By Ibrahim Kasita
THE country is facing a serious shortage of electricity supply. Nalubaale and Kiira power stations at Owen Falls Dam produce only (120MW) â€“ a third of the required capacity. The shortfall is attributed to the prolonged drought, which has affected water levels of Lake Victoria â€“ the source of water used for power generation. Lack of new generation plants is also another cause for the shortfall.
At least 340MW is required to satisfy the growing demand for electricity. The demand grows at 27MW annually. The shortage has affected production in the industrial and commercial sectors.
According to a government study entitled, Plan for Meeting Ugandaâ€™s Electricity Supply in the Short, Medium and Long-term, Ugandaâ€™s Gross Domestic Product, which was expected to grow at 6.5% this year, has dropped to 4.5%.
To reduce the power shortage, the Government procured a 50MW thermal generators and installed it at Lugogo sub-station. Installation of additional three batches with a capacity to produce 150MW, is underway at Kiira, Mutundwe and Namanve sub-stations.
However, the Namanve plant was hit by controversies in the tender process and the inspector general of government ordered for re-tendering.
At the beginning of this year, the Electricity Regulatory Authority invited bidders to build a 50MW thermal power plant in Mutundwe but later transferred the site to Namanve on the basis of Build Operate and Transfer, which means the winning firm will have to build the plant and operate it for six years before handing it over to the Government.
The plant was expected to be operational in June last year, after the signing of a power purchase agreement with the winner. Jacobsen Electro AS, a Norwegian firm, Electromaxx and African Power Initiative responded.
The electricity authority awarded the deal to Jacobsen AS, claiming that their total cost of operating the thermal plant was cheaper compared to other bidders. However, Electromaxx disputed the award and protested to the IGG.
Electromaxx complains that the Government would be saddled with a $34m debt if Jacobsen carried on with the contract. They claimed Jacobsenâ€™s bid was more expensive than their own.
The IGG overturned the award after discovering irregularities in the tendering process and called for the re-tendering of the contract. However, the attorney general advised the Government that the IGGâ€™s report on the subject was not binding and Jacobsen should continue with the deal.
Electromaxx then sued the Government challenging the bid, which prompted President Yoweri Museveni to step in.
Once all the thermal plants are operational by 2007, the country will generate 200MW from thermal generation.
However, thermal power is three times more expensive than hydro power, implying that substantial resources will be required to maintain them due to increasing fuel costs.
The 250MW Bujagali hydro power project construction is progressing. The resettlement action plan and environmental impact study is complete and construction is expected to begin after a detailed economic and financial appraisal anticipated in January. The project is expected to take four years.
Likewise, the Karuma hydro power project is at the centre stage following an invitation for qualified firms to submit their interest in the project. Construction is expected to start in September 2007.
Several renewable energy projects like the small hydro power generation has attracted private investors. Feasibility studies on Waki (5MW), Bugoye (13MW) and Buseruka (10MW) are complete and construction has started. Similarly, co-generation in the three sugar mills of Kakira, Lugazi and Kinyara have kicked off. Kakira is now selling six megawatts to the national grid.
â€œOur goal is to produce 50MW from renewable energy sources. These projects are estimated to cost $108m,â€ read the energy report.
To reduce peak demand, there is promotion of solar energy, where those interested can receive the power on credit over five years.
The energy sector also encourages use of biogas, including firewood for lighting and cooking, which accounts for 93% of energy supply.
However, the use of biogas has led to environmental degradation due to unsustainability of this resource through heating and fuel for small-scale industrial application like brick and tile-making, lime production, tea and tobacco processing.
However, there has been intervention through improved wood and charcoal stoves.
The Government is pursuing petroleum exploration and development in the Albertine Graben in western Uganda. Oil companies have been licenced to carry out exploration in four areas. Drilling results so far show the presence of liquid hydrocarbons targeted to produce indigenous fossil fuel for power generation.
At least 100MW of thermal capacity will be maintained in the system as peak plant and installation is expected in mid 2007.
The introduction of emergency thermal power plants to bridge the electricity supply gap has led to large consumer tariff increment. The tariff is increased in a stepwise manner to reflect the economic cost of providing electricity services.
UMEME Ltd concessioned to run the power distribution business for 20 years has injected $100m in a new billing system that will reduce energy losses from 41% to 36%. So far, $20m has been invested in the improvement of the distribution network.
The short, medium and long-term plan to supply adequate power to the country involves development of hydro power, renewable energy resources and thermal generation.
However, hydro power will dominate the energy sector if Bujagali and Karuma projects are completed. An investment of about $4.43b is required for the entire power sector.