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Ruth Nankabirwa

In Figures: A Look at Uganda's Energy Sector

posted onAugust 2, 2021
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By Dr. Ruth Nankabirwa Sentamu

Introduction

As you may already be aware there are several players in the sector including the Electricity Regulator, Generation companies both Public and Privation, the transmission company, distribution Company and other several private companies including solar service providers.

However, I will limit this to the status of generation, transmission, the electricity connections policy and GOU’s strategies to achieve affordable tariffs.

The NRM government has continued to prioritize the energy sub-sector because of its socio-economic transformative aspects as evidenced in its Sustainable Energy Development objectives highlighted in the National Development Plan III (NDP III 2020/21-2024/25).

This is also evident in the NRM’s Manifesto 2021 -2026 “securing your future” because of the sector’s contribution towards job and wealth creation ensuring access to clean energy for improved social wellbeing of society as well as industrialization for Socio-economic transformation of our country

Generation

The total Installed Generation Capacity has grown from 60 MW in 1986, to 1,268.9MW as of June 2021.

Uganda’s Power Generation is diversified across five (5) different sources including; Hydro, Solar Energy, Thermal, Cogeneration and Biomass.

The Generation segment of the Electricity Supply Industry has a combination of the Government of Uganda-owned power plants, Independent Power Producers (IPPs), and Public-Private Partnerships (PPPs).

This sub-Sector has grown from three (3) Generation Plants in 2001 to over 44 Plants and is still growing.

The increase in capacity over the past two years followed the commissioning of 183 MW Isimba hydropower project on 21 March 2019, Achwa II (42 MW) hydropower plant 30th September 2019, Ndugutu hydropower plant 1st October 2019, Siti II (16.5 MW), Kyambura(7.6MW) and Sindila hydropower plant in April 2019 and commissioning of Nyamagasani II small HPP in February 2021 with most of the small Hydropower plants supported by the Development Partners through the GETFIT program.

The total installed generation capacity is expected to increase to over 1900MW by mid - 2022, following the commissioning of 600MW Karuma hydropower plant and other small hydro plants under construction, (Nyamagasani 1, Achwa 1, Kakaka, and Kikagati).

Transimission

The transmission network totals a length of 3,100.5km consisting of 220kV, 132kV and 66kV transmission lines and 25 primary Substations with a total capacity of 2869.5 MVA across the country by the end of June 2021.

Government under the Sustainable Energy Development Programme continues to priorities the Construction of transmission lines and their associated substations targeting supply to industrial parks, mining areas, tourism attractions, regional balancing and regional interconnections to enable power exchange with our neighbours.

The Ministry has prioritized improved power supply reliability through power systems infrastructure improvement and refurbishment of power lines, transformer injections, grid intensification and densification which target the underserved areas.

Most recently we completed the 132kV Opuyo - Moroto transmission power line that was energized on Friday, 9th July 2021.

The 132kV double circuit transmission line covers 162 km traversing the districts of Soroti, Amuria, Katakwi, Napak and Moroto and comes along with a new substation at Moroto.

This achievement will support the development of major industries as well as increase electricity demand in the area.

The region already has the Tororo cement and Mable factories in Moroto district amongst other upcoming minerals related industries.

The 400kV Kawanda – Karuma transmission line and 400kV Kuruma – Olwiyo line are expected to be commissioned by end of October 2021 to evacuate power from Karuma dam.

The two transmission lines will also provide alternatives to power going to Gulu and environs.

The sector continues to develop other transmission projects like the 132kV Kole – Gulu – Nebbi – Arua transmission line and the 132kV Gulu – Agago/Achwa transmission line that will connect West Nile on the national grid and provide reliable power supply to Greater North.

Distribution

As a way of growing Access to Clean Energy across the country, there are several Electricity Distribution Operators licensed by the Electricity Regulatory Authority (ERA) to serve the hitherto unserved and predominantly rural community.

The number of Electricity Distribution Companies now stands at seven and these are: Umeme Limited, West Nile Rural Electrification Company (WENRECo), Uganda Electricity Distribution Company Limited (UEDCL), Kyegegwa Rural Energy Co-operative Society (KRECS), Pader-Abim Community Multi-Purpose Electric Co-operative Society (PACMECS), Kilembe Investments Limited (KIL), and Kalangala Infrastructure Services Limited (KIS).

These companies are operating in various regions of the country, which has increased access to Electricity.

There are several other small off-grid service providers and private providers of solar home systems.

This has improved access to 57% (19% on the grid and 38% off-grid) according to the 2019/2020 access statistics released by the Uganda Bureau of Statistics.

