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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