International Sugar Conference

July 2018 ~ NSI : Kanpur, India

Sugar Industry in Uganda

Status  Value Addition  Challenges

Farhan Nakhooda
Kakira Sugar Limited
 Background : World Sugar
WORLD SUGAR 2016 2016 2016
Source ISO Production Consumption Consmpn
mio TS/y mio TS/y kg/cap/y
Europe 27.1 16.1% 30.2 17.7% 36.1
North America 13.9 8.3% 16.0 9.4% 33.2
C + South America 53.8 31.9% 22.1 12.9% 40.9
Asia 58.7 34.8% 77.8 45.5% 18.0
Africa 10.3 6.1% 18.9 11.1% 16.1
Oceania 4.8 2.8% 1.4 0.8% 36.4
Others - 0.0% 4.4 2.6%
World 168.6 100.0% 170.9 100.0% 23.0
India 24.8 14.7% 24.8 14.5% 18.8
China 10.0 5.9% 15.8 9.2% 11.4

2
 Background : World Sugar

Asia

C+S America

Asia

C+S America

3
 Background : Africa

UGANDA
 Background : Africa

5
 Uganda : Location


Jinja
Kakira

6
  Background

• Sugar : one of the oldest industries in Uganda > 1924.

• Long crushing season : 10.5 months/year
• Altitude avg 3,600 feet; Rainfall avg 100 cm (40”) 9m/y
Temperature 16 – 30 deg C
• 1st factory in East Africa at Lugazi in Uganda,
originally called Sugar Factory Limited, now known as
Sugar Corporation of Uganda Limited (SCOUL).
• 2nd sugar factory in Uganda was Madhvani Sugar
Works, now known as Kakira Sugar Limited.
  Background
• Uganda Sugar Industry ~ internationally
recognized in 1950s and 1960s. Production
over 140,000 MT of sugar/year, mostly for
domestic consumption
• Over 20,000 MT/yr sugar were exported to the
US and regionally.
• Reversal of fortunes in 1972 when Gen. Idi
Amin expelled the Asian owners & the
community from Uganda.
  Background
• Revival of the Ugandan sugar industry
commenced in the early 1980s with the return of
the Indian owners.
2,000,000 200,000

CANE SUGAR
160,000
Tonnes of Sugarcane

1,500,000

Sugar in Tonnes
120,000
1,000,000

80,000

500,000
40,000

0 0

14…
60
62
64
66
68
70
72
74
76
78
80
82
84
86
88
90
92
94
96
98
00
02
04
06
08
10
12
  Sugar Mills In Uganda
Initial revival of 3 historical sugar factories (1985 -
1995)
Lugazi - Mehta Group
Kakira - Madhvani Group
Kinyara – Booker Agri, now Rai Group
Subsequent new investments planned
- inspired by the success of these pioneers :
Over 28 licenses have been issued by
Government for sugar production.
 Sugar Mill Installed
Sugar Mills capacity (TCD)
In Kakira Sugar Ltd 7,500
Kinyara Sugar Ltd 4,500
Uganda SCOUL 4,000
Mayuge Sugar Ltd 3,500
12 operational Kaliro Sugar Ltd 1,650
mills Kamuli Sugar Ltd 2,500
GM Sugar Ltd 1,250
Hoima Sugar Ltd 1,500
Seven Star Sugar Ltd 500
Sezzibwa Sugar Ltd 500
Ndiburungi Sugar Ltd 1,000
Kenlon Sugar Ltd 200
 KEY: Sugar Mills in Uganda : Locations
1=KAKIRA
2=LUGAZI
3=KINYARA
4=KALIRO
5=KAMULI
6=HOIMA
7=ATIAK

A=MAYUGE
B=GM SUGAR
C=SEZIBWA
D=LUZINGA
E=KAMULI
F=KENLON

LICENSED
G= BUGIRI
H= BUSIA
I= SAIMMCO
J= BUTEBO
K=TIRUPATI
L= MUKWANO
M= KAFU
N= AMURU
Aerial view of Kakira Sugar Ltd
 Kakira Sugar : Overview
Sugar Boiling Bagasse
House Shed
Cogen Distillery
Sugar Plant
Mill

Cane Yard
Aerial view of Kinyara Sugar Ltd
 Making Sugar
BAGASSE SUGAR CANE
for Cogen

1. Milling WATER
JUICE
2. Clarification 3. Evaporation 4. Crystallization 5. Centrifugals

7. Packing 6. Sugar drying MOLASSES

SUGAR
 Making Sugar

DCS for
2 Mills and
Boiling House

17
 Sugar Mills In Uganda
Sugar Project under implementation
- Atiak Sugar Ltd
Some Licenses still at greenfield level :
– Busia Sugar Ltd
– Kyakwanzi Sugar Works Ltd
– Bushenyi Sugar Ltd
– Amuru Sugar Ltd
 Uganda Sugar Production
Mill Sugar Production + Consumption : 2011 to 2018* (MT)
2011 2012 2013 2014 2015 2016 2017 2018*

