By Muhereza Kyamutetera
Roofings Group—the Strength of a Nation, as they love to call themselves, is Uganda’s largest steel and construction products maker and certainly one of the largest in East and Central Africa.
In Uganda, the Group is made up of Roofings Limited- the Group’s seed steel factory in Lubowa on the Kampala, Entebbe Road established in 1995 as well as Roofings Polypipes, also in Lubowa, that makes construction grade PVC fittings for plumbing, drainage, and electrical installations.
Roofings Rolling Mills (RRM), the third unit of the Group is a 3-unit complex that was started in 2009 with a wire galvanizing plant, followed by a 100,000 tonne-per-annum hot rolling (rebar) mill and finally a 150,000 tonnes-per-annum cold rolling mill with galvanizing and colour-coating lines. This Roofing Rolling Mills, located in the Kampala Industrial Business Park (KIPBP), Namanve is the biggest in the country and one of the largest plants in the East African region.
“I had a dream to build something I could be proud of. Decades later, I am a part of something we can all be proud of,” says Dr Sikander Lalani, the Chairman/Managing Director of Roofings Group, on the Group’s website.
So large is the RRM plant that its power load requirement is 20 MegaWatts of electricity, according to Anil K. Bansal, the Deputy Plant Manager.
“We consume between 70 to 80 million units of electricity in a year,” he says.
“We have state of the art technologies, from across the globe,” he proudly says, adding: “Our chairman, Dr Sikander Lalani’s vision has always been to install the most modern technologies so that we can produce the best quality products at an affordable price.”
But besides the cutting edge technology, Mr Bansal says, electricity—stable and reliable electricity is the next big ingredient in the power-hungry steel industry.
“Power is a very important factor. It plays a vital role in production,” he says in an interview.
And that is why, to him, Umeme Limited, Uganda’s largest electricity distributor that accounts for 97% of all power distributed in the country, is a critical stakeholder in the running of his business.
“Umeme is playing a critical role in this plant by supplying us with good quality and stable power. That’s so important for our production because we can adjust our production capacities to produce consistently the highest level of quality,” Bansal emphasizes.
“Our relationship with Umeme has been excellent- we have very good support from them. We can see a continuous improvement in the power quality and the services from them,” Bansal says adding: “The power quality is fantastic. I would say it’s very stable, good quality power. So as a customer, we are really happy.”
Regarding the customer service experience with Umeme, Bansal also says it has been “excellent.”
“Umeme has got a very strong, professional team. A very competent team. The response is very fast. And even the top management is easily approachable,” he says adding: “We also see Umeme continuously building up new power projects. We can see there is a new substation in Namanve itself.”
But this good relationship with Roofings wasn’t always like this- as Duncan Tebaggalika, the Assistant Manager, Electrical at Roofings Rolling Mills testifies.
“When we commissioned this plant in 2013, the quality of power, sincerely speaking, was terrible. We could hardly do any operations,” he recalls, adding that working with Umeme and other stakeholders such as the Electricity Regulatory Authority (ERA) the power quality has improved greatly.
“Around 2015 ERA and Umeme came on board and they proposed the statcom project and it was implemented in 2017.
So we’ve been running it for over now three years. It is a very good project that has done us very well,” he says of the power quality.
Umeme’s 5-year USD450 million investment agenda
The greatly improved Roofings experience has been a result of Umeme’s consistent investment in the KIBP and the surrounding industrial areas? that make up the manufacturing hub of the country. For example in 2020, Umeme injected USD2.37 million to evacuate power from the UETCL Substation, at Namanve to enhance power supply quality to the KIBP, where Roofings is located. The project included the construction of underground cabling works, with automated Ring Main Units linking the UETCL Namanve South and North substations.
These projects have greatly stabilized and improved the quality of supply to industrial customers in KIBP and surrounding areas.
In the nearby Mbalala Industry Area, Umeme also invested in interconnecting feeders to evacuate power from the UETCL Mukono North substation, to improve power supply to the Mukono Industrial Area in Mbalala along Mukono-Jinja Road highway.
This project feeds, among others, the Tian Tang Industrial Complex, Kampala Cement Factory as well as the new National Water and Sewerage Corporate (NWSC) plant at Katosi on the shores of Lake Victoria.
