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Consumers hope for more as Umeme ramps up investments

The new upgraded Gulu substation

The new upgraded Gulu substation

Umeme Limited says there has been a huge improvement in power supply over the last couple of weeks as most of the investments it made last year start bearing results.

Selestino Babungi, the managing director of Umeme Limited, says, “What we have seen is where we have done these investments, the dividends are already coming through in terms of improvement of reliability of supply. You will note that in the period of January through the elections, power has been reliable across the country.”

Daniel Birungi, the executive director of the Uganda Manufacturers Association, says it would be insane to dispute the major improvement in Uganda’s electricity supply industry over the last 15 years.

“Definitely, there has been a major improvement. We have seen new innovations, such as the disaggregation of consumption into extra large, large, medium and domestic consumers. This has been critical in driving productivity among the large consumers. We have also seen the rebate system and the declining block tariff, which have supported productivity,” he said.

Birungi speaks for some of the largest consumers of electricity in Uganda, who are part of the association he heads. And yet, he says more can be done.

“We see a number of challenges. As the production capacity grows, we are seeing a number of power outages. This distorts our planning processes.” Babungi says that ensuring that customers enjoy reliable power supply is one of the Umeme’s core goals.

NEW EQUIPMENT

“Reliability of supply is the single most important value proposition to our customer… last year we implemented a capital investment programme of $80 million and part of that investment programme involved injecting in new equipment,” he said in a statement recently.

That money is part of the nearly $700 million that Umeme says it has invested over the last 15 years of its operations in Uganda. Umeme’s investments last year mainly went into building new substations – seven in total – which helped to step down electricity from the transmission lines and passed onto distribution lines and into customer premises.

A number of these investments were approved under the Electricity (Approval and Verification of Investments) Regulations, 2020, a blueprint that guides the Electricity Regulatory Authority on what kind of investments the licensees intend to take in their five-year plan.

Eskom is one of those licensees that have invested quite a bit of money at its Nalubaale and Kiira hydropower generation complex. In the past three years, between 2018 and 2020, Eskom invested $133 million (about Shs 50bn) in both the Nalubaale and Kiira power plants in order to improve their operation capacity, as well as increase the lifespan of Nalubaale

“Many of the projects are replacements done with upgrade in mind to preserve the assets and improve operational efficiency in line with prudent utility practices,” the company said in a statement. It added.  

“This investment is to ensure that plant performance is enhanced for the long term so as to maintain power production. As a result, Nalubaale Plant performance has remained steady, which is important to the sector and economy since Nalubaale provides the cheapest power to the grid...” Emmanuel Njuki, the corporate affairs manager, Eskom Uganda Limited, said they are “proud of these investments because they are a testament to our commitment to our mandate to operate and maintain Kiira  and Nalubaale Power Plants 18 years on.”

He explained that “Nalubaale is also a historical asset, launched in 1954, and our maintenance and investment into it has given it another 30 years of active life. This means that Ugandans can be assured of a constant supply of affordable power from the Eskom-managed plants.”

Birungi says the numbers on investments in the electricity supply industry are colourful, but it was about time the challenges in the sector are resolved at individual and company levels. One of Birungi’s key issues is the abrupt power outage.

“When we ask for timelines of when the power will be back on after an outage, we have noticed fluffing on the other side (distribution side). This has raised the costs of production. Remember, I have to pay the workers, whether the machines are running or not, as long as they report to duty,” he said.

To put the problem into context, Birungi pointed to the cement industry as an example.

“If power goes off while there is a batch of cement in the production line, that batch goes bad. And that is a loss to the company.” Birungi added: “We keep telling Umeme to alert us of when there would be a shutdown. But many times, power goes off abruptly. What we are saying is that let us have discussions that address individual member challenges, and not at an industry level. This way, if a factory is affected by unreliable power supply, Umeme compensates it.”

That is an idea that Irene Adakun, the manager at Boma hotel in Gulu district, might warm up to. She says power is still an issue.

“We have scheduled power cuts on Wednesdays and Fridays. And that is costly to us,” she says. The scheduled power cuts can go from 8am to late in the evening, she adds. “And do you know what that means?,” she asks.

“At least 20 litres of fuel per day!” she answers. With a litre of diesel going for an average of Shs 3,500, the total bill is Shs 70,000 per day, aside from the noise and fumes that the visitors will have to come to terms with.

PRICE OF PRODUCTS

For many businesses, electricity accounts for nearly 30 per cent of the total costs, according to what some experts say. However, that figure shoots higher for businesses such as Boma hotel that experience frequent scheduled power cuts. Covering up those costs in order to record a profit can be a headache.

The easier formula is to pass the cost of production to the final consumer by raising the price of the products sold. The harder part is finding the buyer of that expensive product. Robert Opit, the owner of Chereleno Millers, also in Gulu, says he “cannot sell my flour especially now when people don’t have money. We need government to help us on the costs of power.”

He, regardless, says work at the factory nowadays can go uninterrupted for longer hours on some days due to the reliability of electricity. Umeme Limited says it is gradually turning around the situation so that businesses can spend less money on costs.

Recently, the company’s officials held meetings in Gulu, Lira and Kitgum and met customers over “the scheduled supply reliability improvements projects and the likely short-term impact in terms of outages and supply interruptions to customers.”

The company announced that “as such, this will affect supply in the entire northern region. All the shutdowns will run from 08:00am to 06:00 on the scheduled days.”

Umeme says it is upgrading some substations in Gulu and Lira to be able to improve supply. It added that it is putting in place measures to be able to distribute power from the new Achwa hydropower plant located in northern Uganda. Adakun of Boma hotel says these forms of communications from Umeme are good as they create an environment of predictability.

“At least I plan when to buy fuel,” she says. Elsewhere across the country, Umeme remains busy. The company says it has spent about $3.4 million in distribution lines to evacuate electricity from the new Mukono North power transmission substation in Mbalala, near Kampala.

The company says these distribution lines will link large consumers such as National Water’s Katosi water pumping station, Tian Tang factory, and Kampala Cement Factory, among others. In Western Uganda, Umeme will target areas such as the Sino Uganda Modern Economic Industrial zone located in Nshara, near Mbarara, which will have a number of factories.

Umeme’s Babungi says the company has “already acquired land in Lyantonde district to put up a switching station. The switching station will stabilize power supply to Lyantonde, Amos Dairies, and the industrial park so that there is enough flexibility to get power from Masaka or Mbarara simultaneously without any delays in case of any outages.”

Stephen Kaboyo, the chairman of Sino Uganda Modern Economic Industrial zone, says some businesses in the park have already set up their units and are awaiting power to start operating. He asked Umeme to speed up the construction of the distribution lines in the area.

Consumers in some parts of Eastern Uganda are also seeing improvements in their electricity reliability after Umeme put up distribution lines from the Siti hydropower project to Tororo, a switching station in the Mbale industrial park and upgraded the Mbale substation.

Adakun is hopeful that all the investments planned for northern Uganda will turn around her fortunes, especially when the 600MW Karuma hydropower dam is launched sometime this year. “We are hopeful that life will get better. It is this hope we live on and it is what keeps us going,” she said.

jeff@observer.ug

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