Isimba could herald a brighter future for electricity sector

By Harrison Mutikanga

The commissioning of the 183MW Isimba hydropower dam is no mean feat and could prove an indicator of good things to come for the sector, which is only just beginning to meet growing demand.

Just to tick off some facts, the commissioning of the plant will increase current generation capacity by 30 percent, lower average generation costs in the industry, has provided jobs for 3000 during construction and is set to create 1,500 direct and indirect jobs during its operation.

In addition, it will mitigate climate change through the reduction of carbon dioxide emissions, has and will provide useful knowledge transfers and create a new tourist attraction from the new reservoir that has been created.

The challenges of the sector are many and deep seated but for a long time the main challenge has been lack of inadequate power generation and efforts, at least publically, have been directed towards remedying this situation.

Now that that situation has been alleviated other issues are going to come to the fore.

I will speak for Uganda Electricity Generation Company Ltd (UEGCL) but many of our challenges are crosscutting and need to be addressed, preferably concurrently, to ensure the long term sustainability of the whole sector.

For a while now we have lobbied to have the current status quo changed to permit us full cost recovery from the tariff. As it stands now our tariff is not priced to cater for plant sustainability and business growth.

As we take over Isimba this issue assumes greater urgency. If the current status is maintained depreciation charges, to allow for maintenance and eventual replacement of the plant, and the reasonable return on investment to ensure long term business growth, will not be included in our tariff.

This is an important issue because as it stands now UEGCL does not have the capacity to develop new projects as the need arises because it is not charging an appropriate tariff.

This means that development of the projects will fall on government shoulders, which is not an efficient or effective way of managing the sector.

In Kenya, power generator Kengen, because it charges appropriately has reserves which it can leverage to carry out projects according to scientific development plan.

We are also aware of the fact that all Isimba's power will not be taken up immediately, but we believe this is a short term situation. The unlocking of the suppressed consumer demand and the attraction of new industries should more than cater for the new capacity within the year.

Given that the River Nile is natural endowment for which we have little control the hydrological risk, what people call the water levels on Lake Victoria and subsequently down the river, will have an impact on our ability to generate power.

And related to all this is the capacity to plan for more power plants on the Nile. The potential of the Uganda arm of the Nile it was once estimated is about 4000MW. If we can't charge a reasonable tariff we may not be able to maximize the potential of the Nile, which power is sorely needed to power our development agenda.

But we are Ugandan and we have to believe the future of our country is bright, all the above challenges notwithstanding.

For UEGCL we can look forward to the added revenues to allow us fulfill our mandate and if allowed a realistic tariff we can do away with government reliance on financing new projects. This will also open up new investment opportunities especially in the private public Partnership (PPP) space that can once and for all put behind us the bad days of the power generation deficits and loadshedding.

But once again congratulations to all Ugandans on the commissioning of Isimba. For now we can celebrate this achievement, but not for long as there is a lot of work ahead.

The author is the CEO of the UEGCL.