Uganda: Ministries’ budgets cut to pay for power

Mr Gilberto Riccobono of Alstom (2nd L) shows Prime Minister Amama Mbabazi (C) and other officials the functional first 50MW unit of Bujagali hydropower project in Jinja yesterday. Government cut ministries’ budgets to pay private power suppliers, it has emerged. PHOTO BY NELSON WESONGA 

By YASIIN MUGERWA & ALEX NSUBUGA  (email the author) 

Posted  Friday, February 3  2012 at  00:00

The government was recently forced to slash ministry and other departmental budgets as it scrambled to avert a crisis when private power generators threatened to plunge the country into darkness over hundreds of billions of shillings in unpaid arrears.

This newspaper understands that the decision to starve non-critical sectors of cash was taken by Finance Minister Maria Kiwanuka with the backing of Cabinet— a development which highlights the cash squeeze currently facing the government as it seeks to implement activities set out in the 2011/12 budget announced in June last year.

A detailed break-down of how badly specific ministries were affected remain scanty, but Finance Ministry Spokesperson Jim Mugunga yesterday confirmed the cuts and asked the affected government agencies to bear with the situation.

“We had no choice but to make hard decisions in order to raise the money needed to subsidise thermal power generation,” Mr Mugunga said. 
“The Shs92 billion allocated in the budget was not enough and we had to effect cuts to raise an additional Shs377 billion. In fact, by July we had already spent all the money budgeted for yet we had a crisis on our hands.”

Mr Mugunga, however, indicated that the Finance ministry did not touch core government activities in implementing the stop-gap measure. “We cut recurrent expenditures, targeting areas such as travel and procurement of vehicles, among others. This expenditure was made to sustain power supply on the national grid,” he said.

After Ms Kiwanuka realised Shs377b from this re-allocation, sources revealed that she later authorised the payment to power generators. The most recent installment of Shs120 billion was made last month.

On closer consideration of this emergency financing measure, it was later realised that the budget cuts were unsustainable as they could potentially paralyse public service delivery.

Cabinet is then reported to have taken the unpopular decision to withdraw the huge subsidies the government, has until recently, been making to the power sector and asked consumers to prepare to foot the entire bill. This is what led to the increase in the cost of power by at least 40 per cent in new tariffs announced by the Electricity Regulatory Authority last month.

Under the revised tariff regime, domestic consumers will pay Shs524.5 up from Shs385.6 per unit of electricity consumed. Commercial consumers Shs487.6 instead Shs358.6, medium industries Shs458.9 up from Shs333.2 per unit, and large industries Shs312.8 instead of Shs184.8 for each unit consumed. Asked why the government secretly cut ministries’ budgets to pay for subsidies they had scrapped, Energy Minister Irene Muloni said: “We were paying for arrears but government realised that paying for subsidies was expensive and unsustainable.”

The minister said government could no longer afford the large sums required to subsidise power whose estimated cost since 2005 tops Shs1 trillion. 
Deputy Secretary to the Treasury Keith Muhakanizi confirmed that the Shs377 billion for the subsidy was financed through the budget cuts from all ministries.

“It is true that all budgets for ministries have been cut for the two quarters this financial year. This has mainly affected the cost of public administration,” Mr Muhakanizi said.

Courtesy East African

Tanzania Govt promises to connect Kagera townships to national grid

BY JUDICA TARIMO

3rd February 2012

Energy and Minerals minister William Ngeleja

The government yesterday reaffirmed in the National Assembly commitment to supply with power from the National Grid villages and townships in Kagera region.

Energy and Minerals minister William Ngeleja sounded the assurance when responding to a basic question from Nkenge Member of Parliament, Assumpter Mshana.

The legislator sought government explanation on the implementation of pledges made by CCM presidential flag-bearer Jakaya Kikwete in the last general election for Kagera region.

According to the MP, Kikwete had promised to connect to the National Grid a number of wards in the region, including Buyango, Ishozi, Mutukula, and Ishuju.

“When would the government connect wards with power, as pledged by our President during the election campaigns? On top of that, in wards such as Kitobo, Bwanjai, and Gera, electricity is there, but supply is not sufficient…so, I need to know when the government will install power transformers to step up the power being supplies?” queried Mshana.

