipated that time from Dar es Salaam to Mwanza will take less than three days to deliver cargo to Uganda. Currently, TPA is using the metre gauge railway, which takes less than four days.

27 May - June 2018

Oil & gas

UNOC on track

Taking care of state commercial interests in oil and gas In their September 2016 Oil & Gas National Content Review newsletter, global consulting firm, PricewaterhouseCoopers (PwC) argues that the spirit behind Uganda’s oil and gas policy and law is the idea of enhancing national content. National content meaning taking care of Uganda’s public good through ensuring state interest in the oil and gas industry, as well as local content in ensuring the Ugandan individual or corporate citizen is given priority in business and benefits in this emergent sector.

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n this direction, appropriate legislation has been made to ensure both national interest and local individual/corporate interests are taken care of.

The Uganda National Oil Company (UNOC) was established as a vehicle to handle the state’s commercial interest in the oil and gas sector and to ensure the resource is exploited in national interest and in a sustainable manner.

UNOC in context UNOC was set up under Section 42 of the Petroleum (Exploration, Development and Production) Act and Section 7 of the Petroleum (Refining, Conversion, Transmission and Midstream Storage) Act, both of 2013.

UNOC and the Petroleum Authority of Uganda (PAU), although both formed by the same laws, are two sister but distinct bodies – each with a separate mandate. UNOC was incorporated under the Company Act of 2012, as a limited liability company wholly owned by the government of Uganda, with shareholding of 51 per cent by the Ministry of Energy & Mineral Development and 49 per cent by the Ministry of Finance, Planning & Economic Development.

UNOC is mandated to investigate and propose new upstream, midstream and downstream ventures. In line with this mandate, UNOC plans to start new upstream ventures and is currently reviewing data relating to some prospects in the Albertine Graben. In addition, UNOC has ongoing and future midstream and downstream operations.

On the other hand, PAU was established to support Uganda’s socio-economic transformation through efficient and sustainable petroleum re-

28 May - June 2018

In line with this mandate, UNOC plans to start new upstream ventures and is currently reviewing data relating to some prospects in the Albertine Graben.

source management. It is also mandated to monitor and regulate the exploration, development and production, together with the refining, gas conversion, transportation and storage of petroleum in Uganda.

Upstream projects Uganda’s confirmed petroleum resource base

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Oil & gas

is currently estimated at 6.5 billion barrels of oil inplace, aka Stock Tank Oil-Initially-In-Place (STOIIP).

Of these, between 1.4 and 1.7 billion barrels are recoverable.

In upstream business, UNOC is mandated to hold 15 per cent state participating interest in the nine Petroleum Production Licenses covering fields that are planned to be developed through the Tilenga and Kingfisher Development Projects.

The Kingfisher Development Area (KFDA) and The Tilenga Development Project (TDP) are located in the north and southeast of Lake Albert, and constitute License Areas (LA) 1 and 2. Partner operators in this area are Tullow Uganda Operations Limited, CNOOC Uganda Limited and Total E&P Uganda B.V. for LA 1 and LA 2 respectively.

The project (KFDA and TDP) is currently at the phase of Front-End Engineering Design (FEED) and Final Investment Decision is planned to be taken during 2018.

UNOC is uniquely positioned to play a key role

in ensuring the sustainability of petroleum resource production and reserve replacement in the country.

The company has acquired exploration & production data over other prospective areas and is currently undertaking evaluation of the data for exploration licensing and new venture opportunities.

Midstream projects UNOC’s two wholly owned subsidiaries; Uganda Refinery Holding Company (URHC) limited and National Pipeline Company (NPC) Uganda limited drive the midstream sector.

The Oil Refinery Company is mandated to hold national participating interest in the refinery and its attendant infrastructure such as final product pipeline on behalf of UNOC and the government of Uganda. The proposed 60,000 barrels of oil per day (bopd) refinery will be based in Kabaale parish, Buseruka sub-county in Hoima district. Through URHC, UNOC will hold 40 per cent stake in the refinery project. The 210 km final petroleum product pipeline is from Kabaale (Hoima) to Namwambula (Wakiso). URHC will also manage promotion of the planned Kabaale Industrial Park (KIP), a 29.57km2 piece of land that the government has already acquired in Hoima district. The park will host the refinery, an international airport, petrochemical industries and energy-based industries, among other supporting infrastructure.

