Umeme’s black Xmas

By Agather Atuhaire

No straight answers to power questions as public waits for Bujagali’s first 50 MW of power

The continuous postponement of the when Bujagali hydropower plant will produce its first 50 MW has got many Ugandans concerned. ‘Will that power ever come?’ they ask. Even when it does, will it solve Uganda’s energy crisis? No one seems to have straight answers anymore, and the recent outburst of street protests amongst businesspeople in Kampala was the latest symptom of growing public anger and disillusionment.

When thermal generator Aggreko cut off the 50MW it was contributing to the national grid from its Mutundwe plant on Nov. 7, Uganda’s energy deficit automatically shot up to 185MW, from 135 MW.

Aggreko’s decision to switch off was announced by UMEME through a press release declaring the return of 24-hour load shedding.

UMEME claimed Aggreko had switched off “due to shortage in diesel supply”. But then State Minister for Minerals, Peter Lokeris, told a press conference at Media Centre on Nov. 16 that the incident was due to a fire that destroyed machines at the plant on Nov.5. Then later reports claimed it was due to a VAT dispute between the company and Uganda Revenue Authority.

Whatever the cause, it has worsened an already severe power crisis in the country, paralysing business and sparking riots.

According to the Director, Ministry of Energy and Mineral Development, Engineer Paul Mubiru, Uganda currently gets a total of 445 MW, generated by the Nalubale and Kiira dams at Jinja and the various thermal generators; Electromaxx, Jacobsen and Aggreko.

The first 50 MW unit of Bujagali – now expected, possibly as “a Christmas gift”, in December – will therefore not stop the current load shedding, since it will only be covering the new deficit created by Aggreko’s shut-down. State Minister for Energy, Simon D’Ujanga, recently confirmed this.

“We will be trying to fill these gaps until all units of Bujagali come on board,” D’Ujanga told The Independent.

The Electricity Programme Officer at the African Institute of Energy Governance (AFIEGO), Don Bwesigye Binyina, said 50MW cannot do much to the country’s energy deficit of over150MW.

“The energy crisis Uganda is facing can only be averted if and when all the units of Bujagali power dam come on board,” Bwesigye told The Independent.

That will not be until sometime in mid-2012.

The other disappointing news about Bujagali is that, at whatever time it comes on the grid, it will not cause a reduction in tariffs as had been expected, given the relatively lower cost of hydro power compared to thermal.

Recent statements from Energy Minister Irene Muloni and Electricity Regulatory Authority (ERA) executive director Benon Mutambi indicate that government intends to end the current regime of power subsidies to transfer the full cost of power to consumers.

The money, they say, will instead go to increased investments in generation, expansion of the distribution network, especially to rural areas, and repayment of the loan used to construct Bujagali dam.

Muloni told journalists at the energy sector review on Nov. 10, that it did not make sense to pay billions of shillings subsidising a service that only benefited 10 percent of the population.

“If you are going to pay huge sums of money in subsidies, you pay for a service that benefits the whole population or at least half of it,” Muloni said.

This is a controversial aspiration, but if the full cost of power is passed on to consumers, tariffs will more than triple for both domestic consumers and businesses.

Energy Ministry Undersecretary Segawa Gyagenda said the money government spent on subsidies – over Shs 190 billion (about US$70 million) this year – was enough to construct a [small] dam.

Government has reportedly been paying 60 percent of the tariff, with the final user paying only 40 percent – despite complaints about high power cots.

Domestic consumers pay Shs 385 while industrial consumers pay Shs 184. It had been hoped there would be a significant reduction in costs once thermal power was phased out with hydro, but apparently this will not be the case.

“It is true we will remove the subsidy when we get cheap power.ERA will be tasked to set a tariff that is affordable by end users without straining government,” said D’Ujanga.

Illogical delays

The most staggering disappointment from Bujagali however is its unexplained failure to put power on the grid.

Plans to construct the dam go way back to 2001 but 10 years later, not even 1MW of electricity has been produced.