In his response, Ngeleja said the state-owned public firm, Tanesco, was currently conducting cost analysis for supplying with electricity Ishozi, Ishunju, Buyango, and Mutukula wards.

The assessment established that the cost of connecting Mutukula ward stands at 1,354,001,754.61, while that of connecting Buyango wards is 785,748,467.36 and for Ishozi and Ishunju, is 1,040,560,389.00.

He informed the House that electricity would be connected to Mutukula via Igayaza, Nsunga, Kabwoba wards, and Lusinga, Bwera, Lushanga, Kyazi wards will get power from Buyango.

“Electricity to Ishozi and Ishunju will pass through Gera and Kyeyambe wards,” noted the minister.

Regarding power access in Kitobo, Bwanji and Gera, the minister said the wards have already been connected, but the only problem facing them was that power supplied there was not sufficient.

“I want to assure the legislators and this House that both the Rural Energy Agency (REA) and Tanesco are working hard to supply many parts of Kagera region with electricity and ensure reliable supply of the same,” said Ngeleja.

SOURCE: THE GUARDIAN

Bujagali power project begins supplying electricity

 

The 53 megawatts Bujjagali power project was switched on Thursday, supplying electricity to the National grid.

The power project was switched on by the Prime Minister Amama Mbabazi.

He said supplies to the National grid will rise after the commissioning of the two power plants at Bujagali expected in June.

In December 2011, President Museveni was quoted saying that Uganda has regular nationwide outages amid a power deficit, with production at 375 megawatts and consumption at 450 megawatts by the end of last year.

Irene Muloni, the Minister of energy said that Uganda will end electricity subsidies, which have cost the nation 1.53 trillion shillings since 2005.

The minister said that Uganda will use the savings to finance public infrastructure projects, including the construction of the 600 megawatt Karuma Hydropower Project, whose construction starts in May.

The plant is jointly owned by Sithe Global Power LLC and Industrial Promotion Services Kenya Ltd., an affiliate of the Aga Khan Fund for Economic Development SA through Bujagali Energy Ltd.

Courtesy of Uganda Radio Network

Slow implementation of infrastructure projects constrains intra-African trade, says AfDB president

Lack of political will is slowing down implementation of vital regional infrastructure projects in Africa, the president of the African Development Bank has said.

Addressing the opening of the 18th African Union Summit in the Ethiopian capital, Addis Ababa, earlier this week, Dr Donald Kaberuka said the lack of inter-country cooperation, rather than funding, was often the main barrier to the launch and completion of critical regional infrastructure projects in Africa. This, he said, had a negative impact on the growth of the intra-African trade. ‘Boosting Intra-African Trade’ was the theme of the summit.

Dr Kaberuka gave the example of the Gambia Bridge, to link The Gambia and Senegal, as one AfDB project that had been delayed for many years due to political reasons. Following AfDB’s intervention, however, construction of the bridge is expected to begin soon.

He also mentioned the Kazungula Bridge in Southern Africa as an example of another vital project that has been delayed by slow inter-country cooperation. Funding for the bridge, which will link Zambia and Botswana across the Zambezi River, has now finally been secured and construction is to begin on it soon.

The Kazungula Bridge, which will replace a ferry service, will have a major impact on trade in Southern Africa, as it enhances the flow of goods and people in the region. Transit times for goods traded between the landlocked countries of Zambia and Botswana could be cut to just six hours on the bridge’s completion.  It now takes from 30 hours to as long as a month at peak times.  

Dr Kaberuka said good inter-country cooperation could lead to the timely execution of infrastructure projects that enhance increased intra-African trade and boost the continent’s economic growth.

The AfDB president gave the example of the recently completed Ethiopia-Djibouti Power Interconnection Project, which now allows Ethiopia to export electricity to Djibouti. The African Development Bank contributed USD150 million to this project. It will provide a further USD 300 million to the Ethiopia-Kenya Power Interconnection Project, which will boost the supply of power to Kenya and the East African Power Pool by some 2,000 megawatts.

Dr Kaberuka cautioned that the economic downturn that has ravaged the developed countries could weaken demand for African exports and dampen earnings.  He explained that this could, in turn, undermine the ability of commercial banks in Africa to provide trade finance.

He said that as a safeguard, AfDB was looking at ways it could help cover this shortfall in Africa’s trade finance. The infrastructure financing gap, he noted, will also require innovative financing, including public private partnerships and climate funds.