NPC will hold participating interest of up to 15 per cent in the 1,445 km East African Crude Oil Pipeline (EACOP) on behalf of UNOC and government of Uganda. EACOP crude oil export pipeline will run from Kabaale (Hoima, Uganda) to Chongoleani peninsular near Port Tanga (Tanzania).

The NPC is also mandated to develop, manage and operate downstream storage terminals to cushion the country from petroleum product supply disruptions.

Josephine Waphakabulo, CEO, UNOC

UNOC is uniquely positioned to play a key role in ensuring the sustainability of petroleum resource production and reserve replacement in the country.

Downstream projects Through its wholly owned subsidiary, (NPC), UNOC will develop, manage and operate storage terminals, and hold national strategic fuel reserves to ensure security of supply. The company currently manages and operates the 30 million-litre capacity Jinja Storage Terminal (JST) in eastern Uganda, and has completed a master plan for the

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29 May - June 2018

Oil & gas

development of a 240 million-litre capacity Kampala Storage Terminal (KST) in central Uganda. The long-term strategy is to develop storage terminals in other regions of the country.

Jinja Storage Terminal UNOC took over management of Jinja Storage Terminal (JST) in June 2017, and immediately entered into a joint venture partnership with M/s One Petroleum Uganda Consortium (OPC) to operate the facility. The terminal is fully functional following extensive refurbishment, with a storage capacity of 30 million litres of petroleum products. Plans are underway to further enhance business processes at the terminal and increase its contribution to the security of supply in the country.

Kampala Storage Terminal Government has acquired land in Namwambula village, Wakiso district near Kampala for setting up a multi user storage terminal. The terminal will serve as a distri-

30 May - June 2018

bution centre for petroleum products from the refinery to market centres in Kampala, western Kenya, northern Tanzania and Rwanda. It will also be a storage and distribution centre for imported petroleum products. In addition, it will be a delivery point for the planned Hoima-Kampala and Kampala-Eldoret products pipelines. It will as well serve as the starting point for the planned Kampala-Kigali products pipeline.

UNOC intends to develop KST through a joint venture with a strategic partner. The strategic partner will be expected to bring into the joint venture technical expertise, financial capability and experience in development and management of petroleum storage facilities.

Kabaale Industrial Park The 29.57 km2 Kabaale Industrial Park (KIP) will host the planned 60, 000 bopd refinery, upstream crude oil export hub (delivery point) and Uganda’s second international airport, which will all be developed as independent projects.

UNOC is looking for strategic partnership(s) with (an) eligible entity (ies) to offer managerial, technical and financial services needed for the development of the industrial park.

Local content Essentially, local content is about securing direct and indirect opportunities for employment and procurement to home nationals, at the same time fostering the development of local skills, technology transfer, and use of local manpower and local manufacturing in capital projects.

According to UNOC, Ugandans need to particularly dig out ways of benefiting from the investment opportunities available in middle and down streams in the oil & gas sector.

Petroleum laws are in place, and a communication desk to disseminate information related to the oil and gas sector was created within the Ministry of Energy and Mineral Development.

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Mortgage financing remains expensive, but growing

Mortgages

Mortgage interest rates in Uganda have consistently remained high for the low and middle-income earner, stifling purchase and property ownership, yet home construction and acquisition remains one of the most active areas of the economy, Roger Kyazze writes.

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atest available data from the Uganda Bureau of Statistics shows that loans to building, construction and house purchases constituted 65 per cent of the whole loan portfolio in the country in 2016.

The same data shows that the value of mortgages in foreign currency in 2016/2017 went up (28.1 per cent of the total portfolio) compared to those in local currency (27.6 per cent). This could be attributed to the volatile nature of the local currency forcing many to take up loans in foreign currency, which is more stable. It could also be attributed to the increasing purchases by Ugandans in the diaspora.

Over the last few years, the number of banks providing mortgage financing to enable Ugandans to purchase or build homes has increased. Today, banks such as Housing Finance, Stanbic Bank, Bank of Africa, Standard Chartered Bank, Kenya Commercial Bank, Commercial Bank of Africa and dfcu Bank, among others, have mortgage facilities.

A mortgage is a loan that a bank or lender gives a client to finance in full or in part – the purchase/construction or to complete a house on land already owned. It is underwriting and extending a home or commercial property loan or mortgage to a qualified applicant. A 100 per cent mortgage financing means the financial institution gives an individual the full amount required to purchase a property.

