Govt starts discussing renewal of Umeme 20-year concession

Wednesday February 19 2020

Extension: Umeme is seeking to extend its

Extension: Umeme is seeking to extend its 20-year concession, which expires in 2025. FILE PHOTO  

By CHRISTINE KASEMIIRE

After two directives from President Museveni and other government officials, government has started discussing terms of extending Umeme’s concession.

The concession, which took effect in 2005 when Uganda Electricity Distribution Company Limited leased out it’s assets, will expire in 2025.

Speaking to Daily Monitor, Mr Robert Kasande, the Energy Ministry permanent secretary, said the committee shouldering Uganda’s interests in the agreement has been set up.

“Umeme still has its concession running up to 2025, therefore discussions to extend it are on now. There is a committee, which comprises [representatives from] the Ministry of Finance, Energy and the Attorney General’s office,” he said.

However, he declined to reveal the identity of the committee members.

Key to note, the current discussions are still between government, which thereafter, is expected to approach Umeme with a unified position.

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However, no timeline has been set for conclusion of the negotiations.

Uganda, in the negotiations, is expected to revise downwards Umeme’s return on investment, (ROI) currently at 20 per cent.

This follows a havoc-wreaking moment for Umeme in March 2018 when President Museveni asked to halt extension of the power distributor’s concession on the premise that terms such as return on investment had continued to be high thus affecting the electricity tariff.

Mr Patrick Bitature, the Umeme chairman, has on numerous occasions said that the power distributor is willing to revise its return on investment downwards.

In addition, energy losses, which perturbed the President, should also be high on agenda. The latest report by Umeme indicates energy losses sit at slightly above 16 per cent from more than 35 per cent when it took over operations.

The discussions have come after the Finance Minister Matia Kasaija, last year directed then Energy Minister Irene Muloni to set up a technical team to expedite negotiations of the Umeme concession.

Mr Kasaija argued that Umeme needed to know the status of its concession extension in order to secure funding from lenders to invest further in the electricity network.

The investments would be a driver in achieving some of government’s programmes such as the free electricity connections policy and rural electrification, among others.

Umeme at the end of last year, received a syndicated loan worth Shs258b, which it said will be invested in expanding the network as well as reinforcing the already existing ones.

Ntinda substation in Shs6.9b overhaul

Meanwhile, Umeme will spend $1.9m (Shs6.9b) to overhaul the Ntinda substation to stabilise supply to Ntinda and surrounding areas.

Key among the works, will include replacing the current switchgear (equipment that makes or breaks connections), now at the end of its useful 25 years and making the two transformers compatible.

“The current switchgear was installed in the early 1990s; it is at the tail end of its useful life,” Mr Dansturn Kimbowa, the project engineer, said on Tuesday in Kampala, adding: “The two transformers are running independently.”

One of the transformers supplies Kisaasi, Kyambogo and Bukoto–Ntinda while the other feeds Kiwatule–Najjera.

The capacity of each of the transformers is 10/14MW.

Mr Kimbowa also noted demand on one of the transformers that supplies Kisaasi, Kyambogo, Bukoto and Ntinda is at 90 per cent while the one is at 60 per cent.

Data on transformer loading indicates that they operate optimally when they are at or do not exceed 80 per cent.

Tendering, evaluation of bids, award of the tender, procurement of material and installation and running processes for the new switchgear, will start next month and the whole overhauling process is expected to be completed in November.

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