9 April 2018

Uganda: Local Transformer Manufacturers to Benefit From Bubu

Kampala — Government has taken a decision to prioritize local manufacturers of transformers in government procurement processes as one of the moves to promote Buy Uganda Build Uganda. This was agreed on during a meeting convened by the Ministry of Trade with local companies that manufacture transformers, to strategize and explore ways of development and marketing of Ugandan manufactured transformers.

Presiding over the meeting, the Minister of Trade, Industry and Cooperatives Amelia Kyambadde noted that through the implementation of BUBU, government aims at reducing the country's import bill.

Uganda's import bill stands at $4.8billion and out of these the value of transformers imported is $22.65million.

The minister said the power distribution and transmission sub sector is critical now that government is constructing several hydropower facilities including the 600MW Karuma, the 183MW Isimba Falls hydro projects and others. She added that the three private companies that manufacture transformers are supplementing government efforts to distribute power.

Uganda currently has three transformer manufacturing companies whose main consumer is government. Uganda's Transformer manufacturers have a combined installed capacity of producing 3,700 transformers per year. The companies include; Orion Transformers Ltd which started production in Namanve in 2016, Electrical Control and Switch Gear (ECS) Ltd based in Kawempe and started production in 2015, and Korica Ltd based in Nalukolongo and started production in 2000. The total private investments in this area alone is estimated at $16million.

James Kalibbala from ECS Ltd says Uganda's installed capacity is currently the largest in the East African region followed by Tanzania with a capacity of manufacturing and repairing a total of 1,500 transformers per annum, while Kenya has an Installed capacity of only repairing 1,500 transformers per year. The rest of the regional countries have no transformer manufacturing industry.

Kalibbala says the market for their transformers is still predominantly in Uganda with government consuming over 70% of the locally produced transformers and repair works. The rest of the consumers are from the private sector of which Umeme is the largest and other private buyers and repairers of transformers.

However, Kalibbala says despite this substantive investment, the industry is performing at only 30% which is mainly repairs.

"Government and Umeme who are the main consumers have continued to shun the locally manufactured transformers in favor of internationally manufactured ones. The BUBU policy has only been fully adopted by Uganda Electricity Distribution Company Ltd (UEDCL) whose annual consumption of new transformers is minimal", said Kalibbala.

Kalibbala added that in 2017, only Korica Ltd supplied new transformers 100 transformers to Umeme. The other two local manufacturers repaired a substantial number of transformers with Orion Transformers Ltd repairing 563 while ECS ltd repaired five . Korica (U) Ltd didn't repair any.

Mr Hanlin Liu of Orion Manufacturers says as local manufacturers, they need a share of government procurement of transformers citing the 820 transformers for which the Rural Electrification Agency (REA) has called for tenders this Financial Year for their various projects.

The three local manufacturers requested for government's interventions towards increasing the local transformer manufacturers' market and therefore increased capacity utilization which will then increase employment, skills-stock, and foreign exchange.

"We request Government to ring fence to the local manufacturers all the government funded distribution projects transformer procurement and ensure that all donor funded projects have the margin of preferences clauses ope-rationalized. This should include lowering the minimum number of years required of local manufactures to have been in production from 10 years to at least three years", explained Kalibbala.

The manufacturers also asked government to prevail upon UMEME ltd to increase on the number of locally procured transformers to at least 70%.

Minister Kyambadde assured the manufacturers noted that the signing of the African Continental Free Trade Area (AfCFTA) is a demonstration that the Government of Uganda deliberately and consistently is spending a lot of effort and time to secure markets for Uganda's goods and services.

"The domestic market is very critical to nurturing Uganda's current and future exports. Therefore it is important to learn that our domestic market must be utilized as a springboard of our participation in the regional and international markets", explained Kyambadde.

The Ministry of Energy and Mineral Development further assured the manufacturers that with BUBU in place, all the new projects and especially those funded by GOU will take care of local content and BUBU.

The Deputy Director UNBS Patricia Ejalu confirmed that the standard on transformers was developed and was approved in 2014, and that all the three local transformer manufacturers were certified to supply the transformers.

All the government agencies that were present resolved that for all the new Electricity projects including those to be funded by the GOU, Local content based on the PPDA Act and the Reservation schemes will be taken care of. Particularly for the GOU, ring fencing for domestic bidding will be adhered to.

The meeting was attended among others the Ministry of Energy and Mineral Development, Electricity Regulatory Authority (ERA), Rural Electrification Agency (REA), Uganda Electricity Distribution Company Ltd (UEDCL), UNBS and others.


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