The Independent (Kampala)

Uganda: Eskom's Bigger Say

Part of the power dam operated by Eskom in Jinja. The company is seeking further investment in Uganda's energy sector. INDEPENDENT/JIMMY SIYAHigh powered Eskom delegation seeks consolidation and growth of their investments in Uganda

If the recent visit of power generator Eskom's top guns to Uganda was intended to make a statement about their plans for the country, it definitely did.

Led by Zola Tsotsi, the group chairman, the high-powered delegation probably got and gave a little more than they could have planned for. Also on the delegation were Mongezi Ntsokolo, group executive for transmission; Segomoco Scheppers, the senior general manager and Johnny Dladla, CEO Eskom Enterprises.

The highlight of their three-day visit from March 9-12 was a public dialogue under the theme, 'Electricity in Uganda: The truth.' The event was organized and sponsored by Eskom, which in its own right is a key player in Uganda's energy sector. It generates over 45% of electricity from Kiira and Nalubaale dams in Jinja under a concession running for 20 years, which is now half-way. The company has so far invested $13.7 million in maintaining the two plants - $5.2 million of which was invested in 2013 alone, according to company officials. The plan in the concession, according to officials, is to invest a total of $40 million by the end of the 20-year concession that started in 2003.

In recent months, energy sector stakeholders have come under more scrutiny from the public, the government and Parliament. Power distributor, Umeme has probably been bearing most of the brunt of the scrutiny, which at one time led to suggestion that its concession should be terminated. In the circumstances, it was only prudent that Eskom's top guns should come around to provide some much-needed visible support to Eskom Uganda Ltd and per chance offset the emergence of negative perceptions about the company. Also part of the public relations agenda was to effectively engage with strategic stakeholders and cement their relationship with the government and power consumers on top of re-affirming the Group's commitment to energy development in Uganda.

"This is an important public relations exercise," Tsotsi told a group of business journalists on a guided tour of Kiira and Nalubale plants in Jinja on March 10.

The Eskom executives' rare visit came at a time when Uganda is on course to develop several large hydro-power projects such as the 600MW Karuma dam, as well as the 650MW Isimba dam and is also aggressively looking forward to utilizing alternative sources of energy such as thermo, solar, coal among others. In 2012, the 250MW Bujagali dam was launched in Jinja. Effectively, all these developments would dwarf Eskom's 138MW generated from the obviously aged Nalubaale power plant in Jinja, which was set up in the 1950s and Kiira whose construction started in 1993. That would definitely give Eskom the 'smaller player' tag. The idea then is to look at a possibility of increasing their share of the market. In fact, Tsotsi revealed that their expertise is available for any form of partnership the government wants to implement in the energy sector.

"We know there are more opportunities in the sector here and we would want to play a part," he said, which he hoped would not be a problem given their excellent performance on the ongoing concession.

"We are here to stay as longer as the people and the government of Uganda welcomes us."

At the Nalubaale Power Station in Jinja, Tsotsi was full of praises for his team in Uganda for maintaining the aging plant in pristine condition at a 96% performance. "This is good performance for a plant that was constructed in the 1950s," he said.

Energy sector challenges

Data from the Energy ministry indicates that the country's peak demand currently stands at 450MW and growing 10 -15% a year with 72% of it being consumed by heavy industries and the rest by households and SMEs.

Total energy consumption per capita in Uganda as of 2012 was estimated at only 80kwh, which is way below the continent's average of 578kwh per capita and the world's average of 257kwh per capita. In comparison, a South Korean consumes 8,502kwh per year, a Ghanaian 253kwh, and an American 13,000 kwh.

That shows that the local and regional market for power is still virgin and massive the growing per capita consumption would ideally translate into more profits for generation companies and distributors.

Tsotsi said Uganda's positive economic growth prospects will be the key market for power and Eskom is ready to tap into that.

At the energy stakeholders public dialogue at Serena Hotel on March 11, Tsotsi called for more efficiency from players - generators, transmitters and distributors - by more investment in appropriate infrastructure.

He said investing heavily in other alternative sources of energy - thermo, coal, solar - was also vital in ensuring that demand and supply move in tandem. If anything, South Africa's example would be good for Uganda to emulate. At least 86% of South Africans have access to electricity compared to less than 15% of Ugandans. That would only come about with better planning processes.

"You cannot connect everyone at once; it is a planned process," he said. He added that electrifying regions with high development potential that can easily contribute to the growth of the economy would be a good idea for a poor country like Uganda. This he said, was because the energy sector has a host of challenges including high connectivity and equipment costs and thus electrifying economically viable areas first would be a better option.

On funding, Tsotsi said the government should go for partnerships with the private sector or other governments to implement the funding of these projects.

At the public dialogue, a panel comprising the Commissioner for Energy, James Banabe, MP Jimmy Akena, MD Umeme Charles Chapman, Eskom Uganda MD Nokwanda Mngeni and Emmanuel Katongole from Quality Chemicals industries; was formed to field questions from the public.

Chapman weighed in on the funding issue and proposed that the government should look for alternative sources of money say foreign Pension Funds in South Africa, UK, etc to invest in the sector.

Tsotsi added that a robust regulatory framework and a more transparent institutionalized sector would bolster growth in the sector. Above all, the players need to work as a team, he said.

Indeed, under the Electricity Act of 1999, the government established six institutions to manage the sector. These include, the regulator - the Electricity Regulatory Authority (ERA), The Uganda Electricity Generation Company Ltd (UEGCL), which currently owns Nalubaale and Kiira power stations. The other is the Uganda Electricity Transmission Company Ltd (UETCL), which manages the transmission process, and the Uganda Electricity Distribution Company Limited (UEDCL), which is responsible for building the distribution network at 33kV and below in the areas where UEB used to operate with a few additions made by REA and Umeme. The other is Umeme - which is operating UEDCL's distribution network under a concession agreement. Finally, the Rural Electrification Agency (REA) is responsible for electrifying rural areas. These are in addition to the Ministry of Energy and Mineral Development, which offers oversight on the sector. Unfortunately, all these institutions are performing in a somewhat haphazard manner, which some participants said was not conducive to further development of the sector.

Tsotsi said that Uganda should focus on increasing power generation. "If you can export some, do it," he said, then use the revenue to maintain the network infrastructure. Chapman agreed with Tsotsi that the most urgent need for Uganda is to increase power generation by building more power dams to support the growing demand.

Katongole, the executive chairman of Quality Chemical Industries, one of the biggest power consumers, said without increasing power generation to match the rising demand, Uganda faces the risk of severe power cuts in the medium-long term.

"More industries are coming to Uganda and they will need power to run," he said. He said Uganda wasted four years on Karuma procurement, which might be costly. Lira Municipality Member of Parliament, Jimmy Akena who is also a member on the Parliamentary Natural Resources Committee, said politics was undermining the development of the energy sector.

Mngeni noted that the lack of skilled workers as well as the high cost of machinery were major challenges facing electricity generation at the moment. But were the South African officials satisfied with their visit to Uganda? All indications show that it was indeed a very fruitful one.

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