Thursday, April 3, 2025

BIDCO: A DEVELOPMENT DILEMMA


One year after the inception of a $150m (sh278.2b) palm oil development on Kalangala island, project sponsors BIDCO are soldiering on, despite incessant attacks from environmentalists and sniping from entrenched local industry interests.


One year after the inception of a $150m (sh278.2b) palm oil development on Kalangala island, project sponsors BIDCO are soldiering on, despite incessant attacks from environmentalists and sniping from entrenched local industry interests.

But despite being the most vocal opposition to the project, the environmentalists admit they are hard pressed to put a monetary value to preserving the island’s ecosystem that would outweigh the anticipated value BIDCO is bringing to the island.

They argue that by slashing forest cover to make way for the plantation, the islands will lose out on their unique species of vegetation, alter the climate of the area and suffer massive soil erosion.

In 2004, the Government gave BIDCO a go-ahead to establish an oil palm project. Under the terms of the project, BIDCO was to establish a 26,500-hectare oil palm growing operation and set up a plant to process the palm oil from the plantations.

BIDCO would provide the expertise and the funds to get the project off the ground, while for its part, the Government would make the land available allow a 25-year Corporate Tax holiday and 12-year Value Added Tax (VAT) deferral for the plantation project.

Currently, about 3,500 hectares have been put under palm trees out of the 5,500 hectares provided by the Government so far most of which has been on land reclaimed from the forest.

"First of all, we are not burning the forests. We just cut down the trees and leave them in the fields to rot. The bio diversity is not being lost. It is just migrating to the forests we are not touching," Kalangala plantation manager Lim Choon Meng said on a recent tour of rows and rows of plantation.

"Secondly, the impression is that most of the island is covered in forest. That is not true. So far, we have planted about 1,500 hectares of grassland with the palm trees," he said.

Meng also pointed out that they are adhering to an agreement to maintain a 200-metre strip of trees between the plantation and the lake shore and growing cover crops between the palm trees as preventative measures against erosion.

He said he plans to plant an additional 1,000 hectares before the end of the year, but he was desperate for more land on which to plant seedlings.

"I have about 500,000 seedlings waiting for transfer to the fields, some of which are more than a year old and need to be transferred now or I will have to lose them but the land is not forthcoming," Meng said.

According to the managing director of the Uganda project, Kodey Rao, under the agreement, the Government was supposed to have provided the whole 26,500 hectares within a year of signing the agreement, which has not happened.

"We have about 5,500 hectares available, but need the whole component as soon as possible to ease planning," he said.

Partly as a result of BIDCO’s activities, the island is experiencing an economic boom.

"Land prices are rising, Kalangala town is growing and immigrant labour is swelling the island’s numbers.

"The wage bill for our workers is higher than the wage bill for Kalangala district administration and we have not even begun commercial production," Rao said.

BIDCO employs about 1,500 workers whom it pays twice a month, which invariably leads to higher sales for shops in the nearby trading centres.

"The improvements around here since BIDCO touched down are amazing," the district agricultural officer, David Balilonda, said.

While agreeing that the workers’ salaries have brought increased liquidity into the Island’s economy, he sees more fundamental benefits.

"The project has opened up roads where there were none. Communication and trade across the island has been greatly improved," Balilonda said.

A new ship, the 108-passenger MV Kalangala, was commissioned in February and sets sail from Entebbe compared to the old one which docked in Masaka. That has improved access to the mainland.

"We are seeing more tourists especially Ugandan tourists since the new ship started," former MP Mulindwa Birimaso, who owns the 30-room Palm Beach Hotel Resort said.

"Everything has an impact on the environment, even your breathing. The question is: what is being done to mitigate this impact?" Rao asked.

"We think we have put together an environmentally-friendly package while at the same time putting together a project that will have a transformative impact on the island’s economy, ".

Rao estimates that the $150m injected into the project will have a six-fold multiplier effect on the economy through saved foreign exchange, job creation and support services.

On the project’s outgrowers scheme, the company projects that on a hectare of land (about 2.5 acres), a farmer will be able to get $1,000 (sh1.85m) per month.

Environmentalists are having a hard time countering these benefits with evidence of their own that shows that the islands trees will have as great an economic impact.

"Building a case for non-monetary benefits is difficult," National Forestry Authority’s spokesman Gastor Kiyingi said.