This loan is usually blocked by securities such as stocks and bonds currently owned by the borrower. Reverse mortgage financing is a loan for senior citizens aged 62 and above. These are insured and allow home owners to convert their home equity into cash with no monthly mortgage payments.

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Green Top Villas, a housing estate in Lubowa along Entebbe Road.

Chris Akugizibwe, a business analyst at dfcu Bank, told The Infrastructure magazine that home and commercial loans come in different products including outright purchases, refinancing, construction, renovation and equity releases.

Commercial mortgages are used for constructing commercial properties such as arcades, malls and office towers, while residential mortgages are used for homes, units and apartments. Acquisition of these loans is dependent on the terms and conditions of the lenders. Some lenders commit to a percentage of the mortgage; say, 75 per cent of the value of the asset, while the clients pay the remaining 25 per cent.

Each lender normally has its own terms and conditions to ensure repayment ability and collateral. An intending client must evaluate himself or herself to find out if they qualify before approaching the lender.

“Home loans have enabled lots of people from all demographics to acquire homes, which would have otherwise not been possible. Very few people can afford owing homes, apartments without the help of lenders,” Akugizibwe said. On high inter-

est rates, Akuguzibwe said “lenders do not control the economy; rates are not fixed; they are variable. When the Central Bank Rate (CBR) increases, lenders are at liberty to either retain current interest rates or increase them; if the CBR is lowered, then the lender can lower the interest rates as well”.

On the issue of fore closure, (default on payment) Akugizibwe said: “There are four types of clients: willing and able, willing and unable, unwilling and unable, unwilling and able.” He cites the case of the willing and able client whose option is simpler: revaluation and selling of the property. Another client who is willing and able, the lender provides them with options which range from rescheduling loan payments; restricting payments all to enable the client achieve their goal.

“The future of real estate business in Uganda is bright, and is largely because of the contribution of the lenders to the sector. dfcu Bank plans to introduce Real Estate Investment Trust in the near future, so everyone can have the opportunity to participate in the kind of investment,” Akugizibwe said

31 May - June 2018

Opinion

Oil should help Uganda to achieve Sustainable Development Goals The United Nations (UN) and the United Nations Development Programme (UNDP) in particular, support nations to ensure natural wealth translates into real improvement in people’s lives. In December 2012, UNDP launched the Strategy for Supporting Sustainable and Equitable Management of the Extractive Industries – making UNDP a strong ally in tackling challenges within the sector.

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he theme for fourth Annual Uganda Oil & Gas Convention, “Regional Collaboration for first Oil”, echoes our firm belief that Uganda needs to team up with other countries under the East Africa Community, the Great Lakes and other African regions to harness successfully her oil. The cooperation will deliver several dividends in terms of joint exploration, collective infrastructure, shared costs, bigger market, comprehensive security programmes, research, skilled professionals and simultaneous transformation of the quality of life of inhabitants. Shared understanding in this sector could also contribute to efforts to develop a continental free trade zone.

Africa is mining, oil and gas sectors are thriving thanks to high commodity prices and improved exploration technologies that have led to important discoveries. Of 46 countries in Sub-Saharan Africa, 19 have important reserves of hydrocarbons oil, gas, coal, high-value minerals and development minerals. Some countries endowed with mineral resources are faced with a number of challenges, including creating local technically fit professionals for human resources, limited participation by wom-

32 May - June 2018

Rosa Malango UN Resident Coordinator and UNDP Resident Representative in Uganda.

She made these remarks at the fourth Annual Uganda Oil & Gas Convention on April 26, 2018

en, minorities and youth in the sector, and conflict over land and resources including environmental degradation.

As players in the oil and gas sector, we invite you to engage communities and incorporate development considerations into your exploration, production and distribution activities. We also want you to contribute to fiscally responsible behaviour that helps government efforts to reduce inequalities and improve environmental protection.

The Albertine graben where Uganda has discovered huge deposits of oil and gas is also known for its high biodiversity, which is part of the backbone of the country’s tourism industry. Therefore, care should be taken to ensure that exploitation of oil resources is done without compromising the quality and quantity of other renewable natural resources. I recognize Uganda’s National Oil and Gas policy (2008) which provides a basis for improving the conservation of natural resources (forests, lakes, riverbanks and wetlands), while also improving infrastructure, access to energy and education, among others, in communities close to sources of exploration or mining. I also recognize the Petro-

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Opinion

leum (exploitation, development and production) Bill 2012, which provides guidance for local content.

