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Strategic plan to increase power supply pays dividends

By Vision Reporter

Added 9th October 2012 01:34 PM

About 150MW of additional thermal power plants were installed to provide relief to the consumers at Lugogo, Mutundwe and Kiira sub-stations, the Government also procured the 50MW Namanve Jacobsen Heavy Fuel thermal plant.

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About 150MW of additional thermal power plants were installed to provide relief to the consumers at Lugogo, Mutundwe and Kiira sub-stations, the Government also procured the 50MW Namanve Jacobsen Heavy Fuel thermal plant.

By Ibrahim Kasita

The period between 2003 and 2007 will always remain memorable in the history of Uganda’s electricity sector.

This is because a prolonged drought affected operations of the country’s main source of electricity, the Owen Falls Dam.

The poor hydrology led to a substantial decrease in electricity output. Power supply deficit was up to 210megawatts (MW), causing a 24-hour loadshedding.

Acute electricity supply shortage negatively impacted the gross domestic product (GDP), dropping at the rate of 1.5% per annum.

In spite of the decline in generation, demand for electricity continued to grow, widening the gap. Peak demand reached 380MW.

Strategic plan

Clearly, lack of new generation plants to match the demand of electricity, coupled with prolonged drought, led to irregular and expensive power supply.

Then the energy ministry in 2006 prepared a plan to meet the shortfall in electricity supply in the short, medium and long terms.

The broad objective was not only to provide adequate and reliable power supply, but to also anticipate new electricity demand ahead instead of the old approach of chasing demand forecasts.

The short-term measures involved procurement of thermal generation to provide temporary relief.

About 150MW of additional thermal power plants were installed to provide relief to the consumers at Lugogo, Mutundwe and Kiira sub-stations, the Government also procured the 50MW Namanve Jacobsen Heavy Fuel thermal plant.

However, the stop-gap measures were at a cost. Power became expensive, forcing the Government to subsidise up to $9.5m every month despite increase in the end-user tariffs.

The introduction of thermal power generation in the energy mix was combined with aggressive energy loss reduction strategy and an energy efficiency/ demand side management.

To improve energy efficiency, the 800,000 energy-saving bulbs were procured at a cost of $1.2m and distributed freely to households. About 30-megawatts were saved under this scheme.

The energy ministry also carried out energy audits in various industries, commercial buildings and institutions.

Bujagali hydropower project

The medium-term strategy involved the development of the 250MW Bujagali Hydropower Project on River Nile. Construction work of this project started in May 2007, and the plant was fully commissioned in July 2012.

The Bujagali project has doubled the electricity supply and is meeting about 49% of the energy needs, reducing load-shedding and replacing the entire expensive thermal power generation.

It will spur economic growth and considerably improve the lives of the population. Effectively, consumers will not experience loadshedding at any time as power deficit has been wiped out –at least for the next 24 months.

The plant was commissioned unit-byunit basis in response to energy ministry’s strategic decision to replace the expensive thermal power generation at the earliest date and minimise loadshedding.

This was aimed at saving the money that was used to pay the expensive thermal power operations. The level of subsidy (payment for thermal power) had reached unsustainable levels and the cumulative amount of subsidy paid out was sh1.5 trillion.

The other medium-term measure was to promote construction of small hydropower plants peppered around the country. Indeed, a number of small hydropower project have been completed and commissioned.

Mini power dams

Less than a month ago, President Yoweri Museveni switched on the 3.5MW Nyagak Hydropower Plant, which supplies the West Nile off-grid region.

Other plants commissioned recently and delivering power to the national grid are the 18MW Mpanga small hydropower station, the 13MW Bugoye small hydropower station, the 6.5MW Ishasha mini-hydro and the 5MW Mubuku mini-hydro are all operational.

Other small hydropower project on the pipeline includes 9MW Buseruka hydropower project expected to be commissioned next month, 16MW Kikagati min-hdyro project, 14MW Nyamwamba small hydropower project and 35MW Nshungyezi mini-hydropower project.

It is estimated that there are over 50 small hydro sites peppered around the country, which can generate a total of 200MW to supplement bigger projects on the River Nile.

“Substantial efforts have been made to promote renewable energy development,” Eng. Irene Muloni, the energy minister, said. “Starting with the Renewable Energy Policy of 2007, other interventions have included the development of feed-in tariffs.

We are working with development partners to ensure that development of renewable energy becomes even more attractive to the private sector.”

The Government set up the Uganda Energy Credit Capitalisation Company (UECCC) for the purpose of managing and administering the Uganda Energy Capitalisation Trust (the Trust).