African heads of state at the summit endorsed the launch of the Programme for Infrastructure Development in Africa (PIDA), a multi-billion dollar initiative to end in 2040.

PIDA is based on a joint study by the African Union, the Economic Commission for Africa, the AfDB, and the Planning and Coordinating Agency (PIDA) of the New Partnership for Africa’s Development.  The AfDB is the executing arm of this initiative.

Heads of state welcomed the PIDA programme and noted that its projects address a key gap that will support Africa’s regional and continental integration. They also noted that PIDA’s longer term goal is to enhance the physical integration of Africa, boost intra-African trade, and raise African competitiveness in the global economy.

On the margins of the summit, the AfDB and the World Customs Organization (WCO)signed a memorandum of understanding, under which the two organisations will work together to enhance the capacity of customs administrations in Africa. This improved capacity of Africa’s customs authorities is designed to help boost intra-African trade.

Dr Kaberuka signed the memorandum on behalf of AfDB while Kunio Mikuriya, WCO secretary general, signed on behalf of his organisation.

“Under this partnership, AfDB’s regional infrastructure financing and WCO’s technical customs expertise will complement each other and improve the efficiency of our efforts to facilitate trade,” said Dr Kaberuka. “Coordinated efforts by both institutions to improve border management will help many companies in Africa conduct cross-border trade. This will in turn further deepen regional integration in the region,” he added.

Dr Kaberuka also held bilateral discussions with a number of African heads of state including, François Bozizé of the Central African Republic, Yahya Jammeh of The Gambia, Ellen Johnson Sirleaf of Liberia and Paul Kagame of Rwanda.  He also met Michel Sidibé, the UNAIDS executive director, Thabo Mbeki, former president of South Africa and chairperson of the African Union High Level Panel on Sudan, and Abdoulie Janneh, executive secretary of the United Nations Economic Commission for Africa.

Courtesy of http://www.afdb.org 

WFES: Fund launched to accelerate solar in East Africa

25 January 2012

Eight19 Ltd., the developer of the IndiGo pay-as-you-go solar power system and SunnyMoney, a social enterprise distributing solar lamps in East Africa owned by SolarAid, have launched the KickStart Sustainable Energy Fund for off-grid solar lighting in East Africa.

By Kari Williamson

The fund, which was launched at the World Future Energy Summit (WFES) last week, is part of an ongoing partnership aimed at expanding affordable solar lighting to rural off-grid communities in East Africa. The initial investment will fund the deployment of 4000 IndiGo units.

KickStart will provide working capital to accelerate the roll-out of IndiGo pay-as-you-go solar lighting products in rural off-grid communities. Users receive solar lighting and in-home phone charging, which they pay for on a weekly basis using scratchcards, just like a pay-as-you-go mobile phone.

The revenues from the scratchcards recover the cost of the solar units and are returned to KickStart to allow the deployment of additional units to new users.

The programme has been primed with a pool from Eight19 and SolarAid of US$200,000 to cover the first 4000 lighting systems to be deployed in Kenya in early 2012.

Steve Andrews, CEO of SolarAid, says: “1.6 billion people - over one fifth of the world’s population - lack access to the electricity grid and pay high prices for kerosene to serve basic needs such as lighting. IndiGo technology provides an affordable means of delivering electricity using the sun’s power to generate clean, renewable energy at the point of use. The KickStart Fund, which is administered by SunnyMoney’s owner, the registered charity SolarAid, will provide working capital to enable IndiGo-enabled solar lights to be help many more families, bringing enormous economic benefits to local communities across the developing world.”

Simon Bransfield Garth, CEO of Eight19, adds: “The IndiGo system makes electricity affordable because it allows users to buy electricity as a service, avoiding the expensive upfront costs normally associated with solar products. Since we launched IndiGo in September 2011, the technology has been met with great enthusiasm and the KickStart fund will further accelerate the deployment of solar power and all the benefits it brings.”

IndiGo solar units

Eight19, launched its IndiGo pay-as-you-go personal solar electricity system for off-grid communities in Kenya in September 2011.

Users purchase scratchcards at approximately US$1 per week for a standard system, which represents less than half the typical cost of the kerosene lighting and phone charging spend it displaces.

