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Uganda Infrastructure Report Q1 2010

Uganda’s infrastructure is currently receiving some much-needed investment, with the power sector the prime focus. However, growth in 2009 is expected to have slowed from previous highs. In our Q110 Uganda Infrastructure Report, we are forecasting the construction industry to grow by 4.41% in 2009 to reach a value of UGX4trn (US$2.13bn).

Data from the Ugandan Bureau of Statistics regarding the construction price index, which is updated on a quarterly basis, confirms our forecasts for a slow-down in growth in the civil works industry following high growth in 2008, with the price index in Q309 standing 3% lower than in Q308.

Uganda’s infrastructure sector has been dominated by news in the utilities sector over the past quarter. News from the two biggest hydropower projects under construction sheds more light on the status of both projects. Reports that the 250MW Bujagali hydropower project had been delayed were confirmed by the project director from BEL, the company developing the project. However, although it was noted that the 2011 completion date was no longer attainable due to design changes, a new completion date was not revealed. At the same time, progress on the 700MW Karuma hydropower project appeared more concrete this quarter, with the revelation of the company that won the contract for consultancy on the project. India’s Energy Infratech was awarded the contract and will carry out studies, draw up designs and prepare the tender. The project will be tendered as a public-private partnership (PPP).

These two projects are the focus of the country’s hopes to build up sufficient electricity capacity to meet demand. Uganda’s electricity supply is perhaps one of the biggest barriers to growth and investment in the country. Another is the lack of transparency. This issue continues to be a very present threat to infrastructure development in Uganda. The Entebbe Airport debacle, in which certain elements of the government had allegedly leased out the airport, brings about questions over the lack of coherence in the government regarding infrastructure. The confusion that ensued and still surrounds the issue confirms a clear absence of coherent policy and transparency in the government. Most recently, the EU reportedly withdrew funding for road projects in the country due to irregularities in the tendering process. One positive news story in the transport infrastructure sector in the country is the eventual completion of the Kampala Northern Bypass by Salini Costruttori in October 2009. The 21km road took five years to complete due to disagreements over design and the appearance of cracks on the road. Although the road has finally been completed, the time scale and the issues surrounding the project highlight weaknesses in the country’s business environment.

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