The electricity connections policy

Government is implementing the Electricity Connections Policy (2018 -2027) whose goal is to achieve 60% electricity access to grid electricity in Uganda by 2027.

The Government pays the cost of electricity connection materials, enabling citizens that are ready for electricity consumption to access free connection materials.

Of the targeted annual connections of 300,000 connections, to date 299,843 have been realized as of the end of June 2021.

A total of 1,502 new connections were registered between April and June 2021.

The annual budget required to implement ECP is estimated to be UGX. 200 billion to be contributed by Government and Development Partners. By December 2020, over 290,000 connections had been implemented under the ECP.

It ought to be noted that towards the end of 2020, the policy was suspended due to the overwhelming demand yet funds were limited.

When Government accumulated arrears of UGX.103.408 billion, the Service Providers were unwilling to make more new connections before Government settling the arrears.

Meanwhile, requests for new consumer connections continued accumulating and by 7th December 2020, there was a backlog of 200,500 applications for new electricity connections.

The ECP was however resumed in March 2021 and connections have since resumed, with a dual connection system where customers with the ability to pay for their connections can pay in three days without waiting as Government mobilizes additional resources for the ECP to clear the backlog.

Cabinet approved the resumption of ECP considering that the Government had procured 87,500 no-pole connection materials worth USD11,550,000 utilizing funds from the ongoing African Development Bank Access project while procurement of 62,400 no-pole connection materials from the same project are under process.

Procurement of 234,989 no-pole connection materials utilizing funds from the Exim Bank of China Access project (under TBEA contract) is also ongoing and these materials are expected in August 2021.

This is therefore to confirm Government commitment to increase access to clean energy in line with the NDP-III.

Affordable tariff strategies

Over the recent years, Government has implemented various measures to continuously reduce the end-user tariffs for all Electricity consumers.

Some of the implemented and planned measures include;

a) Debt refinancing of Bujagali Hydro Power Plant. In June 2018, Government finalized debt refinancing of the Bujagali Hydro Power Plant – reducing the extra-large industrial consumer category tariff to US cents 8.0/kWh and USD cents 5/kWh at an off-peak time of use period.

b) Distribution Efficiency. The energy losses by Umeme Limited has reduced from 27% in 2011 to a Target of 14% in 2021.

c) Implementation of extra-large customer category. In 2017, MEMD implemented the extra-large industrial consumer category.

This consumer category includes 43 industries; consuming 27% of the electricity and the overall cost structure and competitiveness is very sensitive to the cost of electricity.

d) Public financing of large Hydro Power Projects. Government financed Karuma and Isimba Hydro Power Plants.

Isimba was commissioned in April 2019 and Karuma is expected to be commissioned in June 2022.

The Tariff for both Karuma and Isimba are less than USD cents 5/kWh during the loan repayment period and will be less than USD cents 1.2 after the loan repayment.

e) Rebate policy. MEMD has implemented the rebate policy where consumers who finance construction of electrical installation and refunded through a rebate against the electricity bills/invoice.

This has reduced the turnaround time for industrial new connection.

Additional Demand estimated at 60MW is being implemented under the rebate.

f) Declining Block Tariff. MEMD has implemented a declining Block Tariff for Large and extra-large industrial consumers – where the tariff reduces as industries consume more electricity based on predetermined consumption threshold.

g) Hedging of Foreign exchange risk. The fluctuation of the exchange rate of the Uganda Shilling against the United States Dollar is one of the biggest challenges affecting financial sustainability of the ESI. MEMD has commence a pilot foreign exchange hedging of Power Purchase costs amounting to US$ 1 million per month effective January 2021.

h) Improvement of Reliability and Quality of Electricity Supply. The MEMD has determined a new set of minimum standards of reliability and quality of electricity supply for Umeme Limited and UETCL – based on the financial reward and penalty structure.

i) Engagement with Uganda Manufacturers Association (UMA). The Ministry and its Agencies holds quarterly meetings with UMA to discuss; (1) power reliability challenges faced individual industrial consumers, (2) electricity tariff trajectory, (3) demand growth initiatives, (4) ESI investment plans, (5) implementation of directives by H.E in respect to electricity tariffs.

j) Charcoal to Power initiatives. The MEMD has commenced implementation of pilot projects towards ensuring Ugandans and institutions use electricity for cooking.

My Ministry is spearheading the amendment of the Electricity Act 1999 to provide for purchase of electricity directly from generators and/ or Transmission Company by big industrial customers to reduce the end-user tariff for manufacturers starting with those in the proximity of transmission infrastructures.

The renewable energy component

The Ministry continues to promote sustainable utilization and development of renewable energy resources for social, environmental, and economic benefits of Ugandans.