The above projects which were all completed in 2020, are part of Umeme’s USD83.3 million (UGX310 billion) capacity enhancement and network stabilisation investments across the country that have resulted in improved services.
At the nearby Century Bottling Company factory, makers of Coca-Cola, Edward Ojede, the Manufacturing Director at Coca-Cola Beverages Africa says that although they are yet to hit the required maximum efficiency, power quality has greatly improved over the years.
“The reliability of electricity supply has improved a lot over time,” Ojede says, but quickly adds that there are still spikes that affect the business.
“As an entity, in the industrial park, we expect better power quality within the park as it’s a very important input for manufacturing. Most of our equipment is high-spec technology which is extremely sensitive to unstable power,” he says, adding that the business has had to invest about USD3 million on a power stabilising supply system as the work with stakeholders to fully resolve the power issues.
Mr Ojede is however optimistic that the improvements at the Namanve substation will see the power stabilise.
“We have raised this with Umeme and the Electricity Regulatory Authority (ERA) severally and keep hoping it will be addressed once and for all,” he says.
James Byaruhanga, the General Manager of the just-launched Raxio Data Centre, also in Namanve, that consumes up to 4MW, is also happy with the quality of service from Umeme.
“Our connection to the new Namanve substation is a lot more stable than the previous one to the Kiwanga substation. However, Raxio secured a Ring Main Unit from Umeme and that means we are connected to both Kiwanga and Namanve substations. This means we have a combination of the 2 lines which gives us a lot more uptime,” Byaruhanga says.
He also has positive reviews for the quality of service.
“The process was quite good and seamless, to be honest, the only real delay was the importation of the RMUs which I would say might have been due to planning and logistical issues. We also got very good support in the process of securing rebates from ERA. No complaints,” he adds.
Raxio was connected in July 2020 at the height of the Covid-19 first wave in the country- but still, Umeme managed to get Raxio Connected, in time for their launch in May 2021.
Raxio Data Centre Ltd in the Kampala Industrial Business Park (KIBP) Namanve is Uganda’s first privately run tier 3 data centre in the country. Data Centres require 99.99% uptime and therefore Umeme had to go out of its way to supply a set of SCADA ready Ring Main Units (RMUs) and a metering unit.
Umeme has also deployed an underground network within the Namanve industrial park which stretches for about 25km that will enable industries within the park to plug onto the grid with little interruptions from human-caused network disruptions.
The 2,200-acre business park uses up to about 100MW- which is just about 15% of all the national current peak demand.
As of October 2020, according to the Uganda Investment Authority (UIA) which runs the park, sixty-two (62) industries were in operation, directly employing 16,000 Ugandans while 141 projects had commenced construction. 84 companies were still in the pre-start phase while another 28 have just been allocated land.
Industrial users account for about 56.6% of all power sold by Umeme.
Powering Uganda- Umeme’s 16-year journey in Uganda
All the abover positive stories are built on years of Umeme’s investments- into not just the grid, but also into capacity building and convenient service channels.
According to company reports, Umeme has since 2005, when its 20-year concession started, invested over USD 700m (UGX2.5 trillion) in the distribution network to ensure safe, efficient, and reliable electricity supply to factories, businesses, and communities.
This investment has increased the distribution network by 173% from 16,000 kilometres in 2005 to 44,000 km while distribution transformers have more than doubled from 6,000 to 14,000- a growth of 133%, leading to a 245.5% growth in Distribution Transformer capacity from 550MVA to 1900 MVA. Distribution energy losses have also reduced from 38% in 2005 to 17%- a reduction of 55.5% points.
The number of customers has grown by more than 5 times from 292,237 in 2005 to 1,526,000 in June 2021, a growth of 422.2%. As a result, electricity distribution efficiency has greatly improved from 50% to 85% as of 2019, through a reduction of energy losses to 17% from 38% of 2005, coupled with increased revenue collections- currently at 99% from 80% in 2005. These improvements have benefited the sector and the consumers to an estimated saving of USD170m per annum.
And these benefits are spread across the country.
Jean-Michel Pons the Country Chief Executive Officer of Hima Cement says that although the business is still having challenges at their Hima Cement factory in Kasese District, there has been visible progress in their other operations.
“In 2017 and 2018, we successfully set up two factories, our Namanve Blending Station and Tororo Grinding Station respectively and with the support of the Umeme team who invested in the right infrastructure, the power is more reliable,” he says.
