In a significant move that underscores its commitment to a greener future, TotalEnergies has announced a major investment in Uganda’s energy sector through a new partnership with Bujagali Energy Ltd. This agreement highlights TotalEnergies’ strategic push to expand its renewable energy footprint across Africa and marks a pivotal moment for Uganda’s energy landscape.

A Bold Step for Renewable Energy

Under the terms of the agreement, TotalEnergies will acquire a 28.3% stake in the Bujagali hydropower plant located in Jinja, Uganda. This facility, with a capacity of 250 megawatts (MW), is a cornerstone of Uganda’s electricity supply, playing a crucial role in meeting the country’s energy needs.

In addition to this substantial stake, TotalEnergies will also take minority stakes in two other significant projects under development: a 260 MW renewable energy project in Rwanda and a 360 MW initiative in Malawi. Patrick Pouyanné, the chairman and CEO of TotalEnergies, emphasized the company’s commitment to a “multi-energy” approach, which includes not only traditional fossil fuels but also a robust investment in renewable energy sources.

Expanding the Renewable Portfolio

TotalEnergies has been actively expanding its renewable energy portfolio, which now boasts a global hydropower capacity of 3.7 gigawatts (GW). This includes impressive projects across Europe, Mozambique, and India. The company’s strategy in Uganda and Tanzania involves installing between 500 MW and 1 GW of new renewable energy capacity, spanning solar and wind power projects.

The need for increased electricity generation is acute in these regions, where demand is growing at a rate of over 5% per year. By investing in renewable energy infrastructure, TotalEnergies aims to address this growing demand while supporting the transition to cleaner energy sources.

Impact on Uganda’s Energy Sector

The Ugandan government and various private sector players are optimistic about the positive impact of TotalEnergies’ investments. Currently, electricity tariffs in Uganda are among the highest in East Africa, posing a significant barrier to economic development. Lowering these tariffs could provide a major boost to industrial growth, enhance competitiveness, and improve living standards for many Ugandans.

The investment aligns with Uganda’s broader goals of increasing energy accessibility and reducing reliance on expensive and polluting energy sources. With TotalEnergies’ expertise and resources, there is hope that the country will see a more stable and affordable energy market.

Balancing Fossil Fuels and Renewables

TotalEnergies’ involvement in Uganda extends beyond renewable energy. The company is also deeply engaged in significant oil and gas projects in the Lake Albert basin, highlighting its dual focus on both fossil fuels and renewables. This approach allows TotalEnergies to leverage its broad expertise in the energy sector to support Uganda’s diverse energy needs.

According to Ruth Nankabirwa Ssentamu, Uganda’s Minister for Energy and Mineral Development, TotalEnergies’ investment in renewable energy is expected to complement its fossil fuel activities. This balanced approach is anticipated to enhance the overall stability and resilience of Uganda’s energy sector.

Part of a Larger Trend

TotalEnergies’ investment in Uganda fits within a larger regional trend towards cleaner energy sources. Countries across East Africa, including Kenya, Tanzania, and Rwanda, are making significant strides in renewable energy to reduce dependence on fossil fuels and enhance energy security.

In Rwanda, the 260 MW renewable energy project is expected to play a critical role in supporting the country’s Vision 2050 development plan. Similarly, the 360 MW project in Malawi will address longstanding electricity shortages, which have historically constrained economic growth.

Economic and Social Benefits

The investments by TotalEnergies are expected to deliver a range of economic and social benefits. Job creation will be a significant outcome during both the construction and operational phases of these projects. Additionally, improving access to affordable and reliable electricity will stimulate economic activity, enhance educational opportunities, and boost healthcare services in the region.

These developments also align with global efforts to transition to cleaner energy sources and mitigate climate change. By focusing on renewable energy, TotalEnergies is contributing to a more sustainable and environmentally friendly energy future, which is crucial in the face of global climate challenges.

Navigating Challenges

While the prospects for these investments are promising, there are inherent challenges. Ensuring timely project completion, securing financing, and navigating regulatory landscapes are key factors that will influence the success of these initiatives.

TotalEnergies’ extensive experience in managing large-scale energy projects globally will be a valuable asset in overcoming these challenges. The company’s collaborative approach with local governments and stakeholders will be crucial in ensuring that these projects meet their objectives and deliver on their promises.

Looking Ahead

TotalEnergies’ partnership with Bujagali Energy Ltd and its investments in renewable energy projects mark a significant step forward in Uganda’s energy sector. By acquiring a stake in the Bujagali hydropower plant and investing in projects across Rwanda and Malawi, TotalEnergies is demonstrating its commitment to supporting Africa’s energy transition.

As Uganda and its neighbors continue to navigate the complex energy landscape, these investments will play a vital role in shaping a sustainable and resilient energy future for the region. With a balanced approach to energy production and a focus on reducing tariffs and increasing access, TotalEnergies is setting a positive example for other companies and countries striving to meet their energy needs while addressing climate change.

Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

5th August, 2024