"But the calamities that come with such environmental degradation do not take long to show themselves," he said refering to the ill- advised move to build a dam parallel to the old Kiira power dam, a situation that has caused a larger than usual outflow and is partly responsible for the reduced water levels on Lake Victoria.

Today, people are looking for political advice but neglecting professional advice, Kiyingi said.

That maybe but for the time being, the locals remain unconvinced.


PS This was published in teh New Vision 20 years ago.... an update long overdue

Tuesday, April 1, 2025

UMEME EXIT AND THE END OF AN ERA

As of writing this column Umeme’s 20 year concession will come to a close today Monday, 31st March.

Last week the Auditor General submitted his final report putting what the government owes to Umeme as a final pay out at $118m, below any previous estimates. According to Umeme the government owes them $234m, previously the Auditor General had estimated the payout at $201m, while Electricity Regulatory Authority (ERA) the overseer of the concession had put their figure at $127m.

The payout is compensation for assets not fully paid for through the tariff.

It was curious how the discrepancies between all the players were so wide and I guess this will be resolved in the fullness of time.

It has been an interesting journey and a test case for the management of such Private Public Partnerships (PPP), as we will probably need to do more of in the future.

At the tail end of the privatization process, at the end of 1990s, the big infrastructure companies like Uganda Electricity Board (UEB) and Uganda Posts & Telecommunications Corporation (UPTC) came up for sale.

Unlike previous privatisations for which it was enough to liquidate, sell their assets or sell them as is, these companies demanded different treatment.

In the case of UEB a total overhaul of the electricity sector was required to attract funding into the sector.

"For starters the tariff had to be raised, as the prevailing tariff, around US4cents a unit at the time,  did not allow for the sector to be run sustainably, leave alone promise a return for intending investors...

Critical too to the reforms was the breakup of UEB into its constituent parts – generation, transmission and distribution. This was done because it was easier to get investment for parts of the company rather than the whole. As has proved true.

Billions of dollars in investment have been sourced by government and private players in the generation and distribution sector. Government has had to follow suit with comparable investment in the transmission part to keep up with new interest up and down stream.

Umeme came in at a time when we were suffering day long power cuts and as if that was not enough, around that time the water levels on Lake Victoria fell dramatically, affecting power generation at the Kiira-Nalubale power station.

Government opted for expensive thermal power, which raised tariffs even higher and saddled government with trillions of shillings in subsidies to the sector to keep the power tariff manageable for the paying public.

It is only when Bujagali came on line 2012, with the sector seeing surplus generation capacity for the first time in decades, eliminating loadshedding, did Umeme really take off. It should be noted that Bujagali’s commissioning was delayed almost 10 years as politicians and environmentalists threw roadblocks at every turn of its development.

With increased generation Umeme had to ramp up the last mile distribution grid, accelerating account numbers to around two million currently from the 300,000 they inherited.

Of course once it is done everybody jumps up and says it was not that difficult after all, anyone could have done it.

But there certain key things that allowed Umeme to do what UEB could not do.

For starters the managers of Umeme were only dealing with one part of the electricity chain, albeit the crucial one, because if Umeme was not paid transmission and generation would not have been paid. It should be noted that the installation of yaka in 2011, which Umeme were initially reluctant to undertake, because of the huge initial capital outlay, has with a single stroke increased billing to almost 100 percent.

In addition the higher tariff  Umeme has enjoyed has allowed them to not only maintain the grid but expand it almost five fold during the concession to 70,000 km from the 16,000 km they inherited.

Secondly, Umeme has been able to invest almost $800m over the last 20 years, because on the strength of the balance sheet, go to the market to source funding, and not rely on treasury for funding. This was critical for speed of execution of many of its programs...

It helped too that with increased digitization greater efficiencies have been enjoyed that UEB could only dream about. Though on the other hand the profit motive can be a strong incentive to push innovation and early adoption of new technologies.

Unfortunately the concession seems to have come to an acrimonious end. But the management of Umeme can leave l knowing they have set bar against which its successors will be measured. Umeme may have benefitted from being measured against the low bar of UEB, the same will not be the case for its successor.

 

Tuesday, March 25, 2025

HOW TO SUPPORT LOCAL ENTREPRENEURS

Everywhere you turn it seems like government is trying to give a leg up to this businessman or the other. The general theme seems to be for promotion of indigenous capital.

A cursory look down the list of the biggest companies and even tax payers, will show that easily nine in every ten are enterprises owned or controlled by foreigners.

