Uganda Geothermal Energy Information Portal
ABOUT GEOTHERMAL ENERGY
ABOUT THE PROJECT
 

1. Background to Project Development

Government policies and legislation are important factors in creating an enabling environment for geothermal investment in terms of mobilising investment from both the public and private sector (see here). However, few governments have clear policies that promote the use of geothermal energy, and budgetary allocations to geothermal energy research and development tend to be low in developing countries. Most developing countries lack the financial resources to make the necessary investments in geothermal exploration and utilization. The legislative framework is typically inadequate for attracting private or foreign investment in geothermal projects. Governments, however, can play a very important role in initiating geothermal projects by financing the early phases (i.e. exploration and appraisal). However, this requires the right policy environment, which is lacking in most cases. A successful geothermal system requires the right institutional framework, and coordination and consultation among relevant stakeholders. These are lacking in most developing countries, preventing the development of synergies and complementarity.

1.1 Project objectives

One of the key developments in Uganda in 2014 was the restructuring of the Ministry of Energy and Mineral Development, and the establishment of the Geothermal Resources Department (GRD) within the Directorate of Geological Survey and Mines (DGSM).

 

Understanding how best to organise the department in terms of its mission, mandate, structure and competencies in order to strengthen its capacity to support geothermal energy development will be key to unlocking an enabling environment for geothermal energy development in Uganda. This can set out how geothermal projects are to be developed: defining who is responsible for their promotion, regulation and implementation will make for a much clearer process for developers and donors to engage with. This can be achieved by establishing a new legal and regulatory framework for geothermal energy in Uganda that codifies more precisely the government’s role and the modalities and procedures for geothermal project developers across the full project lifecycle (e.g. survey and reconnaissance; feasibility studies; impact assessments; exploration licensing; drilling and well testing; steam and power offtake arrangements; injection/disposal well regulation and standards; construction permits; tariff arrangements; transmission; etc.)

With this objective in mind, the Ugandan National Council for Science and Technology (UNCST) - the National Designated Entity for the UNFCCC Technology Mechanism - worked with the GRD to prepare a request for Technical Assistance to the CTCN to develop the policy and legal framework for geothermal energy in Uganda.

2. The Project Team

The CTCN selected a consortium led by Carbon Counts to work closely with the Ag. Commissioner and Ass. Commissioner of the GRD in developing a policy and legal framework for geothermal energy suitable for Uganda. The team arrangements were as follows:

  • Carbon Counts - Team leader and policy/financing experts

  • Pro Utility - Stakeholder engagement lead

  • Shonubi Musoke & Co Advocates - Uganda legal drafting experts

  • Economic Consulting Associates - Geothermal power economics experts

  • Norton Rose Fulbright - International legal expertise (review)

The team commenced work in November 2015, with a 10 month plan for implementation.

3. Methodology

The project followed the methodology set out below (Figure 1).

Figure 1. Overview of Project Methodology

4. Results

4.1 Activity 1 – Geothermal Energy Policy Formulation

This Activity formed the main focus of effort on the project. It involved thee key sub-tasks as summarised below.

Sub-activity 1.1 – Issue/Challenge identification

A detailed review of the following was undertaken:

  1. The technical basis for geothermal energy development (see here)

  2. Experiences with developing geothermal resources around the world (see here)

  3. Experiences with developing geothermal resource laws (see here)

  4. Current enabling environment for geothermal energy in Uganda (technical information here) [1]

[1] Full details of the policy contexts have not been placed on this site, although information can be found in the presentation materials here.

Sub-activity 1.2 – Stakeholder Engagement

See here for more information of the activities carried out.

 

Sub-activity 1.3 – Draft Geothermal Policy

A draft Geothermal Resources Policy was prepared drawing on the outcomes of sub-activities 1.1 and 1.2. It covers the following:

 

    Foreword

    Executive Summary

1. Introduction

2. Policy Context

3. Geothermal Resources of Uganda

4. Issues and Challenges for Geothermal Development

5. Geothermal Policy Framework

6. Institutional Framework for Management of Geothermal Resources

7. Implementation Plan

The policy outline follows the norms and standards used by the MEMD in preparing policy proposals. It is evidence-based, drawing on the lessons-learned in sub-activity 1.1, and it is inclusive and consensus based, drawing on stakeholder inputs received under sub-activity 1.2.

The initial draft policy was subject to consultation within Government at an internal Government Roundabout held at Amber House on 3rd October 2016.

