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Buyer Community> Trade Intelligence> Energy> Uganda to woo China money for energy, infrastructure
Source: Reuters

Uganda to woo China money for energy, infrastructure

Published: 04 Nov 2009 05:20:27 PST

* Wants investment in nuclear energy, high-speed rail

* Chinese investors already interested in refinery

KAMPALA, Nov 4 - Uganda intends to woo Chinese investment to boost the country's efforts in adding value to exports and to tackle energy and infrastructure handicaps, government officials said.

China's commercial footprint has been expanding in Uganda over the last five years. It was the third biggest FDI source in the third quarter of 2009 after India and Britain, according to the Uganda Investment Authority (UIA).

"Our prime economic interest in China is if they can invest in our processing industry, infrastructure and energy, including nuclear energy, as the president has emphasized in the past. That would be a good partnership," President Yoweri Museveni's spokesperson, Tamale Mirundi, told Reuters.

He said Museveni plans to attend a China-Africa Summit in Egypt later this month. Trade between the continent and China has grown at 30 percent a year, climbing to $107 billion in 2008 to eclipse the United States for the first time.

Museveni has previously named modern, high-speed railways and a refinery for Uganda's newly-found petroleum deposits as some of the immediate projects the Chinese can invest in.

Landlocked Uganda still depends for a great deal of its external trade on the derelict and inefficient Uganda-Kenya rail line to get its exports to sea, blunting the goods' competitiveness and stifling economic growth.

The volume of trade between Uganda and China remains relatively small and heavily imbalanced in favour of China.

Uganda imported goods worth $274.2 million from China in 2007 compared with 138.2 million in 2006, according to a Uganda Bureau of Statistics report that did not give export figures.


A delegation from the Industrial and Commercial Bank of China -- which holds a 20 percent stake in Standard Bank, Africa's biggest bank by assets, -- met Museveni in June and said it was interested in a partnership for the refinery.

Uganda is locked in a dispute with the exploration companies Tullow Oil, Heritage Oil and Gas of Canada over whether the country should refine its petroleum, an option the government prefers, or export crude.

The east African country has estimated reserves of 2 billion barrels and levels are forecast to grow substantially over the next few years.

"The exploration companies don't want us to refine our oil but we're saying no. The president thinks the Chinese can come in with their vast expertise to help us acquire refining capacity," Tamale said.

Uganda mainly exports cotton, leather, coffee, fish, and minerals to China and buys textiles and garments, footwear, porcelain, enamel, mechanical and electrical goods.

Keith Muhakanizi, a top Treasury official, told Reuters that Uganda was targeting China's huge investment funds.

China has "enormous investment funds capable of undertaking huge infrastructure projects in energy and infrastructure and these are the areas where we're focusing our efforts," he said.

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