Nalubaale, Kiira dam flaws spark warning

The government will urgently require to invest $10m (Shs37b) or more to fix multiple defects at the Nalubaale and Kiira hydro-power stations on River Nile in Jinja, days after taking over the infrastructure from concessionaire Eskom Ltd.

The upgrades are critical, according to official accounts, in order to stabilise the power plants’ operational efficiency and safety, safeguard personnel and avert possible flooding of the dams as it happened at Isimba dam last August.

Details contained in a March 26, independent engineer’s assessment report show that repairs or overhauls are required on generator protection—which safeguards the turbines from inherent risks of over current and over voltage.

READ: Nalubaale dam lifespan extended by 30 years

Upgrades are also required for online vibration monitoring systems for units/turbines 1, 4, 5, 6, 8 and 10 at Nalubaale, vibration monitoring system upgrade for units 11 and 12 at Kiira, and water bus main refurbishment for units 6, 7 and 8 which have been red-flagged as risks for power house flooding.

These flaws are coming to the fore just days after South African utility company, Eskom (Uganda) Ltd, handed management of the critical national energy infrastructure over to the government last week.

The authors noted in the report that the identified shortcomings pose health and safety risk to personnel, high maintenance costs, reputation damage, flooding and possible shutdown of any of the plants in likely event of an accident.

A flooding incident at the 183-megawatt Isimba dam downstream at the parallels of Kayunga and Kamuli districts in August, last year, plunged the country intodarkness and left Ministry of Energy and Uganda Electricity Generation Company Ltd (UEGCL) officials in a corner of bother since the plant was only into fourth year of operation.

UEGCL received Nalubale and Kiira dams last week after Eskom’s 20-year concession to run them since November 26, 2002 lapsed.

The concession provided that: “At the end of concession, the dams shall be in good working order, properly maintained in accordance with Prudent Utility Practices and all equipment manufacturers’ recommendations, and shall be free of any and all Liens (except permitted) and encumbrances and shall comply with the requirements of clause 2.6—retransfer of the dams to UEGCL.”

Liens is a concept of a right by one to retain property of a debtor until debt is resolved.  

UEGCL assumed effective management of the country’s two oldest dams at midnight on Saturday, following the handover ceremony five days earlier. The takeover of the dams is part of the wide-ranging second generation electricity sub-sector reforms borne out of the Electricity (amendment) Act 2022.

In a consolidation of the energy sector unbundled and segmented into generation, transmission, distribution and regulation at the height of implementation of the Bretton Woods-pushed liberation policy, Kampala has announced that it will not renewed the concession of Umeme, the power distributor.

The plan is to merge and subsume the three entities --- UEGCL, Uganda Electricity Transmission Company Ltd (UETCL), and Uganda Electricity Distribution Company Ltd (UEDCL) --- under a limited liability named Uganda National Electricity Company (UNEC) and position it as the new energy sector business spearhead.

Nalubaale dam, formerly known as Owen Falls dam, commissioned 69 years ago is one of legacy projects of the British colonial administration. The dam was designed to have ten turbines, but when electricity generation started in 1954 only four turbines were operational.

The 150-megawatt dam remained Uganda’s only hydro-power station until 1993 when construction of the 200-megawatt Kiira hydro-power station commenced. It was completed in 2003.

UEGCL’s chief operations officer, Mr George Tusingwire, said at the weekend that the defects identified with the country’s oldest hydro-dams notwithstanding, they remain in fairly good condition; Kiira and Nalubaale at 65 and 70 percent efficiency.

“Some of the things that needed to be done urgently are mainly replacing old equipment such as the auxiliary switch gear, powerhouse cranes, online monitoring system, among others,” Mr Tusingwire said.

Omission?

Asked whether the reported imperfections are a result of a commission or omission by the asset owner and supervisor - Eskom and UEGCL, respectively – the latter’s chief executive officer, Mr Harrison Mutikanga said “a lot of work has been done over the years and more has to be done because the two dams employed especially old technology”.

“We will continue assessing and evaluating the state of affairs, but the medium to long term strategy is to refurbish and rehabilitate the dams,” he said, “As you know Nalubaale is making 70 years so a lot has to be rehabilitated.”