Kakira 132,679 149,340 152204 180,000 153,302 152,842 123,156 140,000

Kinyara 88,725 97,062 99,533 122,000 107,187 113,604 109,889 121,000

SCOUL 38,006 43,830 46,803 83,000 81,393 65,069 50,407 60,000

Kaliro 0 0 20,000 19,000 20,000 12,000 11,000 20,000

Kamuli 0 0 0 5000 10,000 15,000 14,000 15,000

Hoima 0 0 0 0 2,500 8100 7,000 12,000

Others ** 7500 7500 15,500 29,000 44,500 25,500 50,000 60,000
Total Prodn 266,910 297,732 334,040 438,000 418,882 392,115 365,452 428,000
Consumption 300,000 310,000 320,000 330,000 340,000 350,000 360,000 370,000
** Others include; Mayuge, GM Sugar, Luzinga, Sezibwa and Ndiburungi.
Figures for ‘Others’ are estimates as actual figures are not reported.
* All 2018 figures are estimates.
Uganda Sugar Production

75%

20
Cane Supply 2016 of 3 Historicals (85%)
Nucleus Estate & Outgrower Farmers
Total Cane Sugar
Company Nucl. Estate Out-growers
Supply Production
('000 MT) % ('000 MT) % ('000 MT) ('000 MT)
Kakira 582 35% 1,095 65% 1,676 153
Kinyara 356 28% 935 72% 1,291 114
SCOUL 366 59% 255 41% 621 65
Total 1,304 36% 2,284 64% 3,588 332
Socio-Economic Impact of 3 Historicals
Employment & Outgrower Farmers
Company Employment Out-growers

Kakira 8,500 9,000

Kinyara # 11,300 6,100
SCOUL 6,200 5,200
Total 26,000 20,300
# : Kinyara employment includes contract labour for
harvesting and transport of Outgrower cane.
Uganda Per Capita Sugar consumption
•Total sugar produced in Uganda (2016) 392,115 MT
•Export of locally produced sugar (URA) 75,040 MT
•Net locally produced sugar consumed 317,075 MT
•Sugar imports (Source: URA) 713 MT
•2016 Opening sugar stock with companies 47,583 MT
• Sub-total 365,371 MT
•2016 End of year sugar stock with companies 10,371 MT
• Estimated Sugar Consumption 350,000 MT
• 2016 Uganda Population : 37 million
------------------------------------------------------------------------------------------
• Ug Per Capita Sugar consumption: kg/head/year : 9.5 kg
For comparison - Per Capita Sugar consumption :
 Kenya = 21.4 kg  Tanzania = 12.0 kg  Rwanda = 5.6 kg
 Africa = 16.1 kg  South Africa = 34.7 kg  World = 23 kg
Uganda Sugar Consumption Forecast
At 3% per annum population growth and at 2% p.a. growth in
per capita consumption of sugar, Uganda’s sugar requirement
by 2030 (@ (12 kg/y) will be around 670,000 MT of sugar/year
– scope for planned expansion of sugar production facilities.
Uganda Sugar Demand '000 MT
800

700

600

500

400

300

200

100

0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Sugar Exports : Uganda-made sugar
(Source URA)

Year Qty (MT)

2013 3,558
2014 48,788
2015 31,299
2016 75,040
2017 37,615
 Uganda Sugar Industry
 Value Addition Projects

 Bagasse Cogeneration for Electricity

 Molasses Distillation for Ethanol

26
 Bagasse Cogeneration in Uganda
LICENSED LICENCED AVERAGE
START BOILER OWN
LOCA- CAPACITY GRID GRID TARIIFF
COMPANY YEAR OF TECHNOLOGY USE
TION (2017) SUPPLY SUPPLY Usc/kWh
OPERNS MW
MW MW MW
Kakira Sugar Kakira, 45 bar Boilers
2007 21.5 9 12 8.1
Limited Jinja 100TPH
67 bar Boilers 160 9.5+0.5
2013 30 11 20
TPH = 10.0
Kakira Total 51.5 20 32 28
Kinyara Sugar 23 bar Boilers 115
Masindi 14.5 6 5 1 8.0
Works Limited TPH
Sugar & Allied Ind. 45 bar Boilers
Kaliro 2014 11.9 5 5 2 9.5
Limited 70TPH
Mayuge Sugar
Mayuge 2016-17 9.2 5 3 8.8
Limited (est)
Total Cogen
87.1 36 45 31
for Grid Supply

Sugar Corpn of
Lugazi < 2005 34 bar Boilers 9.5 9 0
Uganda Limited
Planned 67 bar Boilers 120
26 11 15 ???
2020 TPH
Bagasse Cogeneration in Uganda
Key Considerations

 Choice of Boiler technology – must be

correctly decided when replacing / purchasing
boiler

 Grid connectivity

 Timeliness of project implementation – tariffs

are reducing as other sources of electric power
are developed.