The dam, initially projected to be completed in 44 months, has fallen so far behind schedule that it becomes harder each day to believe new promises of when the first unit of 50MW will come to the grid.

Government has found a favourable scapegoat in the environmentalists and legislators who disrupted the commencement of construction in 2001, citing environmental threats, but it still does not explain why the first 50MW that were supposed to come on the grid early this year still have not.

“Environmentalists and other politicians caused a major delay in Bujagali otherwise we wouldn’t be facing this terrible problem,” Muloni said at the energy sector review.

Energy officials argue that if these ‘saboteurs’, led by NAPE Executive Director Frank Muramuzi and legislators Ken Lukyamuzi, Nandala Mafabi and Salaam Musumba, had not written to the World Bank stopping construction, the dam would have been completed in 2005.

Mubiru said investigations of corruption allegations against the first project sponsor AES, prompted by complaints to the World Bank, stole two years from the project. By the time the probe was concluded in 2003, AES had lost interest in the project and pulled out.

A new bid process saw the formation of Bujagali Energy Limited (BEL) which procured SALINI as the main contractor, and construction finally commenced in 2007.

Government admits some technical complications have caused further delays.

Mubiru said there was a problem of soft ground  at the dam site which led to a 10-months delay in construction.

“There were a lot of issues here and there but now we are almost there,” Mubiru said, vaguely, adding that only minor slippages that cannot be ignored to avoid mistakes need to be fixed now.

“These delays are trivial and all that is needed is a little patience for us to put final touches and come up with perfect work,” Mubiru told The Independent.

Bujagali Energy Limited (BEL) Construction Manager William Groth and Sithe Global Vice President Glenn Gayder say what is left is just a “functional assembling” which should not take more than two weeks.

“We are now collecting and putting together all the machines and wires and that should take at least two weeks,” said Gaydar.

Minister D’Ujanga urges Ugandans to be patient for “at least a month” to allow the machines to be tested.

“We will get the first unit by mid next month (December),” D’Ujanga told journalists he took on a tour of the power plant in November.

Although some have attributed the delay to the interconnection transmitter project, that infrastructure that would bring the power onto the grid, Mubiru said the project was almost complete and can take up to 100MW where it is.

“Two of the three components of the project are complete and cannot hinder the transmission of the first unit,” he said.

Bujagali delay timeline

Bujagali 1

2001:              Project starts under AES projected to be completed in 2005

Dec 2001:        Halted due to corruption allegations.

2003:              AES allowed back after investigations but pulls out.

Bujagali2

Jan 2004:         Bujagali Energy Ltd awarded.

Dec. 2005:       Power Purchase Agreement and Implementation Agreement executed.

July 2007:        Construction starts. Plant to be complete in 44 months i.e. March 2011.

Oct.01, 2011:  When first 50MW was to be availed after project delays.

Nov. 2011:       New date for first 50MW. Project delayed again.

Dec. 2011:       Promised date for first 50MW. Will it be met?

The whole plant is expected to be complete by “April or May 2012”.

Capacity of Bujagali

Of late the most controversial power issue has become the disputed capacity of Bujagali dam.

Energy Ministry officials say it was determined in feasibility studies conducted by four competent consultancy firms hired by the lenders, government of Uganda, BEL, and the World Bank, and confirmed that Bujagali would produce the installed capacity of 250MW.

This was the conceived wisdom until weeks ago, when former Energy Minister, Hilary Onek, who is a hydrology engineer; disputed it. Appearing before the Parliamentary committee investigating irregularities in the energy sector on Nov. 3, Onek said Bujagali will only produce 170MW when all its units are fully installed.

The energy ministry has dismissed Onek, as a know-it-all who thinks he is brighter than the armies of well-paid international consultants and contractors and government energy experts involved in the project, who all agree on 250MW.

Ministry officials have even challenged Onek’s academic credentials, claiming that no competent engineer would talk like him.

