“I am confident that the measures put in place will enable Uganda to achieve its electrification targets to support vision 2040”1. Honourable minister, thank you for this opportunity, what do you see as the main challenges for Uganda in terms of its energy infrastructure currently? How confident are you that the country will meet its Vision 2040 goals with regards to electrification etc.?
The main challenges for Uganda in energy infrastructure currently are:
a) Infrastructure Gap in Generation Capacity such that we cannot meet the growing demand: Investment in least cost technologies in the power sector has not been sufficient to match the growth in power demand.
b) Financing Gap for the Power Sector: There is a huge financing gap in the power sector that does not match the needed investment to meet the growing energy demand.
c) The Need to Increase Access to Modern Forms of Energy: Only 20% of our population has access to modern energy services yet without energy, sustainable development goals cannot be attained.
d) The Transmission and Distribution Infrastructure Cannot Support Power Trade in the Region. We have a weak infrastructure which is not interconnected to our neighbours. This cannot support inter-regional energy trade which would enhance security of power supply.
e) High Power Losses (commercial & technical) within the distribution network now at about 19.5%.
On the country meeting its Vision 2040 goals with regards to electrification, I need to point out that Vision 2040 has a number of strategies that have been planned. Adequate and reliable energy is a prerequisite to implement most of the strategies in the Vision. It is for that reason that we have prioritized the development of energy infrastructure in tandem with the growth of the economy.
I am therefore confident that the measures put in place will enable my Country achieve its electrification targets to support vision 2040.
2. Which energy projects in Uganda are you most excited about?
Uganda is undertaking several infrastructure projects; some of the most exciting include:
i. Isimba Hydropower Plant (183 MW) to be commissioned in August 2018.
ii. Karuma Hydropower Project (600 MW) to be commissioned in December 2018.
iii. In addition, there a number of renewable energy projects under the GET-FiT program totaling over 150 MW that are under development. These include two solar power plants that will be the first grid-connected solar PV plants in Uganda. The two will supply 20 MW to the National grid.
iv. There are several industrial park substations and transmission lines being developed which are expected to spur further industrialization in the country. The National grid is being reinforced and expanded to enhance electrification levels in the country.
v. Government is expanding the Power Transmission Infrastructure through the construction of several transmission lines and substations. By June 2017, a total of 976 km of transmission lines will be completed and commissioned. Those meant to facilitate regional power trade include; Bujagali-Tororo-Lessos 220kV, 127km line; Mbarara – Mirama – Birembo 220kV, 66km line.
vi. Another 477 kms of High Voltage (HV) and Medium Voltage (MV) transmission lines will be developed in the medium term to increase energy access.
3. What is your message to prospective investors about opportunities in the energy sector in Uganda?
Government of Uganda’s policy is to work with the private sector in the development of the power sub sector. A conducive environment has been put in place to attract provate capital. Several projects are being implemented by the private sector and there is room for more. The legal and institutional framework in place should provide comfort to those interested to do business in Uganda. The key investment and bussiness prospects in the energy sector include;
i) Participation in Public-Private Partnerships for developing the large and small hydros.
ii) Contribution to equity in financing power projects.
iii) Participation in the Engineering, Procurement, and Construction (EPC) contracts.
iv) Opportunities for supply of equipment in the National Transmission Line network i.e. the upgrade of several substations, supply and Installation of transmission lines as well as supply and installation of power transformers.
v) Investment in Electricity generation from solar energy.
vi) Participation in the development and promotion of the different renewable energy technologies such as solar water heaters, solar driers, solar cookers, etc. In particular, as part of the diversification efforts by the government towards alternative power generation, a new energy mix which encourages construction of grid-connected solar farms is being pursued. Currently, we have investors setting up solar farms of 10 MW each.
vii) Investment in Energy Efficient technologies for Industries and Households such as efficient lighting technologies, efficient motors, soft starters, capacitor banks, etc.
