Will the connected Karuma dam power revamp high power tariffs?

Op-Ed: Recently, the Uganda Electricity Generation Company Limited (UEGCL) revealed that unit five of the 600 mW Karuma dam was successfully synchronized to the grid, making it the sixth to undergo all the operational tests for readiness.

In the same notice, the company also noted that the first unit completed its trial run and grid connection tests in March 2023.

This means that the connection of the 600 MW of electricity from Karuma Dam to the national grid has now increased Uganda’s total generation capacity to over 1,900 MW.

However, it is evident that even with the recently installed capacity of 1,379 MW, this power has never been exhaustively consumed by the country at peak demand. The peak demand still stands at less than 900 MW, leaving a surplus of over 500 MW, which becomes deemed unconsumed electricity.

Up to date, the country has continued to lose billions of dollars to this unconsumed power. For instance, the Auditor General report indicated a cost of up to 88 billion shillings in FY 2020/2021 due to this inefficiency for that deemed power. In the same vein, in FY2023/2024, the Parliament’s Committee on Natural Resources presented a budget estimate of 113 billion to cover deemed energy costs causing the government’s financial burden due to non-existent or weak grid infrastructure and insufficient demand for electricity by poor Ugandans.

In addition, the Energy Minister recently disclosed that the government had been paying about US $24 million (UGX 90.18 billion) annually for deemed power since 2019. Like many other Ugandans, this has created questions about who is supposed to meet those costs that the government is paying to the independent power producers. Secondly, why would the government generate the electricity that it cannot dispatch to Ugandans?

More so,Ugandans are still faced with a lack of access to electricity, despite the surplus electricity that the government is boasting about that is connected to the national grid. Available evidence indicates that only 20% of Uganda’s population has access to grid power. Further, over 94% of the population still relies on biomass to meet its cooking energy needs, with 73% relying on firewood and 21% on charcoal. This is because Uganda’s electricity tariffs are still high.

The International Energy Agency 2023 observed that Uganda continues to have one of the lowest electricity access rates in sub-Saharan Africa due, in part, to connection costs that are too high for most potential customers.

The unaffordability of electricity has led to a failure to ensure access to clean energy and clean cooking technologies for Ugandans. Notably, because of the high power tariffs, even the few of Uganda’s remaining forests are threatened as Ugandans search for firewood and charcoal for cooking.

Uganda’s forest cover stands at 12.4%, which is partly contributed by the energy poverty of Ugandans. The government needs to first address the energy needs of nationals, including affordability, reliability, and accessibility, before looking at generating more electricity that ends up not being consumed.

Notably, the Karuma dam project that the government was supposed to commission in 2018 has now taken about five years, and the project is yet to be commissioned, which has cost implications for poor Ugandans.

The project, with an estimated cost of $1.7 billion (UGX 6.323 trillion), has since skyrocketed to UGX 8.183 trillion because of the delayed commissioning. Although the construction of the dam is claimed to be 99.9% complete, the Community Development Action Plan (CDAP) projects and compensation for the people affected by the project are not yet complete.

The government has invested huge amounts of money to develop, expand, and rehabilitate these big power dams amidst the country’s indebtedness and low power access. This explains why Uganda’s public debt has risen to unprecedented levels, reaching shillings of UGX 96.1 trillion ($25.3 billion), which is 52 percent of GDP as of June 2023, according to an Auditor General’s report.

As of now, each of the 45 million Ugandans is now indebted to the tune of UGX 2.5 million, which is causing financial distress for Ugandans. Part of these debts is contributed by energy developments such as Karuma and Isimba dams, among others.

Therefore, Ugandans are curious about how this significant increase in power generation capacity will lead to a reduction in electricity tariffs for consumers, especially with the connection of 600 MW of power from the Karuma dam to the national grid.

Secondly, if so, what measures are put in place to ensure that the reduction in tariffs is implemented effectively and benefits consumers across the country? Ugandans also want to know what steps the Ministry of Energy is taking to monitor and evaluate the impact of this increased power generation capacity on electricity tariffs and consumer affordability.

With a growing demand for electricity and a lack of access to the national grid, the government should now re-strategize the country’s energy investments to ensure sustainable and cost-effective solutions to meet Uganda’s energy needs while creating new opportunities for economic development.

The author is Patrick Edema, an environmental engineer.

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