An investor who sought to establish a 20–megawatt wind power plant has ‘failed to raise’ $150, 000 (Shs533 million) for the performance bond.
The investor, Mss Xsabo Power Limited, is now on the brink of losing the license to build, own and operate a wind power plant in Tororo District.
The Electricity Regulatory Authority (ERA) intends to revoke the license it issued years ago to Mss Xsabo Power Limited.
ERA says the licensee, by not complying with the requirement to submit performance bonds, is in breach of the License and the Electricity Act.
“The licensee’s breach [has] lasted for a considerable period,” ERA says through a February 17 notice.
“In the circumstances, the Authority had strong reasons to believe that the licensee will not be able to fulfill its obligations…”
In an earlier interview with this newspaper, the Chief Executive Officer of Mss Xsabo, David Alobo, said the company has “all the required funds."
Dr Alobo, who the Daily Monitor had contacted to respond to questions about why he had asked ERA to modify its license, said Mss Xsabo’s request was informed by the contradictions between the Power Purchase Agreement and the license conditions.
“The performance bonds are actually ready,” Dr Alobo said then.
“They [performance bonds] will be released as soon as the PPA has been corrected to have the conditions therein aligned to those spelt out in the license, which was issued after the PPA had been initialed.”
ERA did not directly respond this particular charge.
Mss Xsabo was supposed to have started construction of the wind power plant in mid–February.
Uganda’s electricity regulations require licensees to deposit performance bonds once they get the licenses to undertake power projects.
The government introduced performance bonds in the 2000s to weed out speculators, who would rush to secure electricity project licenses but fail to execute the projects thereby blocking genuine developers from securing sites.
Besides the wind power plant in Tororo District, Mss Xsabo had also secured a license to construct a solar power park in Kabulasoke in Gomba District, 110 kilometres Southwest of Kampala.