28
Cogeneration : Kakira HP Boilers 2007
~ 2 x50 T/h 45 bar 510oC
Cogeneration : Kakira HP Boiler 2013
~ 160 T/h 67bar 515oC
 Cogen : Kakira Turbo-Alternators

2007 - 21MW
2013 - 30MW
Cogen : Kakira Distributed Control System

Combined DCS :
21MW + 30MW
Cogen Plants
 Molasses Distilleries in Uganda
established by (or close to) Sugar Factories
START INSTALLED MAX ACTUAL
YEAR ENA ENA
COMPANY LOCATION
OF CAPACITY PRODUCTION
OPERNS Litres/day Litres/day
SCOUL – Lugazi Lugazi 1991 20,000
2011 30,000 38,000
Kakira Sugar Ltd Kakira 2016 60,000 65,000
Mayuge Sugar Ltd Mayuge 2017 30,000 30,000
Modern Distillery –
Njeru, Jinja 2017 30,000 20,000
(close to GM Sugar)
ENA 150,000 Litres/day
Absence of fuel blending legislation 45,000,000 Litres/year

Avlbl market : Potable spirits @ 40% v/v 112,500,000 Litres/year

Kakira Ethanol Distillery
Kakira Ethanol Distillery
 Fermentation
Section
Kakira Ethanol Distillery
 Distillation
Section
Kakira Ethanol : Bio-digestor
Kakira Bio-Composting
Kakira Ethanol Distillery

Distillery
DCS
 Kakira Potable Spirits
Blending tanks from
Italy / Europe

Copper pot still

from Germany

40
  Challenges
(1) Sugar Act and Regulatory Body
 Sugar Act : In 2010, Uganda passed a sugar policy
to guide the development of sugar industry in the
country - including location of new complexes.
This policy cannot be enforced unless enacted into law
by Parliament. This process has now taken 8 years -
but has still not been completed.
 Absence of a sugar regulatory body (Sugar Board or
Sugar Authority) to provide direction of the industry’s
growth incl. arbitrating cane and sugar industry issues.
(2) Location of New Uganda Sugar Factories
 Government / UIA has licensed many sugar
factories without requiring them to establish their
own new sugarcane nucleus estates. This has
caused a problem of cane supply in some zones
with multiple mills.
 Unplanned overcrowding of sugar factories leads to:
 unhealthy competition;  shortfall in cane supply
 under-utilized plant capacity;  high costs;
 harvest of immature cane;  food insecurity;
 soil fertility depletion, as well as
 environmental risks and  rising poverty.
Sustainable Sugar Zones

KALIRO

KAKIRA
SCOUL
  Challenges
Access to Regional Markets
 Uganda currently produces a surplus of sugar –
which can be supplied to its neighbours in East
African Community, (EAC) who have deficits.
 Despite having the EAC Common Market, it took 2
years and intervention of 2 Presidents (Museveni
and Kenyatta) for Uganda to be allowed to sell
sugar into Kenya - even then after acquiring
permits from the Kenya Sugar Directorate.
 Rwanda also continues to import sugar at 25% duty
from outside EAC instead of Ugandan sugar.
 Access to Regional Markets (contd)
 Tanzania is reluctant to allow Uganda sugar -
preferring to import from COMESA and SADC
countries. Permits issued by the Tanzania Sugar
Board for gap sugar import are divided solely
among their sugar companies, who prefer to
import from outside EAC - mostly from their
affiliated units in the overlapping economic
groupings of the Tripartite Free Trade area.
 Continuing civil unrest wars in Southern Sudan
and Eastern D.R. Congo has interrupted exports
of Uganda sugar to those regions.
Impact of excessive Kenyan sugar imports
• Import of 960,000 MT of duty-free sugar into
EAC region by Kenya in 2017 has not only led to
smuggling of cheap sugar from Kenya to Uganda but
also affected both Uganda sugar and cane prices.
•Saturation of EAC market with cheap duty-free sugar has led
to build-up of sugar stock with millers, with adverse cash flow
impact.

Absence of a Sugar Research Centre

•Needed in Uganda to carry out systematic R&D to
assess current and future needs for efficient use of cane
varieties, agricultural machinery, chemical inputs,
manpower, etc.
Lack of Bio-fuels Legislation
• Uganda issued its Renewable Energy Policy in
Nov-2007, BUT there is still no National Bio-fuel Law.
• This has hindered investment in production of
anhydrous ethanol for blending with petrol.
 Uganda balance of payments stress  Unregulated ‘home-distilling’
Impacts of Climate Change
 Droughts have severely reduced cane yields in EA.
 Unseasonal heavy rains and flooding have also
adversely impacted cane cultivation.
Need for increasing area under irrigation as well as
planned drainage systems
  Conclusion
• Overall, there is considerable potential for planned
expansion and development of the sugar industry in
Uganda if the above challenges are addressed.

• Efforts are needed in improving sugarcane yields

and recovery.

• Modernization and automation in Ugandan sugar

factories with well-trained human resources will
reduce costs and improve productivity - which will in
turn benefit both millers and out-growers.
We look forward to a greener and sweeter
diversified future…

49
 Madhvani Group
pioneering innovation
in the developing world...

Farhan Nakhooda
Projects Director
Fyn @ Madhvani.org
www.kakirasugar.com