MPs considering sh140b energy sector loans

By Moses Walubiri

The parliamentary committees on National Economy and that of Natural Resources on Tuesday began scrutinizing three loan requests meant for the energy sector as part of government’s concerted effort to make access to affordable electricity the flagship of the country’s economic blueprint – Vision 2040.

Legislators on the two committees met a delegation from Uganda Electricity Transmission Company Ltd (UETCL), Rural Electrification Agency and Ministry of Energy and Mineral Development led by energy state minister, Simon D’Ujanga, over the specifics of the loans.

Part of these loans will, according to D’Ujanga, be used to revamp dilapidated infrastructure like substations and erection of transmission lines as part of the ongoing Energy for Rural Transformation project.

These loans include $USD23m (sh59.5b) from the French Agency for Development (AFD), $USD12m (sh31b) from the International Development Association (IDA) and $USD15m (sh50.5b) from German Reconstruction Credit Institute (KFW).

The sh59b AFD loan component will be expended on Hoima-Nkenda power transmission line and associated power substation as part of a sh136b ambitious project, with grants from the French Development Agency and the Norwegian government.

According to UETCL’s Manager Project Implementation John Othieno, the transmission infrastructure bankrolled by the AFD loan will be key in evacuating power generated from surrounding mini power plants at Buseruka (9MW), Kinyara (40MW), Muzizi and Kabaale (50MW) “to the load centres of Hoima, Fort-Portal, Kasese and the rest of the grid.”

MPs heard that part of the crude oil from the country’s oil sector will be used to generate power at Kabaale which is expected to hit 100MW mark at peak hours.

The KFW loan is part of a Euro 24m (about 79b) government project to construct Kampala –Entebbe transmission line and associated substation to stop the intermittent power blackouts in Entebbe town and its environs due to derelict infrastructure.

D’Ujanga told MPs that residential, commercial and industrial electricity consumers in Entebbe are served by two overloaded 33 KV substations which keep breaking down.

“The energy infrastructure built in the 1950s cannot handle energy demands in Entebbe. The airport alone can consume half of it,” D’Ujanga said.

The IDA loan, MPs heard, will be expended on the second phase of the Energy for Rural Transformation (ERT) which is aimed at increasing access to energy and Information and Communication Technology (ICT).

The loan component will see the construction and commissioning of distribution lines for Soroti-Katakwi-Amuria; Ayer-Kamudini-Bobi-Minakulu; Ibanda-Kazo-Rushere; and Gulu-Acholibur.

Other areas to be connected to the national grid include, Opeta-Achokora; Masindi-Waki-Bulisa, Ruhiira Millennium Village, Nkonge-Kashozi and Ntenjeru and its environs.

However, MPs Alex Ruhunda tasked the minister to explain mechanisms put in place to ensure that the investment “benefits Ugandans and not be used by UMEME to make abnormal profits.”

While submitting the IDA and KFW loan requests to the house early this month, Finance State Minister in charge of investments, Aston Kajara said Uganda’s total debt stock as of June 2012 was at sh13.7 trillion, or 27.6 of GDP which he described as “sustainable” on account of prospects of large oil revenues.

Through its Poverty Eradication Plan and Later National Development Plan, increasing access to electricity has remained a central plank of government’s strategy to fight poverty through encouraging value addition on agricultural products using small scale industries.

However, although government seeks to have universal access to electricity by 2035, rural access to electricity as of 2010 was at a mere 4%.