Exclusive Interview with Honourable Irene Nafuna Muloni, Minister of Energy Uganda


Honourable Irene Nafuna Muloni is the Minister of Energy and Mineral Development in the Uganda Government and the Woman Member of Parliament for Bulambuli District.

Irene has worked in various roles with the Government Electricity Utility; and in the telecommunications sector she served as an Executive Engineer. She serves as the Chairperson of the Board of Directors for Finance Trust Bank, the 1st Women’s Bank in Uganda.

Irene was the Winner of the “Sarah Ntiiro Award” 2003; a recognition as a “Model of excellence” by the Forum for Africa Women Educationists (FAWE).

She is an advocate for gender equality, women’s empowerment and utilization of science and technology for sustainable development. She has served on countless governmental and non-governmental boards and committees.

Irene holds a degree in Electrical Engineering from Makerere University, Kampala an MBA from Capella University, Minneapolis, Minnesota. She is a Corporate Member of the Uganda Institution of Professional Engineers, a Certified Public-Private-Partnership Specialist, and a Professional Balanced Scorecard Practitioner.

The Interview

What is the current state of mining in Uganda?

The mining sector in Uganda is growing. A whole spectrum of minerals occur in the country

The Government of Uganda (GoU) is focusing on harnessing the mineral resources in the best way possible. It is the GoU’s intention to sustainably exploit the resources so that they benefit the country.

The benefits include transformation of the economy and creation of jobs for people whilst creating value for the current and future generations.

The ministry has also been developing a legal, regulatory and institutional framework, upon which the private sector can be invited to contribute in the development process.

A lot more work still needs to be done. There is need to provide the necessary infrastructure (including utilities like electricity, and water) so as to support investors and bring the cost of doing business down.

Uganda as a country enjoys a stable political and macroeconomic environment. The GoU and the ministry have put in place laws, policies, and regulations that give investors an assurance of the return on their investment.

 

What are the challenges and likely opportunities for your ministry?

Capacity

Despite all this work, the ministry faces challenges of capacity. There is a limited number of professionals with experience in the mining sector.

To address this limitation, the ministry is focused on building capacity and also encourage knowledge transfer from investors.

For investors that also come along with the technology we encourage them to transfer it to locals.

This allows us to build capacity of our young people so they learn the art of minerals development and management.  By so doing we will be addressing the issue of local content.

Speculation

The second challenge is speculation by our own people who apply for licenses without any intention to progress and operationalise.

The speculative licence holders instead look for other investors to operationalise.

As a ministry holding on to licenses without performance does not work for us. We are going to enforce the law to revoke non performing licences and thus open up opportunities for other investors.

 

Licensing

The licensing law currently operates on a first come first serve. The drawback comes when more investors are interested. We however try to evaluate to get the best offer.

The ministry is planning to review this law so as to open up bidding rounds. This helps allocate licences to best proposal. Our interest is on awarding licenses that help us maximise benefits, maximise community value share and environmental sustenance.

 

Doesn’t bidding give room for corruption and reduced transparency?

NO. The ministry has in place laws and regulations that guide on how best one handles this process.

To reach a licensing decision, we would look at whether the proposal maximises the benefits using basic principle of judgement and analysis.

When we open bidding rounds, one will be able to go for the best instead of people holding on to the licences when they don’t have capacity in the first place.

We would encourage a weighing process which identifies proposals that gives more value and create more jobs.

Surface rights

The last challenge is on acquisition of surface rights.

In Uganda, land belongs to the people but the minerals belong to the state. Owners of land thus demand surface rates from the investors for exploration or mining.

The trend has been that in some instances, owners demand a lot more than the fair value. This causes delays to projects.

The ministry is now sensitising owners and the public about surface rights. As valuation is done at market value land owners should be able to accept offers made by investors.

Land owners will need to know that after the project, investors will restore the land as they found it.

Land owners thus need to rationalise their demands to avoid further delays of project implementation.

