to NAMA Donor Coordination Meeting 7-8 June 2016, Helsinki, Finland

Transcription

1 Kakira Sugar Limited to NAMA Donor Coordination Meeting 7-8 June 2016, Helsinki, Finland

2 About this Presentation 1. What we do at Kakira 2. Sustainable Devp t Initiatives 3. Government Obligation 4. Private Sector Engagement

3 Core Competencies Ethanol Distillery Power Electricity Generation Cane Sugarcane Plantation Filter Cake Sugar Processing

4 Uganda: Sugar Production GM Sugar 1 % Kamuli 1 % Mayuge 3 % Kaliro 7 % Sezibwa 1 % Lugazi 17 % Kakira 42 % Kinyara 28 %

5 Kakira is born and lost! 1920 initially planted cotton (Kakira ginnery) switched to sugarcane cultivation ,000 TC / 83,000 T sugar 1972 IDI AMIN DADA expels Asians Uganda collapses

6 Kakira Production Cane (Tonnes) CANE SUGAR Sugar (Tonnes)

7 Repossession & Expansion 1985 Repossession : New joint venture company (51% GOU) Rehabilitation with loans of US$ 59.38m by World Bank, ADB in 1987 Factory resumed crushing at 1,200 TCD in Acquisition: GOU shareholding reduced to 30% Upgraded: Factory rehabilitation Stage 1 1,500 TCD in 1993 Upgraded: Factory rehabilitation Stage 2 2,500 TCD in Settled: Acquisition: Expansion: All debts to World Bank and ADB EAH got 100% shareholding Crushing to 3,000 TCD (FMO loan of US$ 6.4 mio) 2007 Expanded: Upgraded: Crushing 6,000 TCD expansion Cogeneration 21 MW (EADB loans + GEF grant) 2012 to 2016 Expanded: Expanded: Expanded: New *: Crushing 2 million tonnes of cane (capacity 7,200 TCD) Producing 180,000 tonnes of sugar/year Generating 50 MW of green electricity generation Producing 20 million litres of ethanol per annum

8 High Pressure Boiler (160t/h 67 bar)

9 Produce & Sell Green Electricity Home Consumption Sale to National Grid

10 Renewable Energy: Ethanol BIO-GAS 20,000,000 Lts/Year EFFLUENT TREATMENT BOILER VINASSES DEHYDRATION DISTILLATION RAW ALCOHOL Tech. Ethanol TURBO- ALTERNATOR MOLASSES 74,000 tonnes MASH FERMENTATION CO 2 TREATMENT RECTIFICATION ENA KAKIRA GOLD

11 Ethanol Plant: Bio-digestor

12 SUSTAINABLE DEVELOPMENT ACTIVITIES

13 Good Corporate Governance Direct Employment = 9,366 Indirect Employment = 90,000 Effluent Treatment = 3,000m 3 Legal Compliance = 100% Support UN Global Compact SD Goals Donations to society = UGX 100m p.a Scholarships Schemes = UGX 750m p.a Learning institution = 18,000 pax p.a Research & Development Road maintenance = US $ 800,000 p.a Staff Development = 3,500 hours p.a Taxes to Gov t = US $ 40m p.a

14 Environment: Afforestation Planted on estate and farmers land Pine Gravellia , , ,944 16, ,823 12, ,774 44, ,883 9, ,620 Total 154, ,

15 Farmers Development Tonnes Cane Outgrowers Cane Estate Cane

16 Nursery Schools (x6)

17 Primary (8) + Secondary (1) Schools Level No Age Total Nursery Primary ,927 Secondary , Boys Girls Nursery Primary Secondary

18 Hospital (4 Doc s) + Ambulances

19 CSR: KORD Kakira Outgrowers Rural Development Fund Partnership + co-funded by KSL + BSGA Contribution based on tonnes cane delivered Mission = To improve the quality of life of the community within the KORD operational area by (35-50 km radius)... implementing community development projects. Infrastructure development >22 sub-counties

20 KORD: Stakeholder Engagement KSL BSGA KORD BOARD TEAM NGO s Contractors Religious Org s Government COMMUNITY (NEEDS) DEV PT. PARTNERS -GIZ -UMA -USAID

21 CSR (KORD): Performance Kakira Outgrowers Rural Development Fund Projects maybe supported by other dev. partners Over USD 2.0 million since 2007 Voted by NEPAD as the best agricultural & social development initiative in Africa Voted by GIZ/UMA as best NGO/Business Partnership in Uganda 2013

22 KORD: Open/Rehab Swampy Roads Before After

23 KORD: Fuel Station 300+ farmers trucks

24 KORD: Science Laboratories x6

25 KORD: Classrooms x23 Waitambogwe Classroom Bufulubi Classroom Bulanga Classroom Wankole Classroom

26 CSR (KORD) : Energy-saving stoves in various Institutions Before After Greens Schools NAMA 33 schools, 40 stove) Ownership Enrollment Government 17,923 Private 7,170 Total 25,093

