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WENRECO to resume operations

By Vision Reporter

Added 18th April 2009 03:00 AM

THE West Nile Rural Electrification Company (WENRECO) will resume generating and supplying power to Arua and Nebbi districts under new terms after the Government agreed to provide money to fuel the 1.5 megawatts (MW) thermal plant.

By Ibrahim Kasita

THE West Nile Rural Electrification Company (WENRECO) will resume generating and supplying power to Arua and Nebbi districts under new terms after the Government agreed to provide money to fuel the 1.5 megawatts (MW) thermal plant.

Power is expected by the end of this month, Hillary Onek, the energy minister, confirmed on Friday that they had agreed with WENRECO to resume work.

The move follows last week’s report in The New Vision that disclosed that WENRECO had been hit by a cash crisis, threatening the $12m rural electrification project.
The Government and the Industrial Promotion Services (IPS-Kenya) owned by the Aga Khan Foundation agreed to put up a 1.5MW heavy-fuel thermal plant to extend electricity to West Nile.

Another 5MW small hydro-power project was to be built on River Nyagak. A special purpose company – West Nile Rural Electrification Company (WENRECO) – was formed to operate the two projects intended to extend power to off-grid areas.

The construction of the hydro power that started in July, 2006 and was expected to be commissioned by March, 2008, stopped due to lack of money. WENRECO also closed down the thermal plant in mid-March arguing that its earnings were no longer sufficient to sustain the firm’s operations, including procurement of heavy-fuel oil to run the 1.5MW generator.

The generator that serves Arua and Nebbi districts consumes 300 litres of heavy fuel oil per hour. At the time of its installation in May 2005, residents were receiving power for 18 hours.

This has over the past year reduced to barely four hours a day. Installation of the generator was intended to serve as a base load plant during the construction phase of Nyagak mini-hydro-electric dam and later as a peak back-up plant once the hydro dam was operational. The dam in Nebbi district is, however, two years behind schedule.

This prompted the Electricity Regulatory Authority (ERA) to give WENRECO a notice to show cause why its licence issued in March 2003 to generate, distribute and sell electricity in the West Nile region should not be revoked.

It accused WENRECO of failing in its obligation to supply power for 18 hours every day. “And from March 10, 2009, WENRECO ceased supply altogether in breach of this licence obligation,” ERA said in a statement.

On the customer connection obligation, ERA said WENRECO was expected to add at least 500 new clients in the first year of operation, but failed.

“Additionally, WENRECO had to have connected cummulatively 400 new clients to the grid by March 2008, which was not accomplished in breach of the existing licence obligation,” ERA added.

ERA also accused WENRECO of failure to develop and commission the 5MW Nyagak mini-hydropower project by March 2006.

“The authority believes that WENRECO may not be in position to complete this project in spite of the numerous reasons they have advanced,” ERA concluded.

However, WENRECO blamed its woes on the Government for delays in releasing subsidies, non-payment of electricity bills and failure to implement the tax exemption clause. But the state accused WENRECO of “dishonesty.”

It also asked the Auditor-General to go through WENRECO’s books to see how they used the money earlier allocated before more could be released.

However, the stalemate was resolved after the energy ministry, the Rural Electrification Agency (REA) and ERA convened an emergency meeting with WENRECO to resolve the impasse.

A legal framework document will enable the Government provide fuel to the WENRECO for the operation of the heavy-fuel oil thermal plant.
Under the new terms and conditions, the subsidy is available for only operations of the heavy fuel plant and will be in form of fuel on a monthly basis.

The Government through REA will also have a monitory role on the monthly revenue of WENRECO that is collected from consumers.

“The monthly revenue is to be deposited to an Escrow Account that is to be jointly operated by REA and WENRECO as signatories. Monthly revenue will be used for operations and for purchasing fuel.

However, if there is a shortfall of the fuel, REA/Government will cover the shortfall,” part of the document said.
The Government through REA will continue subsidising shortfalls by purchasing fuel for the plant till the hydro-power plant at Nyagak comes online.

Reflection of the Government subsidy in the electricity tariffs to consumers should be worked out, the document demanded.

The new terms of the agreement followed accusations and counter-accusations between the Government and WENRECO that had brought a promising rural electrification project worth $12m to a standstill.

WENRECO to resume operations

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