Energy and infrastructure
In 2014 Uganda saw a diverse mix of energy and infrastructure deals in upstream and downstream oil projects, renewable energy, transport infrastructure and telecoms involving private sector investors, private equity and commercial and development banks. The African Development Bank projects the country’s GDP growth at 6.6% and 7% for 2014 and 2015.
The local legal market has a number of well-established leading firms many of which have formal associations with networks or foreign firms including the ALN, LexAfrica, DLA Piper Africa Group, Bowman Gilfillan Africa Group, ENSafrica, Norton Rose Fulbright and Dentons. Global US and UK firms are especially visible on the international counsel side, predominantly with teams working out of London.
The market has seen continued activity in the oil sector since commercial quantities were confirmed in 2006. In February 2015 the government announced a first open competitive licensing round for petroleum exploration covering six blocks in the Albertine Graben. The round is governed by the 2008 National Oil and Gas Policy for Uganda and 2013 Petroleum Act and licenses will be awarded by the end of 2015. So far the only companies licensed are Tullow Uganda Operations, Total E&P Uganda and China National Offshore Oil Corporation (CNOOC) Uganda, which was the only one in early 2015 with a production license. Commercial production of oil is set to begin in 2018. The government of Uganda has been embroiled in a number of disputes over oil, notably a tax arbitration against Heritage Oil before UNCITRAL, where the company is contesting a tax assessment made by the Ugandan Revenue Authority, an ICSID arbitration against Tullow Uganda Operations over VAT liabilities on future oil revenues and against Tullow over an alleged breach of a PSA (production sharing agreement). Local and international firms have been involved.
One of the market’s single biggest oil projects is the ongoing $2.5 billion construction and operation of an oil refinery, being developed under a public-private partnership (PPP) structure with Russia’s RT Resources, being advised by a UK magic circle firm, as preferred bidder. The country has also been working on plans for a crude export pipeline.
In energy, in 2013 the country launched its Global Energy Transfer for Feed-in-Tariffs (GET-FiT) programme with the aim of fast-tracking 20 renewable projects from 1MW to 20MW through the use of a guarantee scheme to enhance the bankability from donors including Norway, the European Union, UK’s DFID, Germany and the World Bank. German bank KfW has been at the core of the programme which to date has licensed 17 projects: ten hydro, one biomass, two bagasse and four solar. In January 2015 four power purchase agreements (PPAs) were signed for a total capacity of 33MW. The first two solar projects involved the Ugandan-Italian consortium Simba Telecom/Building Energy and the UAE-Spanish consortium of Access/TSK Electronica. UK and Ugandan counsel were also advising Carbon Impacts on a potential solar project of 100MW.
In 2014 there were a series of transactions in the telecoms sector including the acquisition by Easton Towers of Bharti Airtel’s telecoms towers, Orange’s exit from the market through a sale to Africell Holdings.
Elsewhere, the IFC and government of Uganda were at the early stages of procurement for a $1 billion Kampala-Jinja expressway PPP (public-private partnership) project and in June 2014 private equity firm Actis sold 45% of its shares in Uganda’s electricity utility, dual listed in Kenya and Uganda, through an accelerated bookbuilding. Global and local firms were also involved.
James Wilson - Editor EMEA
Part of the Bowman Gilfillan Africa Group, AF Mpanga is a seasoned top tier firm with experienced energy and infrastructure partners in David Mpanga and Julius Musoke. As with some of its competitors the firm has been growing its oil and gas expertise and in 2014 added Daniel Gantungo as an associate to the team. Gantungo graduated from the University of Aberdeen (UK) and previously worked at the Ministry of Justice and, prior to that, law firm King & Wood Mallesons.
The office has been active across all sectors: energy, oil and gas, mining, telecoms and infrastructure and is a counsel to CNOOC in Uganda.
The firm has been involved in the national Uganda oil refinery project, acting as local counsel to a preferred bidder for the concession to build and operate the refinery. The firm, led by Musoke, has conducted due diligence, reviewed all the draft corporate commercial documents and negotiated with the government. Musoke also led a team that advised a consortium led by France’s Eiffage and Greece’s Consolidated Contractors Company on due diligence, project document review, procurement rules and negotiation relating to the proposed Kenya-Uganda refined oil pipeline concession project.
In another notable energy and natural resources deal Musoke and team assisted KMRI Infrastructure on its proposed investment in and acquisition of three hydropower plants in Uganda and acted as local counsel to the China-Africa Development Fund (CADF) in relation to a large phosphate mining project in East Uganda. The project is high value and includes associated power infrastructure.
