UEGCL ready for operation and maintenance of Karuma, Isimba

Thursday July 28 2016

By Harrison Mutikanga

It’s interesting how brands live on long after their demise. But for UEB (no need to write it in full), we are dealing with a text book case of brands that live on and on for reasons stretching from notoriety to the opposite of it. When the government embarked on an economic recovery model in the late 90s that meant divesture of public parastatals, UEB was in the eye of the proverbial storm. And for good reason. At least as advanced then, divesture of UEB was to improve quality of service, connectivity, reliability, reduce electricity losses, attract private capital investment into the sector and enhance overall sector efficiency.

Indeed, buttressed by a new law, the Electricity Act 1999, UEB was split into three companies: Generation, Transmission and Distribution. To regulate their operations through, inter alia, providing for the licensing and control of activities in the electricity sector as well as to liberalise and introduce competition in the electricity sector, the Electricity Regulatory Authority too was formed.
That’s briefly the birth history of Uganda Electricity Generation Company Limited UEGCL, a public limited liability company incorporated in March 2001, starting operation inApril 2001. From 2003, and in line with the then government policy, the main role of UEGCL was to oversee the concession of the two available government-owned hydro power plants - Nalubaale and Kiira in Jinja by Eskom. Today, UEGCL’s mandate has grown to include establishment, acquisition, maintenance and operation of electricity generation facilities.

UEGCL is the government implementing agency for the flagship hydro-power projects of Karuma (600MW) and Isimba (183MW). These two projects, now about 30 per cent complete, are scheduled for commissioning in 2019 and 2018 respectively. Others in line of development include Ayago (840MW), Muzizi (44.7 MW) and Nyagak III (5.5 MW). UEGCL is also currently in the process of securing funding for feasibility studies to develop other small hydros across the country at Okulacere (6.5MW), Latoro (4.2MW), Agbinika (2MW) and Maziba (1MW).
Building hydro-power stations alone may not be the magic bullet in delivering the much-needed electricity as the country spurs for middle-income status as cognisance has to be given to the operations and maintenance, which is pivotal to the efficient and cost-effective delivery of electricity, and this component forms an invaluable input in the tariff build up.

It is in this context that UEGCL is readying to assume the critical function of operation and maintenance (O&M) with a vision to be ‘the leading power producer in the Great Lakes Region’. This O&M premises on delivering to the country affordable and competitive end-user prices (tariff), utilise and strengthen indigenous capacity (local content) as well as good corporate governance to ensure the projects, now financed with concessional loans, are profitable, self-sustaining and attending to their loan obligations.
The UEGCL O&M model has been approved by the Board and shared with the Ministry of Energy and Mineral Development, and is in line with the aspirations of the National Development Plan (NDP) II and Vision 2040. The model was also largely informed by benchmarking from Kenya’s KenGen and other regional and continental utilities.

The envisaged UEGCL O&M business model will focus on attaining efficiency and financial sustainability through sound business principles and ensuring the posterity of the assets. UEGCL, working as the asset holder, will manage the various power plants as independent business units under internal performance contracts. This will ensure operational independence, adoption of private sector tenets of management guided by clear targets for operational efficiency gains, lower tariffs through efficiency gains and help build a bankable conglomerate of hydro-power projects capable of further mobilising and leveraging finance for new power plant developments. The model will also promote internal competition and benchmarking of the various plants.

So one may ask: What has UEGCL done so far in this regard? Well, staff recruitment is one of the ‘ticked boxes’ and they have already been budgeted for in the 2016/17 Financial Year. These new staff shall have the opportunity to apprentice at the construction sites of Karuma and Isimba to appreciate the development of hydro-power plants. This is arguably an invaluable experience and is within an already formulated training and capacity building programme.
So, there should be no second guessing on whether there is local capacity for operating and maintaining the dams. Like with other government body corporates doing a commendable job in delivering on their mandates, UEGCL is living no stone unturned to rise to this challenge. This is a sign of coming of age for a country, which for the most part, has such strategic operations of national development importance concessioned out.

Dr Mutikanga, Chief Executive Officer Uganda Electricity Generation Company Limited UEGCL