On June 18, 2015, the then minister for Information and National Guidance, Maj Gen Jim Muhwezi, announced that Cabinet had approved the Biofuels Bills 2014.
Speaking at the Government Media Centre in Kampala, the minister said that government had authorised the Minister of Energy and Mineral Development to have the Bill gazetted and introduced in Parliament for debate and enactment.
The bill was meant to operationalise the provisions of both the Energy Policy and the Renewable Energy Policy of Uganda, which Cabinet had endorsed in September 2002 and March 2007, respectively.
While, for example, the Renewable Energy Policy provided for the blending of biofuels such as ethanol with fossil fuels like diesel and petrol, there was need to provide a legal framework to compel the petroleum and oil marketing firms to not only carry out blending, but also regulate such blending by spelling out the ratios that would be followed.
The Renewable Energy Policy had projected on government blending mandate ratio of 20:80 percent biofuels to fossil fuels.
According to Gen Muhwezi, the legislation would impact on the objectives of the National Oil and Gas Policy (NOG), Poverty Eradication and Modernization of Agriculture, National Environment Act of 1995 and the Kyoto Protocol as embodied in the National Development Plan (NDP), 2010/11-2014/15. “When Uganda starts local production of Petroleum products, blending will enhance the life of the country’s oil fields through partial substitution,” he said.
He said besides hampering the blending, lack of such a framework was impeding investments in the biofuels production sector.
“Project developers in the field of biofuels require a secure market which has to be developed through legislation for them to invest in the sector. Legislation will enable the developers to access long term finance which is required in the biofuels industry. In addition, Legislation will create other incentives like tax rebates which will encourage investors to develop biofuels,” he pointed out.
Increased investments in the biofuels production sector tied in with the promotion of private sector-led growth as captured in the National Development Plan.
It was also envisaged that the production of biofuels would enhance mass production of crops like maize, soya bean and sugarcane from which biofuels are made, and also lead to value addition through agro-processing and marketing, which would in turn increase rural earnings and open up employment opportunities in rural areas.
On the environment front, the use of biofuels for in vehicles and in kitchens would help reduce carbon emissions and also reduce on the number of people cutting down trees for either charcoal or wood fuel.
It was also expected that the number of people using charcoal and firewood fuel will drastically go down. It is estimated that Uganda annually loses about 100,000 hectares of forest cover to charcoal burners and firewood sellers. Figures from the 2014 Uganda Population and Housing Census indicate that 340,000 households in Kampala alone rely on either charcoal or firewood or both.
It was further envisaged that this would reduce Uganda’s dependence on petroleum products and also save Uganda valuable foreign exchange.
Given the announcement that Cabinet had granted the minister for Energy and Mineral Development leave to table the bill and the array of expected spinoffs, it had been expected that the bill would be immediately tabled and enacted into law, but that did not happen. Twenty months since the announcement the bill has not seen the light of day.
Uganda continues to spend colossal sums on importation of petroleum products. Figures from Bank of Uganda show that in 2016 Uganda spent $3,694.97million on imports out of which S599.71million went on the importation of fuel.
Investments in the biofuels production sector have been slow in coming up because of the air of uncertainty surrounding the sector.
Save for Kakira Sugar Limited, which last year took a leap of faith by sinking $36million into the opening of an ethanol distillery with a production capacity of 20million liters per year, other sugar manufacturers like Kinyara Sugar and Sugar Corporation of Uganda Lugazi who, like Kakira, have capacity to distill ethanol from molasses, a byproduct from the sugar production process, seem to be preferring to watch the space until the legislation is passed into law.
There is also no mechanism for providing fiscal incentives such as tax holidays, low interest loans and tax rebates to biofuels manufacturers all of which would have considerably increased the country’s capacity to embark on mass production of biofuels.
Equally affected is the area of quality control. As a result of lack of necessary legislation, the Uganda National Bureau of Standards (UNBS) has not been able to access funding to establish a laboratory for testing products.
It may not come with direct benefits in the form of reduced pump prices to the individual motorist, but use of ethanol is definitely good for the economy and the environment. The nation get to save more than 20million dollars which it has been spending on the importation of fuel products, the air is cleaner by far and the vehicle engines will definitely have longer life,”
Mayur Madhvani, Joint Managing Director, Kakira Sugar Limited.
If the bill comes into law and the nation adopts use of biofuels we are definitely going to see lots of benefits. First of all sugarcane is not the only crop from which biofuels can be manufactured. There other like Soya beans. That means farmers will have many more crops that they can plant as sources of money. Secondly we are likely to see more job opportunities and the introduction of new technology. That is good for Uganda
Ms Hellenah Olga Namutamba, Special Presidential Assistant on Wealth Creation and Poverty Alleviation
“It is very important that the bill comes into law as it will surely help to check the depletion of Uganda’s forest cover as the populace goes out in search of charcoal and wood fuel. Kakira is going to introduce clean cook-stoves which will be sold cheaply. The stoves use denatured alcohol, which is one of the products of the ethanol plant. The alcohol is cleaner than paraffin and it is also very friendly to the environment”
Kenneth Barungi, Assistant to the General Manager Kakira Sugar Limited
Energy and mineral Development Minister, Ms Irene Muloni, told Daily Monitor in a telephone interview that the bill was tabled before Parliament in December 2016.
Under the parliamentary rules of procedure, once the minister has introduced the bill and it is considered read, as was the case in December, the bill is sent to the responsible committee to scrutinise it over a 45 days period before sending a final report back Parliament for the second reading which is in this case meant to be presided over by the minister of Energy.
The 45 days have since elapsed, but worthy of note is that on January 23 this year, while speaking in Kakira during the official opening of the ethanol plant, President Museveni, at the behest of the joint managing director of Kakira Sugar Limited, Mr Mayur Madhvani, expressed government’s commitment to ensuring the bill becomes law.
“We will pass the law on blending. The MPs are here and this is something that should be done. Hon Amelia Kyambadde is also here and I want this done [passed] within six months,” he said.
Daily Monitor position
The passing into law of the Biofuels Bill 2014 presents a good prospect for giving the economy a much needed shot in the arm.
While the only biofuel (ethanol) Uganda is producing is being distilled from molasses, a byproduct of the sugarcane manufacturing process, ethanol can also be distilled from other plants like wheat, corn and soya beans.
The enactment of the bill will encourage farmers to diversify into growing more crop varieties, which will result into improved household incomes. It is also likely to open up job opportunities at a time when the economy is proving to be incapable of generating jobs to occupy the high number of graduates that our Universities and institutions of higher learning keep churning onto the job market.
The debate on whether biofuels can help solve the challenges of fuel supply and facilitate a healthier has been around for years. In Europe and other areas where the biofuels experience has been tried, questions arose. For instance, some argued, if in attempt to protect the environment from the effects of burning fossil fuels the world resorts to using biofuels massive tracts of land were cleared to grow grain, sugar cane and other crops from which biofuels are extracted lead to environmental degradation? A rhetorical question then arose: would biofuels be fueling or fooling the world?
The fact that these questions abound, amidst the push for developing biofuels, therefore, makes a strong case for the discussion to involve all stakeholders and experts and then a well thought-out law is passed to guide the development of the nascent industry.