Government to set up infrastructure fund for electricity projects

Friday December 04 2020
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A mobile mini power substation in Mbale District. Most of such projects are funded through loans. The Energy Infrastructure Fund seeks to create a window through projects can be supported without necessarily resorting to loans. PHOTO | COURTESY

By Christine Kasemiire

     
Cabinet has approved the setup of an Energy Infrastructure Fund, which will draw money from the Treasury to aid establishment of electricity projects
This was revealed by Energy Minister Maria Goretti Kitutu, during the launch of the Electricity Generators and Distributors Association of Uganda in Kampala early this week. 

“We want to put an infrastructure fund. This will help government plan better, and also the private sector, we can be able to plan better to deliver these projects in an ordinary manner,” she said.
 
The infrastructure fund, according to Mr Robert Kasande, the permanent secretary, Ministry of Energy, will replace the Energy Fund that was halted around 2015 by Ministry of Finance. 

“We should be allocated money from the Consolidated Fund every year into that fund so that when we have some infrastructure to build, we get a hand from that fund. It used to be there as an Energy Fund, which was removed by the Ministry of Finance. We moved to Cabinet and they have approved it,” he said. 

The fund will be used to set up government infrastructure in the electricity subsector including power generation, transmission and distribution projects as well as any required feasibility studies.

Mr Kasande also noted that modalities on how much would be deposited into the fund periodically would be determined in due course, noting that the fund is expected in the 2022-23 financial year. 

Currently, most of government’s electricity projects are funded by external debt, especially from China. 

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Planning challenges 
The electricity sub-sector is plagued by poor planning manifested through completed power dams in the absence of transmission lines, costing taxpayers billions of shillings. 

For instance, Uganda Electricity Distribution Company Limited, a wholly government-owned company, in 2018 registered 14 per cent in transmission energy losses, translating to Shs14b because it evacuated power from three dams using distribution lines where transmission lines were supposed to be. 

In addition, it was reported that the country pays Aswa River Energy Project, the developer of Acwa dam Shs10m per hour for deemed energy.


The  association  
Ms Kitutu, who was presiding over the launch of the Electricity Generators and Distributors Association of Uganda said unity of stakeholders will allow the sector to plan better before setting up investments. 

Ms Thozama Gangi, the Electricity Generators and Distributors Association of Uganda interim board chairperson, said the association will lobby and advocate for a viable investment environment for potential investors and contribute to the development of industry best practice in generation and distribution.  

The association, which currently has about 15 members, has an interim board made up of Ms Gangi, Mr Selestino Babungi, the Umeme managing director, Ms Josephine Ossiya from Bujagali Energy, Ms Norah Nakato from Westnile Electrification Company and Mr Farhan Nakhooda, a Madhvani director.

Mr Babungi said the association seeks to supplement and compliment government’s efforts and deliver on core roles as well as leveraging on the fact that energy is one of the sectors which can create many jobs if access is exploited.

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