Uganda to invest in new energy plan

Oct 09, 2002 02:00 AM

Uganda has drafted a comprehensive energy policy, which it says will require about $ 2 bn over the next 10 years to implement. About $ 532.6 mm, 32 % of which is public sector contribution, has already been committed to the project.
It is estimated that 68 % of these finances will come from direct private investment while 32 % will be from the government and development partners. The government says that it will seek funding from environmental agencies by emphasising the development of renewable energy resources, which these agencies recommend.

Ministry officials say the policy will be the basis for expanding investment in modern energy production, petroleum exploration and development and supply of well-priced petroleum products. It will also seek to increase efficiency of energy use in all sectors from the households consuming biomass for cooking to the big industries and the transport sector.
"Maintaining the current growth and achieving sustainable development is a challenge that calls for long-term strategic planning. Energy planning and development is a key input in the overall strategic planning cycle," the Minister for Energy and Minerals Syda Bbumba told. She added that in the past this could not be adequately addressed since the energy sector lacked a comprehensive policy framework, and was instead driven by annual ministerial policy statements accompanying the budget.

Completed early this month, the policy says following liberalisation, the power sub-sector now attracts the largest private sector investments in the country. This makes it a vital input in other sectors and potentially a large source of employment for Ugandans.
Over the next decade, revenue from the sector is anticipated to be $ 2.3 bn, accruing from fuel taxes, electricity taxes from independent producers, value added tax on electricity sales, petroleum fees and power exports. More revenues were expected from petroleum production and concession fees for the transmission and generation companies formed following the split of the Uganda Electricity Board.

The Privatisation Unit is currently in the process of granting to a private firm a 20-year concession to run the two firms. The Ministry says $ 400 mm is to be injected in the rural electrification programme, which will have a direct positive impact on poverty reduction and modernisation of agriculture. Uganda's electrification rate remains low, with grid access of only 5 % for the whole country and less than 2 % in rural areas.
Uganda's national grid has just 200,000 customers although the annual power demand is growing at between 5.5 and 7.5 %. Another 1 % of the population access electricity using diesel and petrol generators, car batteries and solar systems. While Uganda has a potential to produce over 2,000 MW, mainly along the River Nile, current production is about 317 MW, although it is expected to rise to 400 MW by the end of the year.

Two dams located at River Nile's Owen Falls Dam in Jinja generate just over 300 MW, while the rest is produced by private companies like Kakira Sugar Works and Kasese Cobalt Company. Uganda's power shortages are exacerbated by exports to neighbouring countries --Kenya (30 MW), Tanzania (9 MW) and Rwanda (5 MW) -- during off-peak hours. However, arrangements have been finalised for Uganda to export firm capacity of 50 MW to Kenya from 2006 after commissioning of the Bujagali Project.
But the Bujagali project has been delayed by corruption allegations involving one of the companies in a consortium which was expected to construct the $ 500 mm, 250 MW dam for the American Applied Energy Services. The World Bank is supposed to offer insurance guarantee to the project and also give the bulk of the money for the construction exercise.

Source: The East African/All Africa Global Media
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