KAMPALA – Following the commissioning of 42 MW Achwa II hydropower plant in October 2019 in the absence of a power evacuation medium, today government is losing shs 39.4 billion from the 2020 energy ministry’s shs 2.6 trillion budgetary allocation for paying for the deemed energy. The raising debt is due to government’s failure to secure land for the construction of transmission line to evacuate power to the national grid.
According to Uganda Electricity Transmission Company (UETCL), it’s noted that delays in land acquisition to construct transmission lines to evacuate power from 42mw Achwa hydropower dam are causing the government to pay for deemed energy.
For instance, UETCL noted that the construction of evacuation lines for Achwa plant will be ready in two years. The government could lose more than initial cost shs 290 billion investment for establishment of the project. If multiplied with the average rate of US cents 9.83 per kilowatt hour charge, the government will pay about shs 224 trillion as deemed energy in two years.
Indeed, the revelations about Achwa commissioning without securing land for transmission lines raise fresh questions about 600mw Karuma project and other hydropower plants. The initial cost of the karuma project was $ 1.7 billion but has been delayed twice and extended its construction time from the original planned 5 years to now over 7 years.
According to new vision June 23, 2020, confidential document, it indicates that each month of delay costs the government $12m (about shs 44b) in expenditures and $17m (about sh 62.4b) in lost generation revenue. Consequently, a year of delay amounts to $144m (about shs 535.8b) in expenditures and $204m (about shs 759b) in lost generation revenue.
Lack of transparency in the signing of Power Purchase Agreements (PPAs) for electricity projects has wrecked the Achwa, Karuma and other Hydro Power Project that was hoped to guard against a return to longs periods of load shedding due to insufficient power generation. Without transparency, Ugandans will continue suffering from both insufficient power and expensive tariffs. In the end, they will not benefit from national, regional and global initiatives such as the Rural Electrification, the SE4ALL initiatives and others intended to help the increasing power access, reliability and affordability to drive socio-economic development.
Today, electricity access for lighting and other simple services stands at 22% and over 95% of Ugandans continue to rely on biomass (firewood and charcoal) for their cooking needs because they cannot afford to use electricity beyond lighting, charging phones and other simple tasks.
Moreover, Uganda has surplus hydro-electricity. Of the 1,2000MW installed capacity in Uganda, citizens consume approximately 700mw. The government will soon commission the 600mw Karuma hydropower plant. Ugandans are already paying high power tariffs because of the excess power that is being produced and is not consumed. Citizens should not be further exploited by making them pay for deemed power which is not required.
In addition to the above, the government continues spending on paying thermal power companies such as Jacobsen and Electro-Maxx as capacity charge for contributing to the national grid.
As you may recall, Uganda’s government entered into PPA with thermal energy generator Jacobsen and Electro-Maxx to supply power to the national grid in 2005 when the country suffered a power deficit following prolonged drought.
The fact that Ugandans continue to pay for expensive power in the face of surpluses is highly exploitative and unfair.
We, therefore, request the MEMD to do the following;
- The MEMD should urgently conduct a new assessment for all the shs 89.4 billion invested as deemed energy for the 42mw Achwa hydropower and cost implication of delay commissioning of the hydropower dam on socio-economic development of the country.
- The government should also assess the reasons why in the region and world as whole, Uganda continues to produce high power tariffs that do not benefits Ugandans.
iii. Enabling parliament and public access to power Purchase Agreements (PPA) signed by government with Jacobsen and Electro-Maxx to explore options of cancelling the agreements without costs to the taxpayer.
Edwin Mumbere is a Web Developer / Content Creator / Blogger/ Data Analysist / Climate Activitist