The debate around the need to power homes and industries in Uganda is shifting towards finding quick solutions on how to create a large customer base for electricity, less than a year before the country nearly doubles the amount of electricity on the grid, writes JEFF MBANGA.
The failure to create this customer base will see the country paying huge amounts of money to private power producers for electricity that is not being consumed by the public.
With Karuma and Isimba hydropower dams set for commissioning early next year – bringing to the national grid a combined capacity of 783MW – and other smaller plants being launched, there are questions as to whether this lot can be consumed by the public.
“If industrialists don’t come through, there could be a countrywide burden because someone has to pay for this power,” Valentine Katabira, the deputy chief executive officer of the Uganda Electricity Transmission Company Limited, said.
“We are trying to do studies on how we can tap into South Sudan,” he added.
Katabira was speaking at the second executive forum on electricity supply in Uganda at the Kampala Serena hotel, which was organized by the Electricity Regulatory Authority.
Katabira also said the government was considering scrapping the take-or-pay model for power projects, where private power producers are paid their money regardless of whether the power they generate is consumed or not. He said government was exploring other options that don’t place a higher burden on it in times of low consumption.
According to official government figures, the country needs about $650 million over five years to stimulate the growth in demand to consume the power coming on the grid. This money is supposed to be spread out in the electricity transmission and distribution infrastructure.
Official government figures show that Uganda has installed generation capacity of 930MW. The system peak demand of the country is 637MW. The annual average power demand growth is estimated at 5.3 per cent. Just over 20 per cent of Uganda’s 37 million people has access to power, with the percentage dropping to less than 10 in the rural areas.
Supporting industries to take up more power and then ultimately stimulate the industrialization that the government craves requires a number of strategies. The Electricity Regulatory Authority added a fifth segment in its tariff classes – the extra large industries – in order to support the industries. The extra large industries pay the cheapest tariff among all the segments.
But private sector players desire more. Farhan Nakhooda, the projects director at Madhvani Group, while speaking at the same forum, said there was a need for government to offer the private sector more tax incentives so that they can increase their capacity to consume this power.
At the moment, the Usukuru industrial complex in Tororo is set to be one of the biggest consumers of electricity in Uganda. The complex will need 120MW before the end of this year, with that amount shooting to 200MW at full commissioning.
At the regional level, Kathrin Kaestle, the former senior project manager of KfW Uganda, one of the biggest financiers of power projects in the country, said while regional markets offer a good option on creating demand, there was a need for some caution.
“South Sudan and the Democratic Republic of Congo are still fragile. It is still too early to gauge the kind of demand that can come from there,” she said.
In terms of increasing local demand, Isaac Serwadda, the head of capital projects at Umeme, said there was need for a drive to boost the business potential of these areas. One of his suggestions was the need to create agricultural zones, where farmers can create a strong network to consume more power.
Serwadda also added that there was need for the Rural Electrification Agency to put up smaller substations to increase the quality of the power output in rural areas.
Robert Kasande, the permanent secretary at the ministry of Energy, while presiding over the forum, said it was imperative that the electricity industry players adopted a culture of speaking with one voice and working together to solve their problems.