In telecoms, Mpanga led a team to advise French telecoms company Orange on the sale of its shares in Orange Uganda to Africell Holdings, completed in November 2014. The firm worked with Bowman Gilfillan on the deal which is part of an exit strategy for Orange from African markets. Musoke also led a team acting as local counsel to Standard Chartered Bank on a $315 million umbrella financing to Bharti Airtel to fund equipment acquisition and to Eaton Towers on asset acquisition financing from the IFC and Standard Bank for its acquisition of tower sites from Airtel Uganda.
A transport deal saw the firm, led by Musoke, act as local counsel to Standard Bank of South Africa and CfC Stanbic Bank on the $20 million finance facility to Rift Valley Railways for the acquisition of rolling stock.
ENSafrica Uganda is growing in profile in the Ugandan market. The team has specific expertise in the telecoms sector but has a good track record in all manner of energy and infrastructure projects.
Key contacts are Bernard Katureebe, formerly a legacy SNR Denton banking and finance lawyer, Alexander Kibandama, whose expertise lie in projects, project finance and M&A, and Donald Nyakairu, a former head of legal at a telecoms solutions provider. Ronald Tusingwire manages the litigation team.
In recent work in 2014, the office worked alongside a global law firm to advise Carbon Impacts on financing for phase two of a solar power project development with potential generation capacity of 100MW. The project is privately financed and was ongoing in 2015.
Kampala Associated Advocates appears on some of the country’s weightiest deals and over the past couple of years it has kept a strong profile in the oil and gas sector representing clients including Tullow Oil. The firm is well versed in working with international counsel and has an association with Dentons.
The firm handles work across the energy and infrastructure sectors, with David Mpanga and associate partner Aisha Naiga Kiwola being key contacts for corporate finance work. Other high profile lawyers include Charles Kallu Kalumiya, who focuses on international and public law and Elly Karuhanga, a former president of Tullow Oil Uganda who serves as Chairman of the Uganda Chamber of Mines and Petroleum.
The firm was recently acting as local counsel alongside a UK magic circle firm to represent an oil and gas company in two high value complex ICSID arbitrations concerning power purchase agreements (PPA) and tax matters.
Kasirye Byaruhanga & Co consists of four partners and 14 associates. The firm is part of the Mackerel International network and is active in litigation, with a substantial part of its practice dedicated to transactional matters and retainer clients.
Key contacts include partners Andrew Kasirye and Paul Rutisya, who have been representing clients such as Excel Construction, the Association of Ugandan Oil and Gas Services and Eko Power.
Katende Ssempebwa & Co is the Ugandan member of the LexAfrica network. The firm is probably the most visible on energy and infrastructure projects and it is also the most often recommended port-of-call for international clients. Key contacts are Frederick Ssempebwa, a leading legal figure in the region who has done considerable high profile work on national legislation (including on the constitution of South Sudan), and managing partner John Katende. Partners Sim Katende and Soogi Katende are also widely considered leading individuals.
Recent work has included advising the government in relation to the $3 billion construction of a national oil refinery. The team has also acted for Total, Puma, American Tower Corporation (ATC) and the African Development Bank on various matters and assisted Warid Telecom Uganda on its $500 million merger with Bharti Airtel.
MMAKS Advocates has a team of 12 lawyers dedicated to commercial transactions and operates across the energy and infrastructure sectors. The firm, which is plugged into the rest of Africa through its membership of the Africa Legal Network (ALN), comes highly regarded by clients. It has a full service offering and as with competitors has been building oil and gas expertise. The team offers a strong track record in mining and energy disputes.
Key partners for transactional work are corporate head Phillip Karugaba and banking and finance head Rachel Musoke. Apollo Makubuya has been visible on high profile mining-sector disputes while senior associate Fiona Magona has interesting corporate finance and mining expertise, having preciously completed a six month secondment with Eurasian Natural Resources Corporation (ENRC).
In 2014, the firm was acting as local counsel alongside a UK magic circle firm to advise European senior and junior lenders on the development of hydropower plant. The office also acted as local counsel to private equity firm Actis on its sale of a 45% stake in the national electricity distributor transmission company UMEME, which is duel listed on the Ugandan and Kenyan stock exchanges. The sale was structured as an accelerated bookbuilding and as such was a market first. It was closed in June 2014, raising $98 million.
Sebalu & Lule is one of the market’s largest firms and busiest energy and infrastructure practices. The team has recently worked on matters including financing for the Bujagali II dam and the concession for Uganda’s only copper mine. The office is plugged into the region and beyond through its membership of the DLA Piper Africa Group. Nicholas Ecimu leads the energy and infrastructure practice and is supported by the well-known Barnabas Tumusingize. Notably, the firm boasts a number of talented juniors including senior associate Paul Mbuga.
Recent work saw the firm advise the Ugandan government on the concession of the Kilembe copper mines and assist a concessionaire on a PPP (public-private partnership) project for a rail development. The team also represented Electromaxx on a $35 million project financing for expansion works on its thermal power plant.