4. What incentives are in place for those companies interested in getting involved in projects?
Government has put in place incentives to attract private sector investment in the power sector. Steps tacked include the following:
i) To begin with, Government of Uganda has put in place a conducive legal and institutional framework to promote investment in the power sector. The Power sector in Uganda was liberalised in 1999. This paved way for Private Sector Participation.
ii) The Renewable Energy Policy, of 2007 was put in place to increase the share of Renewable energy in the energy mix. To attract private capital it provided for the following:;
a. Feed-in-Tariffs were introduced to provide a predictable environment.
b. A Standardized Power Purchase Agreement, PPA was introduced reduce the lengthy time involved in negotiations between the developer and the Off taker. This dramatically cut down time spent on negotiations as well ason transaction costs.
c. The introduction of specific regimes that favor renewable energy. These include preferential tax treatment, tax exemption and accelerated depreciation was introduced.
iii) The Uganda Energy Credit Capitalization Company (UECCC) was established to assist project developers attain financial closure.
iv) Government is welcome to projects developed as Private-Public Partnership (PPP) as well as ensuring that Government constructs power evacuation line.
5. More and more projects in this sector on the continent are being financed through Public-Private-Partnerships; your views?
To a large extent, I support Public-Private-Partnerships since they are a sound solution to bridging the financing gap usually associated with major power infrastructure projects. A key argument I can put forward in support of PPPs is that they avoid limitations that are usually associated with public-sector budgets, which today is one of the major restraining element for developing economies in Africa.
The other important aspect is private-sector participation in delivering public sector services to the public. Nevertheless, to take on public sector roles, the private sector must be motivated by assuring them of an acceptable return on their investment which takes into account the risks assumed by the private sector in delivering public services. Risk transfer is a key factor in the value-for-money argument in favour of PPPs: Also, transferred risks are better managed by the private sector, so costs will be lower than if they are retained by the public sector.
However, we must not forget that the private sector is associated with over-hedging; it takes a long time to mobilize funds, require excessive government guarantees ( commitment to long-term obligations on the part of the public sector) and often capital is over-priced. Therefore negotiations with the private sector are usually required to achieve affordable projects that do not place a long-term burden on the public sector.
6. How important are regional power projects?
Regional power projects are an indispensable ingredient for achieving universal access to modern energy services by 2030. Broadly speaking from a technical perspective, regional power projects or power pools are vital for the following reasons:
i) Regional power pools enhance the power system network integrity. The overall system spinning and standing reserves are better in a power pool than in a standalone system.
ii) In addition, system black outs in partner countries can be easily combatted as there is better reliability and security of supply due to access to imports during emergency conditions.
iii) The power pools also facilitate regional power trade and more economic operation of the power generating plants and transmission infrastructure due to increased efficiency and economies of scale.
iv) These projects also promote regional cooperation and contribute to the overall political stability within the partner states.
7. You are part of the high-level ministerial opening session at East African Power Industry Convention (EAPIC) in September. What will be your message?
The message at the convention will focus on initiatives and strategies being undertaken by my government to provide adequate power supply which is the engine for social economic development. As we do this we need countries in the East African region to share lessons learnt and encourage regional cooperation because it will enable us improve our energy security.
We have to point out that our Governments alone cannot do the development of the power subsector we need the support of the development partners, Development Banks as well as private sector participation.
Finally I will highlight some of the business and investment opportunities within the Uganda’s power sub sector.
8. How important is this regional meeting in your view?
In my view, the East African Power Industry Convention (EAPIC) provides a unique forum to review the advances made in the development of the East African Power Industry. In addition, the challenges experienced by the different players and stakeholders are discussed and plausible solutions deliberated upon.
It is therefore imperative that all players in the power sector attend this convention to get the most current information and strategies that contribute to pushing the East African Power Industry forward.
9. What is your vision for the role of women in the continent’s energy sector?
Women have a very important role to play in the continent’s energy sector realizing that they influence how energy is utilized. In Uganda, we have a gender policy which requires the inclusion of women in the development activities. Women have equal opportunities to employment in the energy sector. It is mandatory that when energy projects are being developed, gender considerations are taken care of.
It is thus imperative to bolster the integration of women into all levels of the energy value chain as this can lead to more effective and efficient energy initiatives. Women should not be looked at as only passive users of energy; they need to take up several leadership positions within the energy industry to shift the gender paradigms. Such initiatives have the ability to enhance women’s social and political status, increase income generating opportunities for women and reduce hunger and poverty levels.
10. Anything you would like to add?
I want to reiterate my message to all sector players to contribute positively to the advancement of our power industry.
During the conference we should share experiences and lessons learned for the good of the power industry in the East African Region
The Governments of the different partner states should also provide a conducive environment, support and fast track the development of regional power projects to boost energy security in the region.