New Vision (Kampala)

Uganda: Electro-Maxx Switches on U.S. $60m Power Plant

Electro-Maxx, a member of Simba Group, has successfully commissioned a 50megawatt (MW) power plant in Tororo, becoming the first Indigenous Independent Power Plant established and funded by Africans anywhere on the continent.

The $60m heavy-fuel thermal plant will go a long way in contributing to the government's strategic plan of not only increasing electricity supply, but also tackling the demand ahead instead of chasing it.

"Uganda needs job creators not job seekers. And to do this, indigenous companies need to be given the opportunity to compete with foreign firms in important growing sectors like power generation and oil and gas," Charles Muhumuza, the firm's boss, said.

"There are plenty of talented entrepreneurs in Uganda that have succeeded in every industry and as Electro-Maxx proves, the new attractive industries should be no different."

Investment opportunities

Already, the plant has attained ISO 9001:2008 quality management systems certification. Uganda boasts of a legal, as well as, institutional framework to provide a conducive environment for those interested in doing business in the country.

"Uganda offers excellent investment opportunities in the energy sector, and investment in this sector is priority for the Government," Kabagambe Kaliisa, the energy ministry permanent secretary, said.

Uganda underwent major power reforms in 1999, with the unbundling of the then state power utility Uganda Electricity Board into three separate entities of generation, transmission and distribution.

The Electricity Regulatory

Authority was created to regulate generation, transmission, sale export, import and distribution of electrical energy. The transmission business, which includes owning and operating the High Voltage Transmission Grid above 33kv, was given to the Uganda Electricity Transmission Company, a public utility company.

"Reforms are needed to increase energy demand, especially in rural areas, where current cost of connection and use is considered a deterrent for most rural households," said Labogang Motlana, the United Nations Development Programme country director.

In the last seven years alone, over 10 plants have been commissioned, tripling power generation capacity.

Local financing

Electro-Maxx managed to raise debt financing locally from Stanbic Bank and Crane Bank, making it the first ever biggest project finance deal in Uganda.

"The private sector is much more efficient at attracting and allocating capital and resources to achieve desired outcomes," said Scot Mackenzie, a senior executive in Electro-Maxx.

"Power plants are just factories that produce kilowatthours (electricity) and no one would say that the Government is better at building and running factories than the private sector."

Energy, like education, health care, safe water, roads, and sound macroeconomic policy, is core infrastructure that is required for any country to develop its way out of poverty.

"The key to reducing poverty in Africa is through a combination of international and indigenous private sector led development, as we are seeing in the electricity industry," said Patrick Bitature, the chairman of the Uganda Investment Authority and founder of Simba Group.

"Governments and civil societies have a critical role to play in making sure that the right environment exists for the private sector to take off. No country has developed its way out of poverty through aid, and there is a reason for this," Bitature added.

Electricity demand

New power plants are critical for Uganda's economic progress. Experts have warned that if electricity demand continues to increase at its current pace (about 10% per annum) and new households are connected and industries up their business, the current power supply will be consumed quickly.

"If no urgent actions are taken, load-shedding will be back as early as 2014," Klaus Dieter Duxmann, the German ambassador, warned recently.

The Government has directed that crude oil from Lake Albert be used as stock feeds for the local thermal plants to ensure not only security in supply, but to also control costs.

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