While Shs37b is needed in the short term, UEGCL officials say $100m (Shs374b) will be required in the long term for rehabilitation of the two dams. One of the problems, especially in the case of Nalubaale is that finding the spare parts is a tall order since it employs technology 50 or more years older.

Technically, the lifespan of a dam’s electrical and mechanical components at the dam are 15-20 and 30 years, respectively, after which they will require an overhaul.  The civil structure can last for 50-100 years, depending on the designs, meaning the two dams are potentially in the range of developing structural problems.

Officials defended that the snags raised are not an omission on any party but rather as a result of a tango between Eskom Ltd and power sector regulator, Electricity Regulatory Authority (ERA), regarding permissible and recoverable investment cap to keep tariffs in check.

The Nalubaale-Kiira plants have the lowest tariff of US cents 1.119per unit and1.19per unit, respectively, which is used by ERA as the weighted average tariff to cushion consumers from pricing turbulence by independent power players. By comparison, a unit of electricity generated at Isimba dam costs US cents 4.16per unit, Karuma (cents 4.97) and Bujagali (cents 8.30).

President Museveni has variously complained about higher electricity tariff, which he linked to many “commission agents” in the generation and distribution chain, something he said has impeded his government’s industrialisation agenda.

The ERA stand-off with Eskom Ltd stalled the latter’s spend and planned works, leading to handover to the two dams to Uganda government in what one official described as a “less-than desirable condition”.

A number of equipment are reported either as not functioning well and with overdue maintenance.

“This is expected to impact the tariff and level of service after the re-transfer process,” one senior official told this newspaper on condition of anonymity to discuss the matter freely.

For instance, by the time of handing over the two dams last week, ERA was yet to approve Eskom Ltd’s work plan amounting to $5.8m (Shs21b) for among others, rotor poles for both dams, powerhouse crane gauge adjustment construction, and alienator air cooler nests.

ERA’s director for corporate and consumer affairs, Mr Julius Wandera, however maintained that there is no looming catastrophe at Kiira and Nalubale dams as Eskom has invested “carefully” and handed back the infrastructure with additional 30-40 more years of life.

“What has been done is to carefully allow investments in critical areas that require attention. That has happened. What remains is restoration of units that had become obsolete by time so that they are all fully functional, those are not defects. They are repairs to restore the functioning of particular generating units that has been put off,” Mr Wandera said.

He added: “Next, investments in power plants must always have an eye on the resultant end user tariff, this cuts across any investment, even if you are investing in a maize mill. It has nothing with political appeasement, it’s about prudence and affordability consciousness.”

Investment

During its 20-year operations, Eskom Ltd, which was encumbered by financing and management problems back home in South Africa, says it invested $51.4m (Shs194b).

That translates into an average of $2.6m (Shs9.7b) annually — in the two plants which some industry sources told this newspaper is below the expected annual investment for a prudent operator.

The World Bank handbook on operation and maintenance strategies for hydropower details that while there is no reliable benchmarking information for hydropower capital costs and replacement, refurbishment, and rehabilitation during the operations phase, a major refurbishment programme should cost around 25 percent of the overall original construction cost—adjusted for inflation.

In Eskom Ltd’s case, industry sources linked the firm’s alleged less-than-satisfactory investments in the Nalubaale and Kiira plants to the financial woes of its parent company. 

According to the investment schedule, approved by ERA, Eskom Ltd hardly invested any money in the first 14 years and only scaled up investments from 2018 of $6.1m (Shs22b), $4.4m (Shs16b) in 2019, $2.6 (Shs9.7b) in 2020, $10m (Shs37b) in 2021, and $6.8m (Shs25b) in 2022.

It is on this basis that that government will pay Shs70.8b as the buy-out amount to Eskom following expiry of the concession last Friday. Energy minister Ruth Nankabirwa tabled a supplementary budget request early last month for the Shs70.8b and Shs26.4b as start-up capital for UEGCL to take over operations from Eskom.

ERA’s director for corporate and consumer affairs, Mr Julius Wandera,  told this newspaper that now that the dams are back to government control, UEGCL shall continually invest in these repairs.

“Just as Eskom, ERA shall allow them a maintenance cost, plus investment to keep the assets robust. Let’s watch the annual tariff review in December for further discussion,” he said.