27 CSR (KORD) : Health Facilities x3 Butagaya HC (III) Laboratory & Counseling Ward Bulamagi HC (III) Maternity Ward

28 KORD OVC project CSR (KORD) : OVC Support Enhance access to education (600+ OVC) Accessibility to psychosocial support To build the socio-economic capacity Enhancing awareness on children's rights including child protection Access to health care (1,000+)

29 KORD: Vocational Training of OVCs Apprenticeship skills program

30 KORD: Village Saving Bank Loans to 6,000+ farmers

31 Threats to the Private Sector: Policy Failure

32 What is a Bankable NAMA (Leila) NAMA NAMA Policy and institutional change Government commitment Financial mechanisms Address financial barriers to private investment Project pipeline Identify portfolio of projects to attract financing at scale

33 Sustainable Sugar Zone `

34 Corrective Action by Gov t!! 1. Stop expansion 2. Relocate Misplaced Factories

35 PREVENTATIVE MEASURE 1. Enact an effective law for Sugar. 2. Enact an effective law for bio-fuels (compulsory blending; tax relief). 3. Reduce Excise Duty on Sugar/Sweets (UGX 50/kg to 25/kg) or stay increase. 4. Repeal withholding tax of 6% 5. Initial Capital Allowance of 100% (in the Agro Industry). 6. Increase yield (variety, best practise). 7. Establish new plantations in proper zones.

36 Private Sector Engagement

37 Renewable Energy: Electricity Boiler + mill upgrade + Boiling House = USD 70m - KSL target selling price per kwh = US Cents 12 - Gov t target price = US Cents 5 [Now = USC 9.5] - GET FiT subsidy = US Cents 0.5 GOOD points Growth of National GDP Socio-economic transformation of communities Inspiration NOT SO GOOD points: Act of God (El Nino effect) Delay or Failure of Govt Policy

38 Renewable Energy: Ethanol Substitute for fossil fuels + forests Uganda deforestation: = 1.76% (86,500 Ha p.a) = 2.13% Introduce ethanol cook stoves Provide Incentives - Tax Relief, - Capital investment, - Subsidy of cost of stoves, - Subsidy of price per litre burnt.

39 Renewable Energy: Ethanol

40 Renewable Energy: Ethanol

41 Renewable Energy: Ethanol Substitute for fossil fuels Petrol imported in Uganda = 600,000m 3 p.a Annual production of = 20,000m 3 (3%) Uganda Petrol consumption grows at >7% Blended with car petrol up to 15% Saves >USD 20 m in foreign exchange

42 Questions of the Day

43 1. Linkages between public finance and private interventions Ugandan economy is private sector-led Uganda s financial system = 3 types A: Formal Banks Microfinance (Deposit) Credit Institutions Insurance companies Development Banks Pension Funds Capital Markets B: Semi-formal Savings & Credit Coop Microfinance C: Informal Village Savings & Loans Assoc.

44 1. Linkages between public finance and private interventions Uganda s financial sector is dominated by the Commercial Banks (private sector). Public institution in the Financial sector - Central Bank, - Development banks, - Capital Market Authority - Uganda Securities Exchange.

45 2. Innovation in finance to address investors needs TO IMPLEMENT Lower costs of finance (grants, carbon reduction, soft loans, etc) Bi-literal arrangement with IFC, FMO, PROPARCO, EIB, etc. Arrange Suppliers credit facilities Reduce number of agents for loan administration

46 2. Innovation in finance to address investors needs TO REVIEW Bank of Uganda regulation on Legal Lending Limits - maximum USD 200 million. Off-balance sheet lending comes with.. Long approval process, Use of foreign law (e.g. English Law), Prohibitive legal fees from international law firms, Lengthy security documentation, etc

47 3. Catalysing private sector engagement at national and international levels TO REVIEW Remove prohibitive Env. & Social Impact Assessment fees, ie. 0.1% of capital cost Provide flexible funding terms - reduce stringent security documentation, - improve land registry for security perfection, - set limits for legal fees, - develop templates for the legal documentation

48 4. Instruments with potential to drive investment in developing Contribution towards capital costs, say 20% Set funding criteria for specific geographical regions Funding through freely tradable instruments to enable the public to raise funds countries at scale

49 5. The NAMA financing gap to be filled and the role of various finance sources Partial funding of set-up capital Deepen the stock market / security exchange Provide matching grants or guarantees Encourage use of Corporate bonds

50 5. The NAMA financing gap to be filled and the role of various finance Mobilize local resources through domestic saving - pension funds sources - retirement benefit schemes - individual savings Reduce Government domestic borrowing to avoid crowding out the private sector.

51 Madhvani Group

52 The Madhvani Group

53 Madhvani Group pioneering innovation in the developing world..

54 Questions for discussion 1. Uganda s economy is private sector-led. What should be the role of public institutions? 2. Lending by commercial banks from their parent companies usually comes with the challenging conditions. What should be the role of international finance institutions in alleviating this hindrance to capital finance? 3. Governments have made a NDCs. However, the role of government is mainly in software while the hardware is undertaken by inadequately incentivised private sector. What should be the role of various finance institutions and Government to fill the NAMA finance gap?