Uganda's privately-owned Alam Group is investing $52 million on a sugar factory and cane estate which it expects to be operational in April with a 60,000 tonne a year capacity, a senior company executive said on Tuesday.
The move comes after Ugandan sugar production fell short of the industry's forecast by 11 percent in 2012, hurt by the harvesting of immature cane and poor weather which forced one major producer to briefly halt operations.
Industry body the Uganda Sugar Cane Technologists Association (USCTA) said the country produced 289,665 tonnes of raw sugar compared with a forecast 327,075 tonnes in 2012, but was higher than the previous year's 259,413 tonnes.
"Work on the (sugar) processing plant is already going on and we think in April or thereabouts we'll be commissioning it," Abid Alam, the company's managing director, told Reuters.
The group, which also manufactures construction materials, will get its cane from a nucleus estate of 2,000 acres about 140 kilometres east of the capital, in addition to cane from other growers covering about 18,000 acres, Alam said.
East Africa's third-largest economy and a prospective crude oil producer, Uganda has been drawing increased flows of foreign and domestic private sector investment scrambling to exploit the country's fast-growing ranks of middle-class consumers.
Alam said the plant, when operating at full capacity, will be producing 60,000 tonnes of sugar annually. The group is financing 60 percent of the investment from its own resources and would secure the rest through debt.
Alam said the company also planned to generate 12 megawatts of electricity from the sugar processing plant using cane residues, and all the power will be used at the factory.
Uganda consumes about 350,000 tonnes of raw sugar annually and the government says it is eager to attract investment into the sector to meet demand forecast by USCTA to hit 700,000 tonnes by 2030.
Government plans to offer 7,100 acres of a natural forest in the country's east to an existing sugar producer to expand its cane estate and increase national output were thwarted after environmentalists opposed the move.
Environmentalists said clearing the forest to plant cane would expose Lake Victoria to silting, disrupt rainfall patterns in the region and put agricultural activity at risk. Reuters