It will not be splitting hairs to point out though, that companies that operate in Uganda are registered Ugandan entities and therefore local corporate citizens. A distinction that is often ignored or forgotten by the “champions” of indigenous capital.

If you are a fairly successful business in Uganda, for every sh1000 you make, you pay out half of it to local labour, utilities and other costs of doing business, of the sh500 remaining as gross profit you  pay the tax man another sh150 leaving about sh350 in after tax profit. Depending on the maturity of the company the owners can keep up to 70 percent of this for themselves, with the rest retained to keep the company going.

From this example alone the suggestion is that almost sh70 percent of the company’s topline revenues stay here.

Often “foreign” companies have been accused of keeping more money from themselves by any number of dodges but we leave that for another day.

So the champions of indigenous capital’s main argument is to keep more money (100%?) in the country we, the government and the people (not always the same thing), need to take more control of the commanding heights of the economy.

That has a nice ring to it and can be sold to gullible citizens, who do not have the benefit of the knowledge of the aforementioned breakdown of where a company’s monies go.

How the government then has tried to go about it over the last 40 years, but with seemingly more urgency in recent years, is to take back companies that were once private e.g. Umeme or dish out money to some businessmen who have the ear of the higher ups in government.

In the first case, the deprivatisation of companies, these companies are often lucrative going concerns and some geniuses in government think that they will continue like that under government management. It does not take a business guru to predict that this will not be the case.

To explain, you have to go back to the reason many of these companies were privatized. Due to political interference – cronyism, nepotism and general corruption, these companies were mismanaged and became a drain on the public purse. Their lack of money came from mismanagement and not the other way around.    

We can expect that a few connected individuals, who have failed to compete in the market, will be the major beneficiaries of these deprivatisations – getting jobs, winning contracts and supplying air, and these companies will suffer for it and the general public as well.

I wish I would be wrong but it is hard to see how this will turn out any other way.

The second way by which government is trying to giving local businessmen a leg up is by giving them cash, in many instances billions of shillings. Billions whose outcome if measured by the conventional metrics of measuring business success, have nothing to show for the billions they have swallowed.

A caveat would be in order here. In some instances where established businessmen have been coopted at least we can find expanded services and even increased revenue collections, but one wonders what government gets for its equity stake in the venture.

Given government’s dismal record in supporting businessmen, where failure is recorded as lack of improved service or return on investment, one would wonder how best to do it.

We need not reinvent the wheel. Businessmen are being supported by governments the world over with better degrees of success.

First of all government needs to create an enabling environment for all business to thrive --  guaranteed security, improved infrastructure, objectively applied rule of law and social services.

To be supportive of the indigenous capital government needs to ensure practical education, good health services and a robust safety net for all citizens.

Then government needs to support businessmen through capacity building for them to be better businessmen.  This maybe effectively done by incentivizing the private sector to invest in these kind of education.

In order to make credit accessible to businessmen and at affordable rates too, they should encourage savings mobilization. The challenge of lack of accessibility and high lending rates is one, mainly of inadequate savings in the economy.

With more savings more players like venture capitalists and private equity players  -- major gaps in our financial sector, can be attracted into the economy.

All the above can be assisted by government having a well thought out national strategy, not one drawn up only by bureaucrats, with no business acumen, but with inputs from businessmen at home and abroad.

It would not be a stretch to say government’s inability to nurture a formidable indigenous capital base, is for lack of a robust national strategy that would have saved us from running around like headless chicken for the last four decades.

It is not rocket science.

Tuesday, March 18, 2025

WHY WOMEN EMPOWERMENT MAKES ECONOMIC SENSE

In 1991 government allowed women 1.5 points towards their entrance into public universities. At the time male students feeling a bit hard done by the initiative, but not wanting to show it, turned it on its head as more evidence of why women are the lesser of the specie.

They soon got tired of the teasing, as the men on campus were not really the aggrieved parties. They had made it to campus anyway.

Recent graduation ceremonies at Makerere university suggest that the ladies are having the last laugh. For the last five years or so, more ladies have graduated with first degrees than men, despite the fact that more men are enrolled to the university in each of those years.

To dismiss this as just numbers –“What have the female graduates done for their fellow women?” is to miss the point or worse to totally ignore the power of example that these ladies in their various endevours provide for younger females looking up to them.

Since independence we have seen that education has been the best tool for social climbing. Most of us reading these pages are probably second generation educated, meaning our parents went to school, immediately after independence you could count them on one hand, those families with parents who were literate and they were most concentrated in central Uganda.