Regarding the situation at the Hima Cement factory in Kasese, Jean-Michel says that the biggest improvement needed is the quality of the electricity supply.
“Power fluctuations are quite disruptive to our operations at the Hima Plant,” he says, adding that a solution is being worked on, together with UETCL, UMEME, with the support of the Electricity Regulatory Authority (ERA).
“We still have a long way to go before we achieve a good power status in Hima Plant but there are significant efforts from all stakeholders to realize this,” he adds.
Nile Breweries Limited, which runs two bottling plants in Jinja and Mbarara also testifies that despite some downtime challenges here and there, there has been visible progress on both the availability and reliability of electricity.
“The unplanned downtime by UMEME at our Jinja Plant has reduced in the last 12 months and the response time to address the downtimes is much better. Overall, there’s an improvement but we opt for zero downtime,” Nile Breweries said in a statement mailed to CEO East Africa Magazine, adding that, there is a need to further reduce the scheduled/planned downtimes as well as stick to the scheduled outage timelines.
The brewer also said that there was a need to fix voltage fluctuations and keep within the planned maintenance windows at their Mbarara Plant.
“Umeme needs to invest in voltage stabilisers on their grid, but generally there has been a big improvement- I would say, 7 out of 10,” Nile Breweries said in their statement.
ATC Uganda which runs over 3,500 wireless and broadcast telecom towers, across the country- a very vital heartbeat of Uganda’s ICT sector also has a positive testimony on Umeme’s service quality.
“The Umeme grid network has been expanding year on year and during that time, ATC Uganda has been able to double the number of grid-connected sites on the network. There has been a noticeable improvement in grid availability and reliability, particularly in the Northern and Eastern parts of the country which had previously been quite challenging. This has seen the grid availability improve from ~80% to ~85% over the past few years,” says Charles Nsamba, Public Affairs Manager at ATC Uganda.
Mr. Nsamba, says this has been driven by Umeme’s investment in grid pole replacement and network upgrades, as well as efforts to curb power theft.
ATC also says that over time, the Umeme customer care experience has improved significantly.
“Umeme have a Work Operations Centre (WOC) which logs faults registered by customers on the grid network system 24/7. These faults can be logged via WhatsApp, phone calls, and email,” says, Charles Nsamba, Public Affairs Manager at ATC Uganda.
“As ATC Uganda, we have a dedicated Network Operations Centre (NOC). The NOC has technicians who monitor the ATC tower network and open tickets to the Umeme team to attend to faults on our sites which helps in quick escalation and resolution of faults,” he says.
ATC however says that grid reliability in the rainy season remains quite challenging.
“With continuous infrastructure upgrades, the effect of rains on the grid network should reduce,” he says.
Patrick Katantazi, the Chief Manager of Corporate Services at Centenary Bank also says there has been a significant enhancement in both the reliability and geographical coverage of Umeme.
“There has been remarkable improvement especially in the areas of geographical coverage for our operations as business locations previously off the grid now have Hydro Electric Power. This has resulted in reduced cost on the power bill but most importantly stability in operations,” he says.
Centenary Bank is Uganda’s second-largest bank by assets and footprint- with over 76 branches and 188 Automated Teller Machines (ATMs).
“Overall, reliability has increased. Our considered desire would be to also connect the areas of West Nile where the Bank has wide considerable business interests on the Hydro-Electric Power grid so that economic benefits associated with this power infrastructure are similarly harnessed,” says Patrick.
Operation fix Northern Uganda and West Nile
Umeme is also moving to fix the network challenges in Northern Uganda which have been a teething issue and often the centre of a love-hate relationship between Umeme and Northern Uganda.
In Gulu District, the largest and most populous town in Northern Uganda, the City Mayor, Alfred Okwonga has positive reviews on the quality of power in the area.
“Over time we have seen the services of Umeme improving. At least as I talk now, I’m seeing some improvement in power outages and we are also seeing the team working on the ground improving on the substation at Layibi,” he told stakeholders recently at an Umeme-organised meeting.
He, however, says Umeme needs to work on extending power to more villages in the district where coverage is just about 21.7%, to attract investors, create jobs and improve livelihoods.
