Abstract
Uganda' s infrastructure is getting a much needed boost, with a high number of
transport and utilities
projects underway and in the pipeline. As such, in
BMI' s Q209 Uganda Infrastructure Report, we are
forecasting the
construction industry to grow by 7.3% in 2009 to reach a value of UGX3trn
(US$1.5bn).
Uganda presents great opportunities for infrastructure
development with the government working hard to
develop the country' s
power and transport sectors. Uganda is a key transit route to other countries
in East
Africa, acting as a corridor connecting Kenya and its Port of
Mombasa to other countries in the region
such as DRC and Sudan. As such,
investing in the country' s transport network is key to the more efficient
transport of goods, especially as a land-locked country. The country has in
place an ambitious plan to
develop transport infrastructure - the 15 year
National Transport Plan, which is expected to cost
US$900bn over the next
few decades to 2050. It will cover all modes of transport including road,
rail, air
and water.
The road sector has been the main emphasis of
this, as the country' s rail network lags far behind.
However, the rail
sector has been the focus of much of Uganda' s infrastructure news over the
last quarter,
with questions raised over how long Rift Valley Railways
will have left managing both Uganda and
Kenya' s rail networks. The company
took over the railways in 2006 and has been besieged by problems,
with the
respective governments accusing them of not sticking to investment plans. The
issue came to a
head in March 2009 when both Uganda and Kenya took the
company to court. In the meantime, plans are
slowly getting under way for
the rehabilitation of the Mombasa - Kampala rail line, which will provide
a
major boost to the transport of goods across East Africa.
In the
power sector, there has been much activity as the country tries to increase
the level of access to
electricity, which is currently sorely inadequate.
The largest project currently underway in Uganda is the
Bujagali
Hydropower Project and accompanying 220kV transmission project. The project is
being
constructed by Bujagali Energy Limited (Bel), which is formed of
Kenya' s Industrial Promotion
Services and US-based Sithe Global Power LLC.
The 250MW power plant is being developed with the
support of the World
Bank. The cost of the project is currently estimated at US$799mn. The power
plant
is due to be completed in 2011, the latest update from February
2009, notes that the projects are two
months and ahead of schedule and 20%
complete, with the first turbine due to come online in 2010. In
March
2009, construction started on the 70km transmission project.
Although the
construction industry is continuing to register strong activity, BMI notes
that the risks are to
the downside due to the global financial
environment. Uganda' s real GDP is expected to post real growth
of 3.5% in
2009, down from 9.8% in 2008. This infers that the government will have less
in its coffers for
infrastructure projects. In addition, private sector
investments will be reduced over the short term due to
risk aversion and
difficulty in accessing finance. However, one upside is the presence of the
African
Development Bank, which has historically supported Uganda' s
infrastructure development over recent
years, and will continue to be a
key source of funding.
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