The law is expected to be the major driver in regulating the electricity sector with changes like the exit of Eskom from the Nalubaale and Kiira dams when the current concession ends on March 31, 2023. January 2023 will come with reforms ending a single-buyer monopoly by Uganda Electricity Transmission Company Limited (UECTL) in the purchase of all electricity generated in the country. The transmission sector is being opened up to more players.
Generally, 2023 is expected to usher in many changes in the electricity sector or what the sector players have described as a second electricity reform after the one that unbundled UEB in the late nineties following the enactment of the 1999 electricity Act.
One of the issues that come into play will be whether the country will have more power generated and consumed. 2022 did not see the commissioning of a new large-scale Karuma hydropower dam while the breakdown of the 184MW dam at Isimba was of concern as the country went into darkness.
By the year’s end, the installed capacity remained at 1365MW from all the power dams. The 600MW Karuma dam was expected to come on board in 2022 but its commissioning was delayed to the end of the first quarter of 2023. Energy minister, Ruth Nankabirwa was in an upbeat mood as the year ended, promising to deliver Karuma after several extensions of the date of commissioning.
Sources indicate that test running of Karuma dam has been ongoing ahead of commissioning. Karuma should have been fully operational by end of 2020. While the commissioning of Karuma dam will increase the installed capacity to 1965MW, there is concern that the electricity generated will not be fully utilized because of gaps in the transmission and distribution infrastructure.
The other concern is that Uganda’s energy generation is still more dependent on large-scale hydropower dams yet the ministry of Energy has always emphasized an energy mix comprised of large hydro, mini hydros, and renewable options like solar.
Investments into Uganda’s renewable energy sector have been sluggish. The only major investment that may materialize in 2023 is from a project by TotalEnergies E&P Uganda. The energy company plans to install 120MW of solar photovoltaic (PV) technology in selected parts of the country.
At the end of 2021, the Electricity Regulation Authority (ERA) found that the largest percentage (91.2 per cent) of transmission purchases were from hydro and other energy sources constituting only 8.8 per cent. For some experts, that is problematic given that solar constituted just 2 per cent of the total electricity.
A recent household survey by the Uganda Bureau of Statistics indicates that the national electricity access rate has increased to 57 per cent, comprising 19 per cent and 38 per cent on-grid and off-grid connections, respectively. With such progress, experts like Dr Frank Ssebowa have indicated that it is unlikely that Uganda Vision 2040’s target of 60 per cent electricity grid-based access by 2027 (33 off-grid) and 80 per cent electricity access will be met.
Bridging Electricity access gap
Some of the barriers to electricity access connections include high tariffs and connection charges. Eng Abadon Atwine, the assistant commissioner in charge of electricity supply at the ministry of Energy argues that there was some progress towards bridging the access gaps through the expansion of the grid.
“Because to have people connected to power, you must have access to the grid. If you don’t have one, you must have an alternative. So if you look at 2005, the distribution network was 6496 kilometres. We tripled that…” revealed Atwine.
According to Atwine, that means that the grid has gone closer to the people and that they can be hooked onto the network. The national electrification strategy study by the ministry of Energy in 2022 found that 51 per cent of the population lives within 0-1.5 kilometres of the grid, 34 per cent lives within below five kilometres from the grid, and 13 per cent live between 5-20km away from the grid.
The question is whether universal access (10.4 million households) will be connected to electricity by 2030. A recent Afro Barometer survey found that the proportion of Ugandans who live in zones served by the national electric grid has doubled since 2005, from 24 per cent to 49 per cent.
It found that urban residents (90 per cent) and citizens who live in the central region (81 per cent) are far more likely to be in zones served by the electric grid than their counterparts in rural areas (36 per cent) and other regions (30-46 per cent).
Afro Barometer found that one in four Ugandans (26 per cent) live in households that are connected to the national power grid. Poor citizens and residents in rural areas and in the northern region are least likely to be connected.
What to look out for in 2023
The assumption has been that the millions not connected to the grid will have to wait for grid extension. But the ministry’s permanent secretary, Engineer Irene Bateebe recently revealed that 2023 may see new technologies for “bottom-up” energy access to complement the traditional top-down planning of national grid extensions.
Some of these initiatives will come with the implementation of the newly amended electricity law. The new Electricity (Amendment) Act of 2022 ended the single-buyer mode, where UECTL was the single buyer of electricity generated in the country. According to Eng Bateebe, 2023 will see the enforcement of the law with guidelines that will usher in new players to end UECTL and Umeme monopoly.
Private investment in transmission
According to Kananura, the network as it stands needs further strengthening.
The ministry of Energy statistics indicates the electricity transmission network length increased by 1,804km from 1,627km in 2017 to 3,431km in 2021. Like in 2021, the electricity transmission sector has suffered a number of setbacks due to vandals who have been stealing pylons, wires/conductors, and transmission infrastructure for scrap. Vandalism was mainly blamed for a number of power blackouts in 2022.
The ministry of Energy said in 2021, it lost Shs 260 billion to vandalism. A number of towers collapsed in 2022 due to vandalism. The last incident was reported at the end of November.
The other development to look out for in the coming year is the introduction of the direct purchase of electricity. According to minister Nankabirwa, with the amendment of the Electricity Act in 2022, manufacturers who qualify will be able to purchase electricity directly from the power generators.
A number of challenges have been identified in the area of electricity distribution in 2022. Some of the cross-cutting issues include vandalism, power theft, affordability of power, and power losses. Questions about reducing the 17 per cent distribution losses and managing the transition from Eskom linger on. Eskom has been running the two dams under a 20-year concession.
Uganda Electricity Distribution Company Limited (UEDCL) managing director, Paul Mwesigwa explained that some of the energy losses occur because the consumer has not consumed all the energy from the transmission side. He said the energy losses due to technical losses is one of the major challenges as ERA asks UEDCL to reduce the losses to about 9 per cent or less.
“The fact of the matter is that we have to invest on the side of technical losses. To have a state of art distribution network, we have to invest $150 million per year. For about seven years. The challenge is that what will be the impact of that investment on the end—user tariff?” asked Mwesigwa.
The government has been investing about $70 million in distribution networks. The Uganda Electricity Generation Company Limited (UEGCL) will be taking over the management the of Kiira and Nalubale dam complex from Eskom whose concession ends on March 31, 2023. Eskom is expected to be paid a buy-out amount for the cost of investments it has not recovered.
UEGCL managing director, Eng George Tusungwire Mutwetwaka said that a road map based on concession and assignment agreement is in place to ensure the transfer of the Nalubaale and Kiira dams.
Source: The Observer