Business and Economic News By Leo Odera Omolo
UGANDA’S power output has almost doubled in the past five years as the country tries to satisfy increasing demand that is driven by robust economic growth.
The third largest economy in the region produces 591MW, up from the 265MW previously. This has boosted power supply, making the economy more competitive.
“Investments in the sector have increased, attracting local and international players because there is transparency,” Frank Sebbowa, the Electricity Regulatory Authority, said.
The development comes on the back of a deliberate strategy in tackling electricity demand head-on. The old approach involved ‘chasing’ demand forecasts from behind through attracting local, foreign, public and private investors into the sector.
New power plants have been installed in Tororo, Namanve and Mutundwe in Kampala. This is on top of hydro-power complex with installed capacity to generate 480MW at Jinja. Power generation from small hydro-power plants is in the pipeline.
While some of the projects are near completion, others are awaiting commissioning. Uganda relies on hydro-energy to meet 90% of its electricity needs, but drought has cut capacity at the main power dams in Jinja.
However, due to the change in strategy, the country hopes to increase power generation from other renewable sources. Sugar companies, Kakira and Kinyara, are producing electricity from cane wastes.
This is not only aimed at catering for the desired pace of economic development, but also to ensure that electricity reaches every part of the country.
“There has been increased search for alternative sources of energy, including utilising the mini-hydro stations, generation from bagasse, garbage and solar-thermal projects,” Sebbowa said.
“The reforms have yielded positive results like increased access to electricity. This transforms into better standards of living.” However, there is still a need to migrate from diesel power generation to heavy fuel oil in the short-to-medium-term to reduce power prices.
“There is need to quickly harness our local oil resources to get cheaper heavy fuel oil,” the regulator observed. “We must also address system losses and reduce tariffs through re-negotiating of the allowed losses.”
Sorting out the country’s power problems is vital as the economy struggles to compete with Kenya and Tanzania for a sizable share in the coming East African Community common market.
The biggest indirect cost to firms operating in Kenya is disruptions in power supply. Attracting foreign investors will be hard since electricity prices are still high compared to the neighbouring economies.
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