Some of the projects the Ministry has supported include; Pico Hydro (Kasese), Solar Mini Grids (Lamwo, Isingiro, Buvuma, Kasese and Rubirinzi, and the Albertine region); Solar food dryers (Kayunga and Luweero); Solar coffee dryers (Kasese); Solar Street lights (Tororo, Busia, Mukono, Buikwe, Bushenyi and Manafa); Under the Energy for Rural Transformation Programme phase II and phase III we have had over 100 schools (89 yet to go), 829 Health Centres (with 117 yet to go) and 71 water pumping stations, across the country electrified.

In regards to Wind Technology, the ministry has supported the repair of Windmills for water pumping in the Karamoja sub-region, and the installation of Pilot small wind turbines in schools and communities (Kotido, Napak, Namayingo and Kaberamaido). This is in addition to the licensed 20MW wind power plant soon to start construction.

The Ministry is also promoting modern energy services for cooking (improved stoves, sustainably produced charcoal, ethanol for cooking (EFC), gasifiers, solar water heaters, fuelwood substitution by LPG), waste to energy programme, and biofuels. Over 50 bio latrines have been constructed in schools as demonstrations.

Improved woodstoves, charcoal stoves, institutional and household stoves, baking ovens, kilns (lime, charcoal, and bricks), Casamance, and household biogas systems have been promoted, demonstrated and disseminated across the country.

Health, safety and environment compliance of sector activities

The Energy Sector carries out environmental and social impact assessments for all projects in line with the National Environment Act, No.5, 2019.

A Multi-sectoral monitoring team is in place led by the National Environment Management Authority that supports compliance monitoring of the project activities.

Monthly meetings and weekly toolbox meetings take place at the projects site in line with the environment and social management plans for each project.

Compliance and enforcement Environmental Audits are carried out for the various projects. Catchment protection, biodiversity monitoring and Biodiversity offset are implemented to ensure conservation and sustainable management of resources within the project areas.

On the safety considerations, personal protective equipment is given to the workers in the sector based on the risk assessment carried out for the project works and activities implemented in line with the Occupational safety and health act, 2006.

Incidents and fatalities are recorded and investigated to support implementation of corrective actions and prevention of future occurrence. HIV/AIDs awareness is carried out with support from the existing health centres in the project areas.

Implementation of Resettlement Action Plans, Livelihood restorations plans and community development action plans are implemented to ensure social acceptance and improve on the livelihoods of the communities in the areas of operations.

Gender considerations and human rights aspects are monitored to prevent gender-based violence and violence against children is prevented and where it happens it is reported, investigated and culprits apprehended.

Challenges

In implementing its mandate, however, the sector faces a number of challenges hampering progress:

a. Way Leave Acquisition: Several electricity projects such as line extensions have been delayed or totally put on hold because of the issue of compensation and wayleaves. We trust that an amendment in the land law will consider this issue and provide public services like electricity the much-needed opportunity for a faster turnaround of protects.

b. Vandalism of Electricity Infrastructures: Vandalism continues to cost the sector billions of Shillings. As you are aware, in recent times the nation was plunged into a blackout (National power outage) because of selfish people who cut down power supply infrastructure.

Others just cut down infrastructure out of malice and others to syphon transformer oil.

To mitigate this vice, we have requested for the services of the UPDF to guard key electricity infrastructure such as transmission towers and substations.

This in addition to amendment of the Electricity Act to criminalize vandalism of electricity infrastructure is hoped to tame the vice.

C. Heavy Capital Needed: As you all are aware, the electricity sub-sector is a capital intensive one. Investment in this sub-sector requires hundreds of millions of dollars, making us compete for the national resources with the other public services such as health, education and agriculture support.

In fact, it’s this capital-intensive nature that informed government’s decision to liberalize the sub-sector to attract private capital as GOU concentrates on the provision of other services.

d. Power Theft: The sector has for a while struggled with power thefts. When we introduced prepayment metering, we moved a long in reducing this vice.

However, the vice hasn’t died out completely but with the establishment of the Utilities Court, several people have been arrested, prosecuted and jailed.

I implore Ugandans to stay away from electricity theft. In several places, it has caused fires that have razzed down people’s home as well as led to fatalities.

The government of Uganda is addressing these challenges to ensure reliable and equitable supply of energy to the people of Uganda.

I appeal to the general public to support Government in ensuring development of power infrastructure by allowing us to go through your land. Any project delayed is the service delayed to the area the project is intended to serve.

We also appeal to the general public to report vandalism to enable the power infrastructure to maintain its integrity to serve the intended purposes.

Dr. Ruth Nankabirwa Sentamu is the minister of Energy And Mineral Development

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