Ugandan Sugar Producers Plan to Invest $197 Million to Expand, Diversify

Uganda’s three main sugar producers plan to spend a combined $197 million to boost capacity and diversify their operations, the Uganda Sugar Cane Technologists Association said.

Kakira Sugar Works, the East African nation’s biggest producer of the sweetener, will invest $100 million to expand its sugar and electricity generation capacity, and production of ethanol, the Kampala-based association said in an e-mailed annual report today. The company, which is expected to produce 165,190 metric tons of sugar this year, plans to complete the expansion and the power plant by June 2012, the agency said.

Sugar output in Uganda may climb 18 percent to 350,000 tons this year, with 99 percent of the output coming from plants owned by Kakira, Kinyara Sugar Works Ltd., and Sugar Corp. of Uganda Ltd. according to the report. The East African nation, which consumes 346,000 tons of the sweetener, imported 130,000 tons last year, of which 67,590 tons was re-exported, it said.

Kakira, which generates 22 megawatts of electricity from cane fiber known as bagasse, plans to boost that capacity to 50 megawatts, which will enable it to supply 30 megawatts to the national grid, the agency said. The company has yet to determine when to open its ethanol distiller, the report said, without providing further details on either of the projects.

Kakira is owned by Madhvani Group, which says it is Uganda’s biggest industrial group.

Power Generation

Kinyara Sugar., the second-largest producer, will invest $70 million in a project that will boost its power generation to 40 megawatts, the report said, without giving a timeframe. Power supply to the national grid may more than double to 4.5 megawatts by June through the production of an additional 5 megawatts, it said, without giving the current capacity.

Kinyara is 51 percent-owned by Rai Group, a Kenyan and Mauritius-based agro-forest company. The company is expected to produce 126,380 tons of sugar this year, the agency said.

Sugar Corp., the smallest of the three major producers, will invest $27 million in replacing its existing mill as well as plantation machinery and vehicles for cane transportation, the report said, without giving further details. The company, which is jointly owned by the Ugandan government and the Mumbai- based Mehta Group, is expected to produce 54,000 tons of sugar this year, the agency said.

To contact the reporter on this story: Fred Ojambo in Kampala via Nairobi at pmrichardson@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson at pmrichardson@bloomberg.net.