Each IndiGo system consists of a low-cost solar panel, a battery unit with inbuilt mobile phone charger and a high efficiency light emitting diode (LED) lamp.

This article is featured in: Solar electricity

Namibia: Energy Needs Outweigh Environment Concerns

BY ADAM HARTMAN, 25 JANUARY 2012

NAMPOWER'S envisioned coal-fired power station at Arandis will present a unique case where the social and environmental impact of such a project on a small town of about 6 000 people will have to be weighed against the government's obligation to guarantee a critical basic need of over two million Namibians.

This was an observation at a public meeting at Arandis on Saturday during which the findings of draft scoping report for an 800MW coal-fired power station were presented.

The report will be submitted to the Ministry of Environment and Tourism's Department for Environmental Affairs for approval, so that the Social and Environmental Impact Assessment process can continue.

Namibia's bulk power utility hopes its new power station will start producing electricity by 2015 - even if it is at an initial capacity of 150MW to 300MW. At least this, combined with the Ruacana, Van Eck and Anixas power plants, could make up for Namibia's peak energy demand of over 500MW - and growing.

Electricity Control Board (ECB) chief executive officer Siseho Simasiku said during last year's electricity supply stakeholders' forum in Walvis Bay that Namibia's energy issue has become a "critical national security matter", which was bigger than socio-economic concerns.

This concern was emphasised at Saturday's meeting. Electricity provision from neighbouring countries are being scaled down drastically because there is a general shortage of power supply in the southern African region as a whole.

Added to this is Namibia's increasing domestic and industrial appetite for electricity - from a country where power plant infrastructure is either old, small or dependent on external factors for optimal operation such as the Ruacana hydropower plant, which depends on a strong water flow.

The latest addition to the national power grid was the N$350 million 22,5 MegaWatt (MW) 'Anixas' diesel power station at Walvis Bay, commissioned last year; the first bulk electricity generator to be inaugurated since the Ruacana hydropower station that was opened in 1978. Anixas is a crucial link in the electricity grid, but will not be Namibia's saviour when it comes to bulk supply.

Nampower's current installed generation capacity is 415,5MW, with a peak demand of 511MW recorded in June last year, which excludes the 96MW requirement of the Skorpion Zinc mine in the south.

In addition, it is estimated that the growth in energy demand for this year will be 4,4 per cent with a corresponding growth in demand requirement of 4,6 per cent, according to a background information document of NamPower related to the proposed coal power station.

The shortfall to date was supplemented through energy imports over Namibia's interconnected transmission network with the Southern African Power Pool countries. During some periods the energy imports can be as high as 80 per cent of energy requirements.

This reliance on imported energy poses a big risk for Namibia though, as the region not only experiences power shortages but the transmission networks in neighbouring countries are congested.

Projects in the region are suffering from delays and in some cases are not being implemented at all.

The energy white paper of Namibia states objectives for more secure and reliable energy. It highlights that Namibia should aim to supply all of its demand (MW) and at least 75 per cent of its energy (MW per hour) requirements from its own installed generation capacity.

The proposed coal power station is one of the potential solutions to the current situation, and a site about six kilometres east of Arandis seems to have caught Nampower's eye.

Environmentally speaking, out of all the possible sites, which included sites near Walvis Bay and Swakopmund, as well as west of Arandis, the eastern location would seem to have the least impact.

Another element that played an important role in NamPower opting for the site is the town council's readiness to make land available for the initiative.

The Arandis town council is working exhaustively in turning this little town into the industrial hub of the region.

It even held its first investment conference during the last quarter of 2011 for which it has received much acclaim and support, according to the town's mayor, Daniel Muhuura.

The untimely availability of land for a seriously critical energy generator was what eventually led to plans for the erection of the coal-fired power station in Walvis Bay falling flat.

In general, considering the "modern and proven, but not experimental" technology to be used that will reduce pollutants by more than 90 per cent; the availability of coal, and the possibility of utilising biofuels and other organics; and limited impact on the environment, there is not really anything than can stop the plant from materialising east of Arandis.

Generally speaking, when it comes to large projects that have specialised markets, the social impact may very well outweigh the desire for the project, but the proposed coal-fired power station, like any other national infrastructure development, is an exception to the rule when it comes to the consideration of impacts.