Denis Ondongpiny, the Resident City Commissioner of Gulu City also applauds Umeme over the improved quality of service.
“I’m glad to say that the management of Umeme has listened to our cries, and they have made great improvements. Since May when I was appointed RCC, power has been generally very, very, very stable. Even where they are hitches, the engineers of Umeme always act very fast and correct,” he says.
“I would like to call upon development partners and investors and assure them that power is now stable in Gulu. Please come and open your businesses in Gulu City, so that you help to create employment for our unemployed youths,” he optimistically says.
Selestino Babungi, the Managing Director, Umeme Limited says Umeme has invested significantly in correcting the issues along the main Tororo-Opuyo-Lira-Gulu transmission line as well as investing in new alternative sources of supply.
“We have rehabilitated the Tororo-Opuyo-Lira-Gulu transmission line. We have upgraded the transmission line to pylons to replace the wooden poles in some parts that were susceptible to rotting during the rainy season and bush-burning in the dry season,” Babungi says. He adds: “Last year we invested more than USD2 million in upgrading the Gulu-substation. It is now bigger, with a much bigger capacity. We also installed capacitor banks.”
“We want to ringfence Gulu and Northern Uganda and fix the challenges we have been having once and for all. We project that when Karuma is commissioned and integrated into our Gulu feed, the issues of Gulu will have been significantly addressed,” he says optimistically.
Catch-22: how does Umeme increase reliability while keeping down the cost of power?
Nearly, all the industrialists we talked to, while they agree that most issues of reliability and availability have been nearly fixed, there is still a teething challenge of cost as Muzamil Muhammad, the Manager Policy and Advocacy at Uganda Manufacturers Association (UMA), unequivocally says.
UMA is the umbrella lobby association for most Uganda’s industrialists and manufacturers.
“There has been tremendous investment by the private players in the Electricity Supply Industry (ESI) especially Umeme, in power extensions (distribution), accessibility and of course a noticeable improvement in reliability in general terms,” he admits.
He, however, says that while the liberalisation of the ESI allowed private players to invest in solving supply issues, there was an associated increase in high returns on private capital that has eventually driven up the cost of electricity.
“We appreciate the GoU for the efforts done in light of the commitment to provide cheap and affordable power for manufacturing across the board. There is a need for expeditious resolution of the cost by attaining the US5 cents and lower for all manufacturing entities and providing reliable power across the board to match the rest of our competitors such as Egypt, Ethiopia, South Africa and the rest of the world. This is an achievable target once the mechanisms are in place to ensure access to cheaper, more reliable alternatives including off-take from generation or transmission,” says Muzamil.
Muzamil also says there is still a great need to improve electricity reliability across the country, beyond the Greater Kampala Metropolitan Area (GKMA).
“We believe that without settling the cost and reliability issues, manufacturers cannot compete at both the local and international scene,” he says.
Patrick Bitature, the Board Chairman, Umeme Limited agrees that affordable electricity tariffs for industries remains a critical input to attract industrial investment in Uganda but is quick to add that the current prices reflect the cost structures for electricity generations, transmission and distribution spread over the consumption base.
“Umeme charges end-user tariffs as approved by the Electricity Regulatory Authority (ERA). The approved tariffs to be collected meet the cost of the entire electricity supply industry (generation, transmission, and distribution). Umeme’s contribution to the large industrial tariffs is only 2% whereas transmission and generation account for 98%,” he says.
He, however, reiterates that “Umeme remains committed to playing its part in the equation by driving distribution efficiencies, increasing consumption and system investments to evacuate the increased generation capacity.”
“Umeme is completely aligned with the people of Uganda and the government in driving the country’s electrification agenda. It is in our interest that we have a sustainable electricity supply industry. We continue investing in digital and ICT solutions for the ease of doing business and delivery of services to our customers,” he adds.
Bitature, himself a multi-sectoral serial investor with interests in hospitality, telecoms, real estate, agriculture, power generation and mining, says that Umeme does share and is deeply invested in Uganda’s quest for accessible, reliable and more importantly, affordable electricity— US Cents 5 per kWh.
Bitature applauds the government of Uganda’s move, under the leadership of President Yoweri Kaguta Museveni, to the refinancing of more than USD400 million Bujagali Energy Limited (BEL) loans, which has largely made it possible for the sector to reduce the cost of power from US 9 cents to US 8 US cents and US 16 US cents to US 9.8 cents for extra-large and large industrial consumers respectively.
