Kenyan edible oils multinational, Bidco, is eyeing allocation of a further 6,500 acres of land to expand its cultivation of palm oil in Kalangala Island, located on the Ugandan side of Lake Victoria.
Bidco chief executive Vimal Shah said in an interview that the company has so far invested $150 million (Sh12.8 billion) on the island farming project, which currently has 20,000 acres under cultivation.
“We are looking at expansion of the area to 26,500 acres,” Mr Shah told the Business Daily.
The Kenyan-based consumer goods conglomerate said it is in talks with the government of Uganda for allocation of more land, and hopes to eventually have 30,000 acres under cultivation.
“Once the government gives us more land we will go ahead,” said Mr Shah.
The palm oil project is a 2003 public-private-partnership between the government of Uganda and Bidco, in which the Kenyan manufacturer was to invest in production in exchange for serviced land.
The government of Uganda is set to invest $50 million (Sh4.3 billion) after getting funding from InfraCo Africa, a fund that invests in infrastructure projects targeted at low-income countries on the continent, and is managed by Frontier Markets Fund Managers.
The money will be used to increase water supply, rehabilitate and construct new roads and increase electricity supply.
Kalangala Infrastructure Services (KIS) Limited, a subsidiary of InfraCo Africa, is handling the infrastructure work which began in April.
KIS had earlier said that revamping the islands infrastructure is also meant to make it easier for Bidco operations.
The palm oil is produced solely for the Ugandan market. The processed palm is shipped to Jinja for further processing, while the waste is used to generate electricity at the firm’s thermal power plant on the island.
For the Kenyan market, Bidco imports the raw material from Malaysia, but this is susceptible to interruptions. Kenyan manufacturers were affected in 2011 when a ship carrying palm oil was hijacked by Somali pirates in the Indian Ocean.
Bidco is also producing its own electric power at the farm, and has plans to sell excess power in future.
An information memorandum on the project says that KIS was to buy excess power produced from Bidco’s plant.
“Beginning in 2012, KIS will purchase from Bidco excess energy produced by the 2.5MW biomass-fuelled co-generation facility produced with waste from the milling process.
Excess energy (electric energy remaining after meeting the requirements of palm plantation in steam and electricity) will be available when the palm plantation and the associated mills achieve peak production expected in 2012,” says the information memorandum.