Courtesy http://allafrica.com 

Nairobi, Addis in landmark 400MW power purchase deal

Details of the high-stakes negotiations before Kenya signed a 400MW electricity deal with Ethiopia two weeks ago are emerging, revealing that Nairobi managed to talk down the initial charges proposed by Addis Ababa as too high. 

By KENNEDY SENELWA  (email the author) 

Posted  Sunday, January 22  2012 at  15:34

Details of the high-stakes negotiations before Kenya signed a 400MW electricity deal with Ethiopia two weeks ago are emerging, revealing that Nairobi managed to talk down the initial charges proposed by Addis Ababa as too high.

The deal, which analysts say presages a new era of power trading in the region, was arrived at after a great deal of haggling, with the Ethiopians pressing for a higher price on the grounds that Kenya is currently buying even more expensive power from thermal plants.
The deal ushers in one of the biggest power pool projects in the region, and will serve as a model for future arrangements under the Eastern Africa Power Pool.

The deal is a take or pay contract, meaning that Kenya has to pay for the 400 MW supply even if it is not using it.

It will pay US cents 7 per kilowatt hour. The transmission line is expected to be completed by 2016 at a total cost of $1.2 billion.

The agreement for continuous supply of 400MW was concluded in Addis Ababa by Kenya Power and the Ethiopian Electric Power Corporation after two days of intense negotiations from January 6-8.

The power purchase agreement is the second in Kenya’s history as it seeks long term solutions to its perennial power problems. A decade ago, Kenya imported about 30MW from Uganda.

The conclusion of the agreement paves the way for Kenya and Ethiopia to mobilise funds for building a 1,045-kilometre high voltage electricity transmission line. Ethiopia, which is endowed with a huge hydropower potential of about 45,000 MW, is currently building three dams to generate power for domestic use and export to Kenya and other neighbouring countries.

Other projects under the Power Pool are under way, with the goal being to create a regional electricity network.

Tanzania will be connected to its neighbours through the planned Kenya-Tanzania interconnection and through the extension of the Tanzania grid to the northwestern Rusumo Falls Hydropower Project shared among Burundi, Rwanda and Tanzania. Meanwhile, Uganda and DR Congo are planning to extend the Ugandan electricity network to Beni and Bunia in DR Congo through a transmission line, Nkenda-Beni-Bunia.

According to the Kenya Electricity Transmission Company (Ketraco), Agence Française de Développement (AFD) of France, the African Development Bank and the World Bank have expressed a commitment to funding the Kenya-Ethiopia project.

Ketraco was a few years ago hived off from Kenya Power to exclusively build infrastructure for high voltage transmission. Kenya Power as a distributor is in charge of smaller voltage lines for connecting end-users.

Ethiopia is the only country in the region with surplus power, backed up by by a reserve margin of more than 30 per cent, double the recommended margin of 15 per cent. “Donors like the French are keen to support the transmission line project.

Kenya’s funding is about $666 million and Ethiopia’s $486 million,” said Ketraco managing director Joel Kiilu. He said selection of consultants to oversee building of the transmission line, designed with power transfer capacity of 2,000MW, will start soon and construction work begins in mid-2013 with a completion date of 2016.

The high voltage direct current (HVDC) line requires putting up of steel towers, transmission cables and inverter substations at Suswa in Kenya and Welayta Sodo in Ethiopia. The HVDC line will start from Welayta Sodo and run south along Lakes Abaya and Chamo, through Konso and cross the Kenyan border about 90 kilometres west of Moyale town.

From Moyale, the transmission line will run through Marsabit, Samburu, Laikipia, Nyandarua and Nakuru counties to terminate at Suswa. Kenya and Ethiopia have formed a joint project co-ordination unit (JPCU). Ketraco is finalising bid documents and tenders are to be floated in April.

The surplus electricity applicable at any time will be agreed on by the parties three months before commencement of supply, taking into account economies of scale and other relevant factors. Completion of the high voltage electricity line is expected to open avenues for big consumers such as cement manufacturers to enter into negations for supply of cheap power directly with Ethiopia.

Mr Kiilu said Ketraco is working on other interconnection facilities like the Lessos-Toro line with Uganda and Isinya-Arusha line with Tanzania to address power shortages and unreliability of supply in the region. The implementation of the Lessos-Tororo line is at an advanced stage as the project has attracted the required financing.  

Courtesy of East African