Mubiru said that as much as seasonally-fluctuating water levels could affect the capacity of the dam, Onek has no basis to say the plant could never produce at its installed capacity of 250MW.

“Producing 170MW at Bujagali would require a water flow rate of 865 cubic meters per second which can be attained at a lake level of 11.51 metres, based on the agreed curve water release policy,” said Mubiru in an interview with The Independent.

Mubiru says while Lake Victoria is experiencing very low levels currently, the lake’s waters rose to 12.88 meters in 1998, and can rise again, given sufficient rainfall.

“Why should we design the power plant for a modest outflow when there is potential for higher power output?” he asked.

However, others are giving Onek the benefit of a doubt, pointing to the precedent set by Kiira dam – a ‘white elephant’ that never achieved its promised capacity.  Onek warned that Kiira dam would be a failure but he was ignored.

AFIEGO’s Bwesigye says Onek’s claims should not be completely dismissed, as it would not be the first time a power dam in Uganda failed to produce its planned capacity, as the same thing happened with Kiira dam.

“Bujagali is only about 15km away from the Kiira/Nalubale dam so it should not be impossible for it to produce the installed capacity of 250 MW when Kiira/Nalubale can produce 200MW upstream,” said Bwesigye.

But, he said, it needs to be investigated whether there was misappropriation of funds or the contractors not doing what they were supposed to do.

“The same person [Onek] predicted that Kiira dam would not produce the power that Ugandans expected and it came to pass, so his statements this time should be taken seriously,” said Bwesigye.

Government says Kiira’s problem is the result of the terrible drought which has affected not only Uganda but the whole region. But seeing as they are powered by the same water, there is no reason to expect that the same drought would not affect Bujagali.

Former State Minister for Energy, Francis Babu, agrees with Bwesigye that an investigation is necessary to uncover the government officials and “experts” who have facilitated the crisis over the past decade.

On that list are the consultants, whose studies Babu claims misled government regarding Kiira’s capacity, and possibly Bujagali’s. But the former minister intimated that the network of suspects is bigger and more powerful, including former ministers, technocrats, donors, contractors, and others.

“All the people who did the bad things are known and Parliament should investigate them and they be punished,” Babu said recently.

“I am ready to tell them my side of the story as this is a matter of national importance. They should all be called to order regardless of if they are NRM or not.”

D’Ujanga says between 2001 and now, the power crisis has cost Uganda up US$ 1 billion, a figure that is growing with lost business.

Cost of Bujagali

Another mystery surrounding the Bujagali hydro power plant is the cost of its construction. Built at US$1067 million, critics say it must be the most expensive power plant in the world.

“Bujagali is way expensive compared to its production capacity,” said Bwesigye.

To justify this cost, government points at its usual suspects – the ‘saboteurs’ that interfered with construction in 2001.

Officials argue that AES was to undertake the project at US$580 million, with engineering, procurement and construction costing a separate US$315 million. The generation cost at that time was estimated at US$1,260 per kilowatt.

By 2003 when international energy markets collapsed forcing AES to throw in the towel, circumstances had changed.

New investors SALINI and SNC Lavalin/Jaiprakash were awarded the EPC contract at US$618 million, doubling the price to US$2,472 per kilo watt, which Mubiru says “still lies within the acceptable international range”.

In fact, government officials say that if it were not for the ‘saboteurs’, the billions paid in power subsidies to mitigate the high cost of thermal power would not have been necessary, as cheaper hydro power would have been on the grid by 2005.

It remains to be seen whether the first unit of Bujagali will be available in “a few weeks”, and the whole project completed by May 2012, like ministry officials said at the recent sector review.

It is ironical that Uganda, host of the source of the River Nile, one of the world’s largest rivers, continues to play second-fiddle to upstream countries in harnessing its immense resources. For example, Sudan’s giant 1,150 MW Merowe Dam was commissioned in March 2009, while Egypt’s Aswan High Dam generates some 2,100 MW.