Engaging the land owners helps give communities reassurances that they will get royalties as owners of the land but minerals belong to the state.

What benefits should be given to communities that do not directly own land rich in minerals?

As the minerals belong to the state, any accrued revenues from mining operations are channelled to the treasury. The land owners and the local administrative units benefit directly from royalties paid by the investor as well.

The revenue from the treasury is ploughed back to the rest of the country, as the money is used to develop infrastructure (roads, electricity, educational facilities).  These are benefits that are distributed to everyone.

Hence the issue is making sure we get all the revenue in the most transparent manner, and plough it back, to the economy, so every person can benefit.

 

How is your ministry dealing with securities for energy, water and infrastructure that are key to mining operations and yet might not fall under your portfolio?

My ministry deals with energy, and minerals development including petroleum. I ensure we have adequate energy which is reliable for the entire country.

My ministry also has responsibility of ensuring that petroleum resources are developed in the best way possible with returns going into the treasury.

To manage resource security (energy, pipelines, etc), we plan as government the needs of this sector to operate fully.

My colleagues in charge of other utilities (water, transport, ICT, etc) are also tasked to ensure that those facilities are available. We work as government, and each one of us has a responsibility,

What interventions are in place to ensure mining companies develop local communities?

1. Local content-Capacity building is one of the key areas. Our local communities are involved in artisan and small scale mining, so we have trained about 1000 of them, of which 40% are women, so they gain the skills, they are made aware of the hazards, technology and how to take care of the environment, and maximise the benefit from their association so they can acquire, finances for their investments.

2. We encourage investors to employ locals.

3. Value addition: The ministry is promoting beneficiation and industrialisation. We want value addition as our minerals are not for exporting as raw materials. Investors, who are coming, should know that they have to set up facilities for beneficiation so we can maximise the benefits.

 

Is there any danger for the Chinese syndrome in your ministry, could the current Chinese movement be a threat to sustainability?

I think it all boils down to competition and the need for financial resources.

China appears to have a fat purse and it is ready to invest. For us we welcome them and everyone else. We have to take it upon ourselves to ensure that they are delivering work of high quality according to international standards and that that products are sustainable.

When looking for investors, one looks for those with quality and cheap financing. However, cheap does not mean cheap things, cheap financing must also correlate positively with quality with warrantees and guarantees so it can last.

Chinese investors must be held accountable; they must be responsible corporate citizen wherever they are operating.

How aligned is Uganda to the Africa Mining Vision, what have been the milestones towards achieving this vision,

Africa Mining Vision is looking at nationalising this vision. The ministry is going to examine what the vision is focusing on, and how we can bring it down to the level of government

From the way we are developing this sector we are picking best practice so that as we progress we are applying the best.

We are also preparing to become members of EITI so that issues of transparency and accountability get out of the way.

Joining EITI is a process as you have to prepare a lot of underlying data to validate.

As a ministry we are very mindful of the environment, the local people and we believe value addition is extremely critical.

Issue of women being part and parcel of development process is not left behind. Gender mainstreaming should be case throughout.

What Lessons can be learnt from Uganda

Africa is number one continent with big opportunities because there is development work going on. If we are to integrate Africa we need to pull our resources together and develop infrastructure, which can help us build on, and be able to tap and harness these natural resources that are going to bring benefits.

African governments need to be cognisant of local regulatory and legal frameworks and comply with them. It is only following the existing laws religiously that we can also develop and harness Africa’s rich mineral resources.

Resources from the minerals must be fully accounted for and processes be as transparent as possible.

Would you say lack of governance is Africa’s biggest issue?

Each country has a leader but importantly they should be visionary. Such a leader looks at how to better lives of people, and only use resources to transform the lives of the poor by providing access to electricity, health, education, water, roads, and creating jobs.

Uganda is fortunate to have a visionaryLleader ; President Yoweri Museveni.

Thank you; Honourable Minister

Interview

Uganda


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