4.2 Activity 2 – Draft Geothermal Law

A draft Geothermal Resources Act has been prepared that implements many elements of the Geothermal Resources Policy. Main features include:

  1. Clarifying the tenure of geothermal resources. By defining geothermal resources and vesting  its ownership in the state on behalf of the citizens in line with Uganda’s Constitution (Regalian doctrine), thereby severing tenure rights from minerals;

  2. Institutional Arrangements. Defining the role and powers of Minister, Directors and the Commissioner;

  3. Unitisation Method. Providing the powers to declare Geothermal Resource Areas as a means by which geothermal resources may be unitized so as to facilitate approaches to resource management e.g. competitive tendering of resource areas;

  4. Facilitating Public-Private Partnerships. Providing the powers for Government to enter into Geothermal Resource Agreements that can act to facilitate public-private partnerships in resource development;

  5. Revised Licensing System. Introduction of a new, three part, licensing system to help improve the expectations and understanding between public and private sector when applying for a license in terms of the work to be carried out, the cost of that work, and the results expected etc. The approach is as follows:

    1. Reconnaissance – small-scale surveys/surface studies (1.5 years)

    2. Exploration – extensive surveys, test drilling (2 years, renewable twice)

    3. Production (exploitation) – produce and use/sell steam (25 years, renewable at discretion)

  6. ​Inclusion of articles relating to National Content and training of Ugandan nationals

 

The Act is aligned to the norms and standards for Ugandan legal drafting. The initial draft policy was subject to consultation within Government at an internal Government Roundabout held at Amber House on 3rd October 2016.

4.3 Activity 3 – Draft Supporting Laws and Regulations

Following the review of Issues and Challenges under Sub-activity 1.1, it was noted that:

  1. There are no barriers in the law relating to the undertaking of geothermal resource development activities in Uganda. Two key pieces of legislation, namely the Electricity Act, 1999, and the Environmental Management Act, 1995, already contain provisions which are facilitative to geothermal resource exploration and development. Other pieces of legislation such as the Water Management Act would apply to geothermal activities mutatis mutandis.

  2. Regulations are typically developed to support the primary legislation following experiences with implementation. Until experience is gained in implementation of the Geothermal Resources Act, it seems premature to develop specific Regulations at this stage.

Consequently, it was concluded that no supporting laws and regulations were needed as part of the TA Project. The effort allocated to this Activity was therefore used for other purposes in support of policy and legal framework implementation. It also included the submission of a paper to paper to the Sixth African Rift Geothermal Conference (ARGeo-C6).

5. Expected Outcomes

The project will significantly improve the enabling environment for geothermal resource development in Uganda through the following achievements:

  1. Finalised geothermal resources package/Bill to be sent to Cabinet. The project has delivered an actual draft policy and a resource development law, rather than simply making recommendations on how to develop such material. This material, prepared following national norms and standards, is ready to be packaged as a Bill for consideration by Cabinet.

  2. Awareness raised about Uganda’s geothermal potential. The preparation and eventual approval of the Bill by Parliament should help to raise the profile of Uganda’s geothermal potential, both domestically and internationally. This should help to reignite interest in the sector from developers, investors and development partners. Clarifying the Government of Uganda’s ambitions with respect to resource development should help to foster greater support for further technical assistance from development partners, and attract more interest from competent, well capitalised developers with experience in developing greenfield geothermal resources.

  3. Increased investment in geothermal exploration. Increasing investment in exploration will help to improve knowledge about resource characteristics, such as the heat source, recharge mechanism and conceptual geological models for the most promising propsects. This will provide a basis on which to establish a feasibility study for exploration drilling at least one site within the next 3-5 years as envisaged in the policy. Mobilising additional domestic finances should help to leverage co-funding from development partners in the form of both grants and concessional loans, helping to raise sufficient capital for a comprehensive exploration drilling campaign. Moving ahead with test drilling will prove the viability of geothermal energy in Uganda, help to attract investment from competent and well-capitalised private sector investors.

  4. Provide clarity to private sector. The new licensing system set out in the draft Act will help to improve the expectations and understanding between public and private sector when applying for a license in terms of the work to be carried out, the cost of that work, and the results expected.  The revised licensing modalities and timeframes, alongside the need for performance bonds for Exploration licenses, will help to deter passive speculation and create efficiency in the industry by avoiding the tying-up of areas with licensees that do not have the finances and/or competence to add value to the concessions.

  5. Clarify geothermal resource rights. The draft Act will several mineral tenure rights from geothermal resource rights. This will help streamline exploration activities in Uganda.

 
 
 
 

Project Background

This page provides on overview of the worked carried under the project.

Information is provided on the following:

  1. Background to Project Development

  2. Project Team

  3. Methodology Overview

  4. Results

  5. Expected Outcomes

 
 

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