Uganda's Alam Group is venturing into sugar production starting April, in order to fill the deficit in the country and generate extra electricity to power its steel industry.
Group managing director Abid Alam told The EastAfrican that the firm is investing $52 million in the sugar factory and some 20,000 acres of cane plantation, 90 per cent of which belong to out growers.
According to Uganda Sugar Cane Technologists Association, Uganda’s sugar consumption currently stands at 350,000 tonnes per year, compared with 289,665 tonnes and 259,413 tonnes produced in 2012 and 2011, respectively.
The sugar factory in Kaliro district, some 150 kilometres east of Kampala, will begin operations with an initial 60,000 tonnes annually, and produce 12MW of electricity to power Alam Group’s steel factory in Jinja.
“We shall sell the surplus power to the national grid thereby addressing electricity outages in the country and increasing our revenue base,” said Mr Alam adding that firm expects to produce an initial 5MW surplus which should rise to 18MW in two years when it goes full capacity.
Although three of Uganda’s sugar millers currently generate electricity, only Kakira Sugar Works is selling some 33MW to the national grid. Kinyara Sugar which has also installed 30MW, awaits the completion of transmission lines to sell the surplus to the national grid.
Mr Alam said the steel rolling mill currently uses 7MW of electricity from the national grid, costing the firm about Ush1.6 billion ($592,612) a month.
Alam Group commissioned the $50 million steel plant in Jinja in October last year, it uses iron ore rather than scrap metals to manufacture steel products.
In addition, the firm said it imports coal from South Africa for de-oxygenising iron ore during steel processing, costing the firm about $1.5 million a month, which not only raises its energy costs but also exposes it to currency fluctuations.