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Uganda Infrastructure Report Q2 2009
Market |
Construction |
Report Type |
Market Research |
Country |
Uganda |
Published |
21 May 2009 |
Number of Pages |
66 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
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 the 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, the report 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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