Shonubi Musoke & Co is a well-established leading firm for all manner of energy and infrastructure financing, corporate and commercial work. The firm has an associate office in Burundi under the name Shonubi Musoke Gilbert & Partners and in 2014 it formalised an association with Norton Rose Fulbright.
Key contacts in Kampala are Alan Shonubi, Noah Mwesigwa, Andrew Kibaya and Innocent Kihika, a former in-house at the Uganda Electricity Transmission Company (UMEME). All four have substantial experience in the energy and infrastructure sectors, particularly in power and oil and gas. The office is sits on Total’s legal panel and advises clients including oil and gas company Neptune and the Aga Khan Foundation.
In recent highlights the firm worked on UMEME’s IPO, which was one of the most highly sought equity capital markets transactions in recent years. It was also acting as local counsel to the IFC and Standard Bank in relation to the acquisition financing of Eaton Towers’ acquisition of Airtel tower sites.
AF Mpanga keeps its top tier position this year in corporate finance. The practice saw no significant changes and continues to be led by a team of five partners. In a sign of its proximity to the oil and gas sector, in 2014 the firm did lose an associate to the in-house legal team of an oil and gas company.
The team remains strong in corporate work, bank financing and projects, with key clients such as CNOOC, Citibank Uganda, Stanbic Bank Uganda and Coca Cola manufacturer Century Bottling Company. In 2013-14 it won new instructions from the East African Development Bank and Vivo Energy (formerly Shell Uganda), among others. On cross-border work, the team remains the exclusive member of Lex Mundi and the Bowman Gilfillan Africa Group and has good relations with international counsel including White & Case, Clifford Chance and Herbert Smith Freehills, among others.
Highlight deals over the past year saw the team advise Guaranty Trust Bank Nigeria in its acquisition of Fina Bank, a deal valued at $100 million on completion in December 2013. The acquisition was executed alongside acquisitions in Rwanda and Kenya, marking the Nigerian banks’ entry as an East African bank. It will operate as GT Bank in Uganda.
Elsewhere, the firm advised CNOOC in negotiations with the government in relation to new oil and gas regulations and worked with Herbert Smith Freehills to act for Standard Chartered Bank and Svenska Exportkredit on the local facility and security on an umbrella project financing to a telecoms service provider.
Another notable deal had the firm assist the Investment Fund for Health in Africa (IFHA) on its investment into a hospital in Uganda.
The four-partner team of ENSafrica maintained a consistent team in 2013-14. Between them the partners have a few historical areas of strength, including TMT, projects, tax and commercial litigation. Since coming into operation, the office has won over clients such as Hilton Worlwide, RBS, Heineken, IFC, the Ugandan National Road Authority, PetroSA, Total and Housing Finance Bank Uganda.
Among its notable deals, the firm worked with lead counsel Norton Rose Fulbright to advise Standard Chartered Bank UK in relation to its $40 million financing in February 2014 to telecoms company Airtel Uganda.
The team won several instructions from development finance institutions, among them advising the IFC on Uganda-law aspects of two $4 million facilities to Pearl Dairy Farms and FMO on $52 million of project financing for the construction of four small hydro power plants in Uganda. Allen & Overy led in the latter while ENS also handled the power purchase agreement review and land matters.
In another notable case the team, along with AF Mpanga, has been advising the government of Uganda (Uganda National Roads Authority) in relation to a tender for the construction of new roads and motorways worth €63 million. The case involved a claim against the government by a bidder that was refused the tender.
Kiwanuka & Karugire Advocates is a three-partner team led by Kiryowa Kiwanuka, who focuses on energy, oil and gas matters, and corporate finance partners Edwin Karugire and Peter Kauma. The team has had a growing practice over the past year and maintains a reputation in the market for quality. “Very high and specialised service,” says a European energy company off the back of company and commercial work. Clients rate the team for the quality of advice it provides and for being solution driven.
Clients include New Vision Printing & Publishing Corporation, resources company Exalo, Ugandan Communications Commission and the National Social Security Fund.
Notable transactions over the past year saw the firm advise Guangzhou Songsong Energy Group and its subsidiary Uganda Hui Neng Mining on its application for a phosphate mining licence in Tororo, Eastern Uganda for a $560 million mining project. It is one of the biggest investments outside of oil and gas in the country’s natural resource sector.
In another deal, the firm advised the National Gas Company of Trinidad and Tobago on its bid for the construction of a refined oil pipeline from Eldoret in Kenya to Kampala (Uganda). The $400 million cross-border infrastructure project will be the country’s first oil pipeline. The process was still open in mid-2014.
A third interesting case saw the firm act for White Showmans on the construction of a 5-star Radisson Hotel in Kampala.