This may have worked against them in the 1970s when the elite were spat upon and worse. In the last 40 years we have accelerated literacy levels and therefore the competition for the few formal jobs the economy can generate a year.

In patriarchal society where women find themselves always coming from the back, you can imagine what would have happened if there was no active effort to get them advanced education. Of course, the drop out rates in lower levels for girls is still atrocious, speaking to a need from a more holistic solution for girl’s education, but that can be a subject for another day.

With increased university enrollment women over the last 30 years have been given a better chance to compete in the market place than they would otherwise have. Credit to them they have embraced the opportunity and run with it. You can take a horse to the well but its another thing altogether to get it to drink.

Beyond expanding the ranks of the educated women on a macro level it makes so much sense to empower women, in any society, but especially for underdeveloped countries like Uganda.

For starters to pull us out of our underdeveloped state we need all hands on deck. It does not make sense to disenfranchise more than half your population due to some outdated male chauvinist hangover. The reality should not allow it.

 As the economy becomes more formalized and global, the skills needed, especially the ability to learn, have their roots in formal education.

And as women have got more empowered, especially by being more knowledgeable but also through accumulation of property, their relationships have changed. Because women now have a better sense of self. This is inevitable and both sides of the gender divide will have to acknowledge this and deal with it-

While the work of balancing the genders will never be done, the next frontier of achievement for women will have to be property accumulation and business ownership.

Initiatives to make credit more easily available to women is a step in the right direction, though I believe like all other businessmen, improving financial literacy and business management would show a better return on investment than cheaper credit.

But also Uganda’s businesswoman does not have very high standards to aspire to, as their forerunners – the men, have been content to keep their businesses only as big for their own subsistence.

The other day I was listening to a podcast about Nigerian businessman Aliko Dangote and you have to marvel at the vision of the man. His refinery, which can handle 600,000  barrels of oil a day – more than the consumption of NIgeria, has been in production barely a year.

Dangote is clear that his efforts in oil – cement and wheat flour before, are not about serving Nigeria only but about uplifting the whole continent. So with a man like Dangote at the head of the Nigerian community, one shudders to think what dreams Nigerian businesswomen are habouring.

 

Tuesday, March 11, 2025

MTN AND THE CASE FOR ECONOMIC LIBERALISATION

Last week telecom company MTN released their 2024 financialresults.

They reported that revenues grew 18.9 percent, crossing the three trillion shilling mark – the first company in Uganda to do so, laying the ground for a 30 percent jump in after tax profit of sh641b.

Last year revenues came in at sh3.17trilion. In 2023 revenues and after tax profit came in at sh2.67trillion and sh493b respectively.

While voice calls – sh1.26trillion, continue to be the single largest contributor to the company’s revenues, data and fintech sales registered higher growth --  30.5 percent and 22.8 percent, cementing a trend that saw  voice revenues fall below 50 percent for the first time three years ago.

Data and fintech revenue streams are set to cross the trillion shilling mark this year, assuming continuation of current growth trends.

An interesting detail from the results is that MTN subscribers last year grew to 22m from under 20m in 2023. This is interesting because the population of Uganda in 1998 the year MTN entered this market, was reported at 20.6m.

In 1998 all told there were about 50,000 telephone lines in Uganda.

A condition of their second network operator license, was that they were supposed to grow the network to 89,000 lines in five years, a figure that was surpassed in their first year of operation.

The telecom sector in Uganda serves as the posterboy of the possibilities that come with the liberalization of the economy.

While one can argue that the South African based company has rode on a superior technology and therefore the old Uganda Posts & Telecommunications Corporation (UPTC) maybe excused, that argument flies out the window when you consider how the state operator continues to flounder to the point of insignificance.

"The liberalization of the economy, allowing private players to participate, has been the key driver of the economy over the last 40 years. With a single stroke it attracted billions of dollars into the economy and increased production of goods and services...

Liberalizing the economy unlocked individual initiative, which has paid off handsomely for those who have gone out to take advantage.

Liberalisation’s detractors, less vocal now than in 1998, argued that the government was selling out to foreign capital and this would be detrimental to the economy. While they gave little in the way of alternatives, by logical extension they were suggesting government should recapitalize the old state enterprises, with which money is anyone’s guess and lock out foreign capital. Thank God they were not listened to at the time.

