Thermal plant contract extended

May 29, 2008

A LAST minute signing of a deal on Wednesday to extend the 50MW Lugogo thermal plant contract averted a return to the 48-hour loadshedding schedule of 2005.

By Ibrahim Kasita

A LAST minute signing of a deal on Wednesday to extend the 50MW Lugogo thermal plant contract averted a return to the 48-hour loadshedding schedule of 2005.

The deal has been extended to September when another 50MW thermal generation plant in Namanve is commissioned.

The Lugogo thermal plant will be decommissioned because it will be replaced by the heavy-fuel oil thermal plant at Namanve, which is cheaper.

A unit of power from Lugogo is at $25 cents compared to the heavy-fuel oil thermal plant where a unit of power will be at $14 cents.

The Namanve plant will cost $88b (sh145), while the Lugogo plant cost was at $167.8m

The Lugogo plant was leased in May 2005 following the signing of a three-year power purchase agreement between the Uganda Electricity Transmission Company and Aggreko.

The contract for the plant, which was supposed to provide emergency electricity until a new plant is established, expired mid-this month. Uganda has been negotiating with Aggreko for an extension since April.

However, sources said Aggreko became impatient with the prolonged negotiations and was minutes away on Wednesday afternoon from switching off the the diesel- powered engines and throwing the country into darkness.

“We had no option but to sign the three-month power purchase agreement for Aggreko’s extension,” the source said.

“The agreement was signed today (Wednesday) after the Solicitor General endorsed the deal.”

Norwegian firm, Jacobsen Electro, is expected to finalise and commission the Namanve Heavy Fuel Oil plant in August, which will replace the Lugogo plant’s lost power.

“It makes sense to extend the contract. Namanve will replace the Lugogo plant,” another energy expert said.

Uganda plans to phase out the expensive thermal plants and replace them with heavy-fuel oil thermal plants to keep electricity tariffs down.

A total of 100MW are generated from Lugogo and Kiira diesel power plants, a situation that has led to power tariff increments three times in two years.

Both thermal plants are operated by Aggreko. The contractual period for Kiira thermal plant will expire in November.

However, there are plans to replace them with heavy-fuel oil thermal plants in Namanve, Kaiso-Tonya (Hoima), Njeru (Mukono) and Tororo.

Norwegian firm, Jacobsen, entered into a partnership with Tullow Oil, the company exploring for oil.

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