Reliability and affordability— a chicken and egg situation
Ziria Tibalwa Waako, the Chief Executive Officer, Electricity Regulatory Authority (ERA) says that the question of reliability and affordability is a chicken-and-egg situation—which one comes first?
“We must choose between having enough energy supply and focus on growing the demand or try to catch up with the growing demand. It is our considered view that investing ahead of the demand curve, having more supply than demand usually spurs economic development that has far-much greater benefits than the cost of the surplus itself,” she told CEO East Africa Magazine in an April 2021 interview.
“Therefore, we have a good problem – as the President has always said. That said, we believe, that the increased investment in large hydro plants will continue to reduce the weighted average tariff especially when most of the energy from the large hydro plants is consumed,” she says.
Uganda’s electricity installed generation capacity now stands at over 1,200MW from 180MW in 2005. Electricity sales have been growing at a compounded annual rate of 8% hitting the 3,201GWh in the last 12 months to December 2020 compared to 1,015 GWh of 2005.
She says that for sustainability purposes, affordability is not a one-sided discussion, but rather takes into consideration the interests of all stakeholders.
“Affordability means that we must ensure a credible tariff regime that is cost-reflective to sustainably attract investment in all the three segments; but also offer a reasonably priced service for the millions of Electricity Consumers,” she said.
“As a regulator, we will always be the umpire, the referee; we will always do our best to balance the interests of all the stakeholders, to protect the rights of the consumers,” she adds.
She said that it is by balancing all stakeholder interests in Uganda’s ESI that Uganda’s electricity has been able to grow from a capacity-constrained sub-sector to a capacity surplus sector with over 67 licensees for Generation, Transmission and Distribution.
She also says that Uganda today has a more secure and more diversified generation mix consisting of four (4) different sources, namely: Hydro (1,023.59 MW), Thermal (100 MW), Cogeneration (63.9 MW) and grid-connected solar (60.8 MW), compared to over-reliance on Hydropower as was the case 20 years ago.
Addressing the issue of outages, despite surplus generation the ERA CEO, while appearing on Capital FM’s Capital Gang programme said that it all comes down to the amount of investment that is needed and balancing that with the potential impact on the tariff.
“Currently, we have a poor man’s grid. Most of our premises in this country have one service line. To have proper reliability, you need at least two alternative feed lines. But to invest in an alternative feed, so, that at any one point in time, even if they are going to maintain one line, you are not switched off, requires money,” she said.
According to ERA, Uganda needs an estimated USD3 billion investment into distribution to reach the desired reliability rates.
“This is not an off-head (figure). This has been studied and a document of the least cost expansion plan submitted through our ministry to also the Minister of Finance,” she says, adding: “The resources that we need to make the electricity reach the users in time are limited. They must be mobilised. Of course, there are two ways. The government continues to mobilise but also, on the other hand, Umeme will be happy to mobilise, but what will be the impact on the tariff?” she said.
Over the next 5-10 years, the Electricity Regulatory Authority (ERA) estimates that Uganda’s effective electricity generation capacity will double from 1182 MW in FY2018/19 to 3,500 MW in 2025. The transmission capacity is projected to increase from 2,354 Km in FY2018/19 to 4,354 Km of high voltage transmission lines, while household access to electricity will increase from 24% to 60%. Per capita, electricity consumption will also increase from 100 kWh in FY 2018/19 to 578 kWh.
To absorb the new generation capacity and drive the new power targets, ERA, estimates that Uganda will require up to USD6 billion (UGX21.4 trillion) in investments into the expansion of the electricity transmission and distribution infrastructure as well as accelerated customer connections. Of this, an estimated USD1.2 billion will go towards funding distribution network investments over the next 10 years.
16 years into its 20-year concession, Babungi says that Umeme is still committed to Uganda—powering communities, business, and industry for prosperity.
“This we shall continue to drive, through increased supply of safe and reliable electricity through an efficient tariff-reducing distribution network. Uganda is our home and being Uganda’s invaluable partner in transforming the energy sector as an engine of increased household incomes and improved quality of life is a responsibility that the men and women at Umeme, are proud to wake up to each day,” he concludes.
Adopted from CEO East Africa Magazine