But that is not true. They actually had the ear of the  new government after 1986, which government tried to go along with their prescription, fired up the money printing presses to capitalize the state owned enterprises and quickly sent inflation soaring to as high as 240 percent at its peak.

Most Ugandans have no concept of what 240 percent inflation looks like. What this means is that prices were doubling every three months. So if you paid a million shillings in school fees in first term by the time third term came around you would be paying sh8m.

"The worst inflation most Ugandans have seen – more than 80 percent were born after 1990, was the 30 percent inflation we saw in 2011, this again was driven by an explosion in government expenditure during that election year...

But generally with such high inflation investment is near impossible and the only sensible economic activity is speculation.

By government swallowing its pride in time, stabilizing the economy, thanks in no small part to divesting itself of the black economic holes that were the state enterprises, passing the responsibility of stimulating production to the private sector, is why companies like MTN can now be serving more customers than there were Ugandans in 1998.

Without a doubt MTN has been good for its owners.

They will pay out a final dividend of sh190b for a total of sh506b to its shareholders, but MTN and the liberalized telecom sector has done brilliantly for the general economy. In taxes alone, the company has paid about sh10tr since 1998...

I am sure the figure of the economic impact of the sector is somewhere, but going by anecdotal evidence alone it is not a difficult argument to make for the economic impact on the economy in general and on our individual lives.

One other detail to come from MTN’s results was that the total value of transactions carried out on their mobile money platforms was about the size of the country’s GDP at sh158.6 trillion. While some people discount the importance of that number, a large part of it is money that was under our mattresses, in our socks and bras, but now in the formal economy.

When the money is in your pockets it helps no one, except maybe to massage your ego, if it’s in your back pocket. But once it is in the formal sector it can be lent out – MTN lent out sh1.4trillion last year or can earn its owner money – they paid out sh40b in interest on deposits.


Tuesday, March 4, 2025

CASHFLOW: PLAY TO REENEGINEER YOUR MONEY PSYCHOLOGY

Recently I joined a group of young people to play the “Cashflow” game. The game designed by Robert Kiyosaki, mimics our financial lifestyle, while trying to teach how to get out of the rat race, the hand to mouth existence, many of us locked into often because we do not know better.

The main aim of the game is to graduate from the rat race, by building a passive income that exceeds ones expenses. Passive income is that income earned without selling your labour it can come in the way of rent, dividends, royalties and interest.

At the beginning of the game all the players have a salary, which the leverage to buy shares, rental properties and other assets, with the deals growing bigger and bigger as the players income increases.

But like in real life you are tempted by consumption, get babies, get sacked from your job, get conned by friends and family and any other number of unwanted expenditures that slow your progress to building passive income.

There are several lessons that I learnt from the game.

1.       Money is an idea

The paper or set of numbers on our account that represent money are first appreciated in the  mind. As an example even if it was just a game played with fake money, players suffered real anxiety when faced with making decisions, experienced unbridled elation when they made deals and sunk into depression when the game was not going their way.

The game showed up our attitude towards increased or decreased income, our reluctance to release this accumulated money for investment and our competitiveness in trying to accumulate more cash than our neighbor.

The game showed that in real life our financial fortune or otherwise is a function of our psychology around money.

2.       Building passive income is a long and arduous journey

On an intellectual level everybody understood what needed to be done to get out of the rat race, but execution was a challenge. Say for example a 3 bedroom, 2 bathroom house came up for sale. It cost $100,000 but required a down payment of only $5,000 to earn cashflow of $100 monthly. The player with the opportunity has only $2500 to their name.  Often our first instinct is to pass on the deal.

The option to borrow and top up the amount required to get the house is at the beginning of the game avoided like the plague. “Me, I don’t like debt”. So they forgo the deal for the illusory comfort of keeping a fat bank account.

  

3.       Everything is negotiable

In our lives we get paid a fixed salary. When we go to the shops we pay according to the price tag. If there is a deal to be had we think the asking price is final. The game shows that negotiation is always an option, and while it is good to negotiate from a position of strength that is not always possible.

In the game deals don’t always come to you but might go to other players can you negotiate for the deal even if the other player wants it just as bad? Or to turn the tables you are not in position to execute a deal but there are players around the table who can, can you leverage your “weak” position to achieve your goals?

You learn in the game that negotiation is a manipulation of time, knowledge and power and that you learn what you negotiate for not necessarily what is due to you.

