The project is expected to connect electricity to 340,000 households, 800 SMEs
In a bid to extend power to rural areas under the rural electrification programme, the government with a grant from development partners, plans to construct 10 mini hydro power plants in the country. The construction of the mini hydro power plants will be coordinated by Uganda Energy Credit Capitalisation Company (UECCC), a state-owned company using funds from the Dutch ORIO Infrastructure Fund.
Roy Nyamutale Baguma, UECCC's Manager in Charge of Transaction Execution, said each hydro power plant is expected generate between 1-1.5 megawatts of electricity. The construction of the mini hydro power plants is expected to reduce on power outages, especially in rural areas. The project will be developed in two phases. The first phase of carrying out feasibility studies is expected to kick off next month, and will take 18 months.
It is estimated to cost Euros 900,000 [approximately Shs 3.2bn). The studies will be undertaken by Royal Haskoning, an international engineering and consulting firm. The energy minister, Irene Muloni, is expected to officially launch the project today at Sheraton hotel in Kampala.
After the development phase, the real construction of the mini plants will be funded by ORIO [50%] and other development partners.
"The total cost of the construction phase for all the 10 hydro mini plants is estimated at Euros 24.4 (approximately Shs 8.5bn)," Baguma said.
After construction, Baguma explained, the mini hydro sites will be concessioned to the private sector for management. It is not yet clear on which small rivers the power plants will be constructed. However, Baguma says it will most likely be in western Uganda. Once completed, the project is expected to connect electricity to 340,000 households and spur social-economic growth.
The project is also expected to connect over 800 small and medium size enterprises (SMEs) to electricity and also reduce the use of firewood, Baguma stressed. The project is expected to be completed in 2016. According to government policy, mini hydro power plants, which are less than 20MW, are supposed to be developed by the private sector and not government.
Government only develops hydro power plants that have capacity to produce more than 20MW, said Baguma. UECCC's mandate is to provide a reliable framework for pooling resources from government, investors and development partners and channel them to viable renewable energy projects. UECCC's main function is to enhance the flow of private sector financing resources towards small-scale renewable energy projects with a capacity of up to 20MW and/or rural electrification projects in Uganda.
Renewable energy investments include solar energy, biofuels, biomass, just to mention a few. These energies will take the form of products such as hydropower plants, geothermal plans, cooking stoves, and baking ovens, among others. Renewable energy remains a crucial energy component for government. Under the Renewable Energy Policy of Uganda, which was approved in 2007, government intends to increase the component of renewable energy, within the total energy consumption, from the current levels of roughly 10% to 61% by 2017.
According to the renewable energy policy, government needs $3.5 billion to achieve that target. The policy estimates that 86% of this money will be invested by private players, while the remaining amount will be sourced from government and foreign donors.
Government has zeroed in on the energy industry to drive its growth over the next two decades. The energy sector currently accounts for the largest investments in the country.