MMAKS continues to be highly regarded particularly for its financial and corporate transactional practice, which is led by three key partners. According to a financial institution on an M&A deal the firm provides “excellent advice and documentation” and “strong legal support”. Clients rate the firm for being consistently good. On cross-border work, the firm remains the ALN member for Uganda.
Over 2013-14 the firm has been very active on financing transactions, often for commercial lenders and development finance institutions but also for borrowers, and it won mandates on some very interesting corporate work. The team also paired up with several international law firms, among them Allen & Overy and Clifford Chance.
In highlight deals, the firm worked with Allen & Overy to advise the Belgian Investment Company for Developing Countries (BIO) on a $13 million financing to Rwimi EP Company for the construction of a 5.6MW hydro power plant Kasese District. The project comes under a program between the Government of Uganda and KfW targeted at clean renewable energy for the Ugandan National grid (GET FiT program).
The firm acted for the Industrial Development Corporation of South Africa (IDC) on a third phase funding of $14 million to Aya Investments for the refurbishment of the Hilton Kampala and with Clifford Chance supported Proparco on a $75 million financing to the Export Trade Commodity Group (ETC) for the development and construction of agricultural commodities, storage infrastructure and processing facilities.
On the corporate side, in 2014 the firm was representing a majority shareholder of a listed company on an exit to private equity and retail investors, a first of a kind in Uganda, and the private Kampala Hospital on an equity investment for a 51% stake through a subscription for shares. The investment will help settle outstanding debts and fund refurbishment and equipment purchases.
Sebalu & Lule maintains a solid grip on the top tier. In 2013-14 it made a notable addition to the partnership with the recruitment of Gertrude Wamala Karugaba, former general counsel of Stanbic Bank Uganda, in December 2013. The hire boosts the firm’s already strong profile for capital markets work, as well as for banking, finance and M&A. The firm maintains its association with DLA Piper and in 2013-14 secured a notable panel appointment from Tullow Operations, one of the three licensed oil and gas companies.
In highlight deals, the firm advised CfC Stanbic Bank in its role as transaction advisor and Kakira Sugar as issuer on a $30 million notes issue listed on the Uganda Securities Exchange to fund an expansion programme. The issuance, in November 2013, marked the first listing on the fixed income securities segment of the exchange, with all the other listings being by financial institutions or the Government of Uganda.
In notable financing deals, the team has been acting for lenders Barclays Bank Uganda and Barclays Bank Mauritius and hedge counterparty Absa Bank on a $40 million refinancing facility to a company to expand a heavy fuel oil (HFO) plant and for the lenders on the Bujagali II hydropower dam project. In the latter, the firm also worked on hedging arrangements, which are still few and far between in the market.
On the M&A side, the firm advised Mauritius Union Assurance, listed on the Mauritius Stock Exchange, on its indirect acquisition of a stake in Phoenix of Uganda Assurance Company as a result of the acquisition of majority stake in pan-East African insurer Phoenix TransAfrica Holdings.
The corporate finance transactions team remained unchanged through 2013-14, under the helm of four partners including Innocent Kihika, who joined in March 2013 from the Uganda Electricity Transmission Company. The firm maintains a strong and long-standing relationship with Norton Rose Fulbright and was recently chosen as the sole relationship firm for Baker & McKenzie. These associations benefit the firm in the form of training schemes and the firm currently has a senior associate Brian Shonubi, on secondment with Norton Rose Fulbright South Africa.
“Good, very prompt and sensible advice,” says a banking and finance client, while another says the firm is “very professional in all their undertakings with us” and provides “timely feedback and legal advice and input on very short notice”. According to another the team goes “out of their way to ensure that such information is relayed to us on time, they are always getting better”.
The team has an especially strong profile in energy and infrastructure work and for banking and finance. It is a panel advisor to Total, Eni and Neptune Oil and wins instructions from the IFC, Ecobank, Standard Chartered Bank and others.
Highlight deals saw the firm work with Clifford Chance to advise electricity company Umeme on a $190 million loan facility from the IFC and a syndicate of local banks to refinance its capex program. The facility, granted to a company that has only recently listed, included debt buy back and hedging elements. Another standout deal saw the firm advise Umeme on the sale by majority shareholder Actis of its stake to selected institutional investors and a public offering on the Uganda Securities Exchange to certain retail investors. The deal was the largest such transaction on the exchange.
Elsewhere, the firm advised Elgon Siti (PVT) on a $52 million project for the establishment of a 21MW mini hydropower project on the Mt Elgon river in Eastern Uganda. The work included advice on power purchase agreements and agreements with the Ugandan government.
On the banking side, the firm advised Standard Chartered Bank Dubai on an amendment and restatement of a $120 million revolving loan facility to the Export Trading Group in May 2014 and Proparco on a $6 million credit facility to a local bank NC Bank in January 2014.