Behind UEGCL’s sharp drop in net profit to Shs2.8bn

Karuma dam construction

Mutikanga revealed that the construction of Karuma Hydropower Dam now stands 97.85% to completion a head of commissioning in February next year.

The dam, which had been planned for commissioning in November this year, was pushed back on the request of the contractor to complete the pending works. Mutikanga, however, said they are satisfied with the quality of works at Karuma.

He added UEGCL continues to monitor the concession with Eskom (U) Limited at Kiira/Nalubaale Complex to ensure that its lifeline is extended.  He revealed that phase two works for a contract for feasibility study for refurbishment of the complex progressed well, with the detailed assessment of the options initially selected in phase one completed by end of 2020.

The Deputy Secretary to the Treasury, Patrick Ocailap, said the FY2019/2020 was largely successful because it marked the completion of the first year of commissioning of Isimba dam; commenced debt repayment of the Isimba dam; improvement of stakeholder collaboration by attracting development partners and grants for capacity building; development of capacity programme for Karuma dam and completion of community development projects for Isimba HHP.

Evelyn Anite, the minister of finance in charge of privatisation and investment said, UEGCL remains one of the wonderful agencies of government working towards promoting industrialisation through electricity generation and overall development agenda of government.

She said as more energy gets generated, power tariffs for all category consumers will reduce in the long run, benefiting not only households but also the planned 32 industrial parks that are projected to provide two million jobs and related opportunities.

FY2019/20 challenges

Mutikanga said, the current billing for Isimba HPP on basis of energy metred reduced the revenue generated to meet the loan repayment obligations under the on-lending agreement between UEGCL and the government for the dam development.

The other, he said, relates to financial resource constraints arising out of limited budget that curtails the ability of the company to effectively carryout its activities.

The company also noted inadequate investments by Eskom plus delayed implementation of projects at the Jinja complex. This has exposed the generation facility to the risk of reduced asset life and equipment damage due to concrete expansion and cracking.

The other is policy and regulatory framework which limits the ability of UEGCL to operate financially with reasonable return on investment.

Delays of project implementation covering the Karuma, Muzizi and Nyagak III hydropower projects mainly due to land compensation was another challenge noted.

The future

Going forward, Mutikanga and Njuki said, they will still focus on ensuring sustainability across its value chain, commencing with generation of power to its bottom line of financial sustainability.

The company also plans to continue with implementation of generation projects including Muzizi HPP (48MW), Nyagak III (6.6MW), and completion of the feasibility studies for the Greenfield site of Okulacere (6.3MW) and rehabilitation of Maziba (1MW).

These generation projects are in line with achieving a target of 3, 500MW of electricity generation detailed in the National Development Plan III.

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