The trust’s main function is to enhance the flow of private sector financing resources towards small scale renewable energy projects with a capacity of up to 20MW and/or rural electrification projects in Uganda.

The energy ministry is now focused on the construction of the 600MW Karuma Hydropower project. The project and its associated transmission line will be constructed using resources from the energy fund as a public project.

 A detailed project feasibility study and engineering designs have been concluded. The procurement process to acquire a contractor to undertake the construction is ongoing.

The long-term interventions are the development of 188MW Isimba Hydropower Project, use of indigenous petroleum resources for thermal generation, renewable energy generation projects and use of solar photo voltaic and solar water heaters.

Use of biogas, improved efficiency stoves to cater for rural energy requirements and production of electricity from municipal waste for sale of power into the grid will be enhanced.

600MW Karuma dam project next

The Government plans to build 600MW Ayago hydropower project on River Nile. The  prefeasibility studies were completed in 2011 with the support of the Japanese government.

The project will be developed as a public-private partnership. Uganda carried out reforms in the electricity sector that resulted into the unbundling of Uganda Electricity Board into generation, transmission and distribution entities.

The reforms have subsequently defined the existing institutional, legal and policy framework, as well as the market structure.

In 1997, the Government formulated a comprehensive and detailed strategic plan and energy policy for transforming the Uganda power sector into a financially-viable electricity

Early power reforms

The strategic plan was only possible because of the earlier power reforms that Uganda undertook with the following objectives:

*Making the power sector financially viable and able to perform without subsidies from the budget and moving to cost reflective tariffs.

*Increasing the sector’s efficiency.

*Improving the sector’s. commercial performance.

*Meeting the growing demand for electricity and increasing coverage.

*Improving the reliability  and quality of electricity supply.

*Attracting private investment.

A new Electricity Act was enacted in 1999 and this provided for the establishment of an independent regulator.

The regulator is responsible for setting tariffs and other charges, issuing licences for generation, distribution and transmission, regulating the quality of services and technical standards and enforcing compliance.

In 2001, the assets, liability and operations of the UEB were transferred to separate limited liability companies for generation, transmission and distribution.

The successor companies were registered in accordance with the Companies’ Act under the following names; Uganda Electricity Distribution Company Limited (UEDCL), Uganda Electricity Transmission Company Limited (UETCL) and Uganda Electricity Generation Company (UEGCL).

UEDCL owns the electricity supply infrastructure operating at 33kv and below. Its assets were leased to UMEME in 2005 under a 20-year concession.

UETCL owns and operates the grid connected electricity supply infrastructure operating above 33kv. It is the only company responsible for buying power in bulk from generators and selling it to distribution companies.

UEGCL owns the Kiira and Nalubaale hydropower stations. Its generation assets were leased to Eskom Uganda Limited in April 2003 under a concession agreement.

The Electricity Act also set up a Rural Electrification Fund to promote rural  electrification.

The fund is administered by the Rural Electrification Agency. The Act also established a tribunal to handle any electricity dispute. It is operational.


Competition was introduced through licensing of independent from page 20 power producers. This has attracted a number of private sector-led investments in the electricity sector.

They include the $860m Bujagali hydropower project, $15m upgrade of Nalubaale hydropower station, close to $100m in upgrading distribution network.

A number of small hydropower plants like Bugoye, Kisizi, Mpanga and Nyagak have been commissioned. Others planned to be constructed are Kikagati, Naki, Nyamwmba, Nshungyezi, Musizi and Maziba.

This has increased electricity supply enough to meet the current demand. The current installed electricity capacity is 800MW compared to 150MW.

Uganda used to produce in the 1960s. Under the rural electrification programme, the Government has put emphasis on connecting electricity to district headquarters, productive centres like factories and trading centres and social services such as health centres, educational institutions and water supply points.


The biggest challenge, however, is increasing power supply, reduce power losses and provide power at affordable tariffs. Local banks are unwilling to undertake long-term lending to power projects. There is also lack of ready projects with accomplished feasibility studies.

There has been difficulty in bringing all stakeholders on board to embrace the power sector reforms.

Fuel supply constraints inhibit thermal power generation. Regarding accessing electricity the major constraint is the inability, mainly of the rural and peri-urban dwellers, to afford connection costs.


A lot has been achieved in the electricity sector in the last 50 years despite the governance problems Uganda experienced in the 1970s and 1980s.

Strategic plan to increase power supply pays dividends

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