UNDP has supported Uganda’s conservation efforts and the responsible development of her mining sector. In the past three years, we have spent close to US$8 million supporting climate change, environment protection and reforestation projects in Uganda. We are also working with African Caribbean and Pacific (ACP) group of countries on a European Union-funded Development Minerals Programme. This three-year 13.1 million Euro project focuses on how to improve the management of these minerals. We have also mobilized over US$24 million for wetland management, and are advocating for additional funding to help promote alternative livelihoods for affected communities as part of a Presidential Initiative on Wetlands. This is because of our firm belief in Uganda’s efforts to attain the Sustainable Development Goals as part of their National Vision 2040.

I invite you as players in oil and gas to join us in identifying ways to contribute proactively to Uganda’s Green Growth pathway. “Green growth means fostering economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies.”

Nations endowed with oil and gas can create good jobs and spur economic growth (SDG 8) when they invest in good infrastructure (SDG 9).

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Nations endowed with oil and gas can create good jobs and spur economic growth (SDG 8) when they invest in good infrastructure (SDG 9).

This, coupled with responsible consumption (SDG 12) and care for the environment (SDG 13), would lead to elimination of poverty (SDG 1) and reduced inequalities (SDG 10). This will enable Uganda, and indeed the region, to have sustainable cities and communities (SDG 11) through transformative partnerships (SDG 17).

I thank the Uganda Chamber of Mines and Petroleum for organising the Oil and Gas Convention.

This annual event provides us with space to reflect on progress and identify solutions for challenges ahead. I believe the extractives sector provides huge opportunities for sustainable development and inclusive economic growth if properly managed with the right mix of policies.

Development should not be at the expense of the environment and certainly, oil must be a blessing. In this regard, I would like to encourage the government to use the legislation and polices developed in the oil sector as a guide for the development of the minerals sub-sector in Uganda. This is an opportunity for national benchmarking and enhancing the legal framework for this sub-sector by learning from oil and gas.

The UN system in Uganda remains committed to working with the government and all partners to ensure that natural resources work for all people in Uganda. Together we can create an environment that will lead to a more inclusive, sustainable and transformative development in the country.

33 May - June 2018

Advertiser's Profile

Samka Construction Co. Ltd: A reliable, experienced contractor Any property developer embarking on a multi-million shilling construction project, whether for a residence, office, commercial or whatever use, is always confronted by the nightmare of achieving a property with the right standard, quality, durability and safety that one envisages. This is because in a purely profit driven kind of business environment like in Uganda, quality, ethics and standards have been relegated to second place. Therefore getting a contractor that delivers to required standards, with the highest quality possible and with good social and environmental considerations, is a difficult feat.

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evertheless, that does not mean that in Uganda there are no companies that deliver to required standards.

There is, indeed, a number of upcoming quality-conscious and dedicated companies that strive to meet the aspirations and needs of property developers. One such company is Samka Construction Co. Ltd. Established in 1998 and incorporated in February 2000, the company was right from inception conceived as a quality conscious and standards observant, reliable and formidable company. It is for this unique quality that just 20 years into its existence, Samka Construction Co. Ltd has executed various notable projects for the central and local governments, non-governmental organizations (NGOs) and private individuals/businesses.

Services According to Eng. Sam Kajojo Arineitwe, the managing director, the company has especially developed expertise in civil works where it undertakes contracts in construction of buildings, bridges, design and construction of roads as well as supervision of construction works.

In water and sanitation engineering, Samka Construction Co. Ltd offers ser-

34 May - June 2018

vices in construction of valley and hydro dams, construction of water supply systems, surveying, designing and documentation of water supply systems. In electrical works, Samka Construction Co. Ltd offers services in electric power system installation including high and low voltage (33KVA and 11KVA).

In other general works, Arineitwe said, they offer services in architectural drawings, construction supervision, services, projects costing and evaluation, general hardware supplies and transport services.

Human resources Samka Construction Co. Ltd aims at providing quality, demand-driven and efficient services to its clients, which is only possible with a well-trained and motivated workforce. The company’s technical team comprises of well–qualified and highly experienced engineers, surveyors, architects in civil, building, environmental, mechanical and electrical engineering. An equally experienced line-up of business/finance and social science professionals supports the engineering team. Other professionals are called upon to support various elements of the company’s operations from time to time as demand requires. This makes the

NANA hostel block at Wndegeya in Kampala. companies human resources pool elastic and as big as the project at hand.