4.       It is personal

Like any game the temptation is to compare yourself with other players and their races. This can often lead down a black hole. The game teaches you to focus on your circumstances. You may learn from the others as the game goes along but you quickly learn that envy is useless.

Whether you come out of the rat race first of last does not matter what matters is to get out of the rat race. Same as in real life we get distracted from our own journey by our neighbours worse or better fortunes, whereas our financial health often has little or nothing to do with how our neghbour is faring in their own journey. Focus.

5.       Cash is trash

And this really is the crux of the matter. Money possesses some unhealthy fascination for us. When we don’t have it we can think of nothing else. And when we do have it we become elated and quickly look to deplete on one hand or hoard it and derive pleasure from looking at a bank account with many zeros.

The game helps to reconfigure the players thinking away from consumption to making iot work for you. On an intellectual level many of us understand this the trick is to execute.

It’s a fantastic game that I recommend anyone interested in improving their financial situation should play. A great learning opportunity that may very turn your thinking about money upside down.

 


Tuesday, February 25, 2025

GOVT WALKING DANGEROUS PATH IN ELECTRICITY SECTOR

Last week MPs on an inspection tour of the Namanve thermal power plant, learnt that two of the plant’s seven turbines had been shut down for lack of funds and the entire plant may be shut down by year end,if government doesn’t release funds meant for maintenance of the plant.

Uganda Electricity Generation Company Ltd (UEGCL) through the energy ministry has already requested sh61b to undertake deferred major maintenance and implementation of this year’s capital investment plan.

This has become even more urgent after last year’s release of sh19b for 2023/24 never reached UEGCL, even though it was released by the finance ministry.

The MPs heard that a total shut down by December 2025 would be inevitable, if this money was not released promptly...

UEGCL presented other concerns surrounding the Isimba and Karuma power plants, but we will save those for another day.

This a harbinger of things to come.

Just in case we forgot, our plans for developing especially through industrialization will remain pipe dreams if we did not straighten out the power sector.

Over the last two years UEGCL has repossessed Kiira-Nalubale dams from South African firm Eskom and the Namanve thermal plant from Jacobssen. And at the end of March the Uganda Electricity Distribution Company Ltd (UEDCL) will be taking over the grid from Umeme, when the 20 year concession will be up.

One of the major reasons we handed over our distribution and generation networks to private players, was because they were not only inefficient but they were proving an unsustainable drain on the treasury. The idea was by passing them on to private players they would be a net contributor of revenue to government, would raise funds to invest, thereby expanding capacity with the eventual aim of assuring power supply and bringing more people onto the grid.

Through out the concessions Eskom, Jacobssen and Umeme have contributed to government coffers rather than the reverse.

Uganda Electricity Board (UEB) from which UEGCL, UEDCL and Uganda Electricity Transmission Company Ltd (UETCL) were hived off, struggled majorly for lack of funds....

Over the last 25 years billions of dollars have been invested in the sector, most of it from private players, bringing us to the happy situation where we have a surplus of power.

Currently Uganda has an installed power generation capacity of more than 2,000 MW against a peak demand of just over 1,000 MW.

Although it has to be said, that the surplus capacity is costing us a lot of money, a failure of government execution, but that again is a story for another day.

The private sector was able to carry out these investments, because it did not have to run to government everytime they had to finance adding new generation capacity or expand the grid. The private players went to the open market and on the strength of their cashflows and balance sheet funded their operations and investments.

Meanwhile, the private players did not airlift staff from South Africa or the UK or Norway to run these private concessions. Ninety percent of their staff were Ugandans, who will remain in the country after the infrastructure is returned to government.

So the problem then, in the UEB days and now, is not that we don’t have qualified people to run the electricity sector but that government bureaucracy and inefficiency is weighing the sector down.

"The lesson of the last two decades of private sector participation in the sector maybe that the private sector is a better operator, but more importantly that government needs to keep an arm´s length distance from industry in order for it to work...

UEGCL’s experience in the last two years is proof enough of this.   

It has been done before. The experience of National Water & Sewerage Corporation (NWSC) , which was close to being flogged 30 years ago, is a good example. Government allowed management to turn it around, recapitalized it by converting debt to equity and providing the necessary cover to source financing for its major projects.

Water is more emotive than electricity so if government can do it in the water sector it can do it in the power sector.

If government is serious about the energy sector they need to recapitalize these agencies and cut them loose to operate commercially, otherwise the beginnings of a return to the loadshedding and inefficiency of the old UEB days seem inevitable.

 

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