THURSDAY, 19 JANUARY 2012 01:27 WRITTEN BY MOSES TALEMWA
When Parliament’s ad hoc committee probing the energy sector reconvened this week after the Christmas recess, chairman and West Budama South MP Jacob Oboth indicated that they had a tight agenda ahead of them.
The committee plans to meet key government officials and to conclude its report in two weeks. According to Oboth, this report is expected to set the tempo by which the power sector will run, beginning this year. The committee is set to meet key sector ministers, Irene Muloni, Simon D’Ujanga and Hilary Onek, as well as minister of State for Finance Aston Kajara and long-serving permanent secretary Fred Kabagambe Kaliisa. The five are expected to explain the various discrepancies in the sector that led to a crisis, which now makes doing business in Uganda the most expensive in the region.
“We need to get to the bottom of this crisis so that when our report comes out, it is so comprehensive that our groundbreaking resolutions will not be ignored,” Oboth says. The MP has met several groups of players who were involved in the evolution of the sector from 2004, when Umeme first took over from the disbanded Uganda Electricity Board.
Many in the business community are also watching the committee closely to see if its final report will mirror their own findings and concerns.
“We have been doing our own research and we intend to publish our report on January 20 before we call for decisive action,” Issa Sekitto, Kampala City Traders Association spokesperson reveals.
Sekitto says KACITA is convinced the electricity crisis is unsustainable and unnecessary as Uganda is now the most expensive in the region. “As you know most (businesses) start out small and are eventually knocked out by high electricity tariffs or the lack of power,” Sekitto says.
However, Sekitto’s comments couldn’t have come at a worse time. The Electricity Regulatory Authority (ERA) recently issued new tariffs, following government’s decision to withdraw the subsidy on the cost of electricity. The decision effectively increases the cost of power by 70% (from Shs 184.8 to Shs 312 for the large consumers and 38% for the medium scale consumers from Shs 333.2 to Shs 458.9).
Uganda Manufacturers Association members, who are already incensed by the move with some calling for a strike, want a public hearing on the matter as it affects their survival.
“UMA demands an urgent fair hearing by government on this matter that fundamentally affects the present and future members of UMA over and above having far-reaching social economic consequences for Uganda as a whole,” UMA chairman Kaddu Kiberu demanded in a letter on Monday.
At around the same time, the Oboth committee summoned the Electricity Regulatory Authority (ERA) and demanded that it withdraw the new rates, after realizing that, contrary to regular practice, the ERA board had not sat to decide on them.
“We demand that you withdraw these rates or else we shall send the people onto the streets to demonstrate against you,” Kasilo county MP Elijah Okupa said.
ERA executive director Benon Mugisha Mutambi said it was unsustainable to keep the power tariffs at the old rate. Once outside the house, the director for Energy and Mineral Development in the ministry, Paul Mubiru, weighed in on the matter: “The concerns of the ad hoc committee have been noted but the reality is that the process has already taken place. It is difficult for the committee to change the tariff back because the mandate for this lies with ERA.
The committee can only make recommendations to Parliament which would then discuss them and change them if a resolution is made. But the Electricity Act is clear and makes no provision for tariffs to be taken to Parliament for endorsement.”
Mutambi later added that unlike in the past, ERA would review the tariff once every month from April going forward and the cost of power would not be going down.
“So far there is nothing to show that once Bujagali comes on stream, the cost of power will come down. So, it is unrealistic to expect lower power tariffs,” Mutambi said.
In explaining this, Mutambi says the current power deficit is 172MW, which they hope will be resolved when Bujagali is fully commissioned. But then he expects population growth to have translated into higher demand for power.
Sekitto says the trading community is already fed up and will not hesitate to take action.
“The electricity tariff is unnecessarily high and this must end. We are ready to take to the streets to ensure that our demands are met.,” the KACITA spokesperson said.
Contractual Issues
The ad hoc committee is also already concerned about the contract that brought Umeme into Uganda’s power sector.
“The negotiating team knows very little about the [concession] agreement than those who are now investigating it, and worse still they don’t even recognize that it’s a bad deal that makes the tax payer a prisoner,” Oboth said late last year.
The Auditor General has also raised queries about Umeme’s losses and the level of investment onto the national grid. Under the contract, Umeme is entitled to claim compensation from the government for any losses incurred while conducting business, but the Auditor General doesn’t believe the loss levels are genuine. His appearance before the committee in the coming days will shed light on this.
Power Generation
So far, the committee has discovered that there are serious problems in how power is generated at Jinja. While meeting the director of Water Resources (DWR), Mugisha Shillingi, the parliamentary committee discovered that the country is ill-equipped to monitor the water that goes into the two dams Kiira and Nalubaale to generate power.
“We do not have any staff in Jinja; we only monitor the water that is discharged into the dam by looking at the gauges after Eskom has released the water. To my understanding Eskom uses the water we allow them to use,” Shillingi told the committee.
However, he admitted that the DWR was unable to independently ascertain whether Eskom was following instructions. He explained that from a technical perspective the dams, including the yet-to-be-connected Bujagali hydro power plant are designed to handle 800 cubic metres of water per second. However, the President recently directed Shillingi to increase the water discharge rate to 1,000 cubic metres per second to enable more reliance on hydro power than the more expensive thermal power.
On the thorny issue of whether Bujagali can produce 250MW, Shillingi, said the new plant was designed with a flow of 800 cubic metres per second, and could generate 250MW of power for up to six hours a day, which is when that kind of electricity is usually needed.
mtalemwa@observer.ug
By Godfrey Marawanyika