Health, Quality, Safety, Environmental (HQSE) and Social consciousness The company has a quality, health, safety and environmental (HQSE) plan implemented by a QHSE officer/supervisor, alongside the contracts manager and the projects engineer, in such a manner as to comply with local and international standards. This compliance includes; policy adherence through audits and training, recruiting competent human resources, risk assessments of all site activities, ensuring that employees wear appropriate protective gear, among others.

Eng. Kajojo told The Infrastructure Magazine that the company is committed to high standards of quality, health, safety and environment (HSE) in its work. This, he said, the company does by seeking to minimize injuries to workers and observing health standards and conservation of the

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Advertiser's Profile

CNOOC engineers inspect works contracted to SAMKA. ronmental integrity through proper waste management by minimizing waste production; reuse, recycling and proper disposal of the un-avoidable waste that may be produced.

Anti-corruption, HIV/AIDS and Drug $ Alcohol policy environment while adhering to the quality management plan. The plan guarantees that the project outputs are delivered as specified by the client or client’s representative in such a manner that ensures safety and operational health of employees, sub-contractors and other stakeholders According to Onesimass Twesigye, the projects engineer, the company aims at minimizing impact on the environment, and as much as possible maintain envi-

Eng. Twesigye further told The Infrastructure Magazine that the company has an HIV/AIDS policy to support the preventive, infected and affected Individuals, a drug and alcohol policy that guides in prevention and management of staff with drug and alcohol related problems and seeks to observe high standards against fraud, corruption and bribery.

Project portfolio Samka Construction Co. Ltd. has been

involved in various projects as a sole contractor or in partnership with other companies (in particular Concorp International Ltd). The company has executed several multi-billion shilling projects in construction, water supply systems, roads, electric power installation systems and civil works. A few selected projects include: ■■Modification and renovation of Christeve House on Nkrumah Road in Kampala worth Shs 6.4 billion.

■■Construction of 33KV high voltage and associated low voltage lines in the districts of Kanungu, Kabale, Kisoro, Ntungamo and Rukungiri (provision of labour only): Under China Jiangxi International (U) Ltd. The works were worth about Shs 250.7million.

Some of the engineering equipment.

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35 May - June 2018

Advertiser's Profile ■■CNOOC: Construction of resettlement houses for persons affected by the access road project to Kingfisher oil fields.

The project was US$ 189,969 ■■CNOOC: Construction of concrete paved road in Bungoma drilling camp at kingfisher oilfields. This involved earth works, base stabilisation, formworks, mixing, placing and compaction and finishing with a power float. These works were worth US$ 457,762 ■■Ministry of Water & Environment: Construction of Kagango dam in Isingiro district; The works were Shs 1.3 billion.

■■Kaki Investments: Construction of NANA hostel in Makerere at US$ 2 million ■■Islamic University in Uganda: Construction of King Fahad Plaza on Kampala road, a project worth Shs 7 billion (in 2007) ■■Uganda Industrial Research Institute: Renovations, alterations in offices and plant worth Shs 645 million ■■Ministry of Health: Renovation of Mulago Hospital (under Dragados/Corncorp)- Shs 720 million

Bridge construction.

36 May - June 2018

Ruffles ■■Kampala International University-modification of former Summer Hotel building – Shs 600 million ■■Different local governments: Bushenyi district (construction of Kabwohe Health centre IV); Rukungiri district (Katabushera, Kasheny and Kinioga water gravity flow scheme; Nyabushenyi gravity water scheme; periodic maintenance of Rukungiri-Kinyasano road.

Others are: Soroti district- rehabilitation of Atiriri-Tubur road; Mbale district-Buwambwala and Bushiika gravity water

schemes; Kaliro district-rehabilitation of Kaliro-Namwiwa-Gadumire-Bulumba road; Hoima Town council roads; Kabale district- construction of rainwater catchments, among many other works

Equipment

Samka Construction Co. Ltd has over the year acquired critical equipment to deliver its projects. These include compactors, concrete mixers, tipping trucks, wheel loaders, excavators, water bowsers, bulldozers, graders, among others.

Karobwa Towers alond Nkrumah Road in Kampala.

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“If you want to understand how a lion hunts, don’t go

to the zoo. Go to the jungle”– JIM STENGEL

That is why if you are in the infrastructure business:

Construction materials & equipment manufacture & supply, construction & civil works, Energy, water & sanitation, oil & gas, engineering & architecture consulting, housing, real estate, Telecoms, ICT, transportation & logistics…..

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