Uganda's three main raw sugar producers are planning to invest $195 million over the next two years to expand cane processing and power generation capacity at their plants, an industry report showed. East Africa's third-largest economy produced 350,000 tonnes of raw sugar last year, up from 292,051 tonnes in 2009, said the report, which was obtained by Reuters on Friday.
Last year's output was 8.2 percent below the year's 318,000 tonnes forecast, mainly undermined by technical glitches at Kakira Sugar Works, the country's biggest producer. A 2010 sector performance report by the Uganda Sugar Cane Technologists' Association (USCTA), an industry body, also said the three plants sold 2 percent less sugar last year than in 2009.
"The Ugandan Sugar Industry is continuing to invest in expansion and diversification," the report said. USCTA said Kakira's investments will aim at "expansion and further diversification," to increase annual milling capacity to two million tonnes of cane and sugar production to 180,000 tonnes.
The plant also expects to boost its power co-generation output to 50 MW from 20MW now. "The cost will be in excess of $100 million. The plan is to have factory and co-generation activity ready by June 2012," the report said. Kinyara and SCOUL, Uganda's second and third biggest sugar millers, respectively, USCTA said, expect to spend $95 million between them to modernise their thermal generation facilities and milling equipment to crank up power and sugar output.
Although the industry had expected a 4 percent increase in sugar sales last year compared to 2009 based on population and consumption growth projections, sales instead shrunk by 2 percent. "Several factors could have contributed to this situation; the faltering global economy, the Sudanese referendum or the 2011 National election recently and peacefully concluded," the report said.
South Sudan is one of Uganda biggest regional markets but exports there slowed down as tensions rose in the months leading up to the January secessionist referendum. Uganda consumed 318,000 tonnes of sugar last year, down from 325,000 tonnes in 2009. USCTA forecasts consumption levels could jump to 700,000 tonnes by 2030. It imports refined sugar for industrial use but in small quantities.
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