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‘Unconsumed electricity will hit Uganda’s budget hard’

 

Isimba launched early this year

MUHAKANIZI: Unconsumed electricity will hit Uganda’s budget hard; capacity to rise to 1200MW, yet Ugandans can only consume 600MW

Kampala, Uganda | THE INDEPENDENT | Uganda must now reserve money to pay for generated but unconsumed power for the next five years, Secretary to the Treasury Keith Muhakanizi has said.

Muhakanizi told diplomats and economists at an IMF organised meeting at Sheraton Kampala on Monday evening that Uganda – and some other African countries – had been affected by power blackouts in the past, pushing governments to sign power-purchasing agreements with investors to produce more power than can be consumed.

He said the governments have now realized that citizens cannot consume all the power generated, creating another puzzle, because consumers have to pay for unconsumed power. Although the technocrat did not disclose how much Uganda would need to spend annually to compensate for unconsumed power,  he said it is huge dent to the budget.

Uganda commissioned the 183MW Isimba dam in April 2019, bringing the total installed capacity to 1200MW, yet Ugandans can only consume 600MW at the peak and lower than that off-peak. Early next year, the country will commission the 600MW Karuma dam, availing more power that must be consumed.

Muhakanizi said another mistake for Uganda is that the country has not prioritized network investment to evacuate power from where it is generated to people’s factories and homes. Here, he said, the country lags behind.

With the issue of low consumption taking centre stage, it also means that Ugandans may wait longer to have the tariffs lowered. Ugandans pay 19 US cents (700 Shillings) per unit of power, they consume, making expensive for households. Most people resort to using power for just lighting to keep the bill low.

James Banaabe, the Director of Energy Resources at the Ministry of Energy and Mineral Development said in October that Uganda invested in new dams partly to lower tariffs but unless all the power generated at Isimba and Karuma Dams are fully consumed, Ugandans will still pay higher tariffs for power.

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5 comments

  1. Very surprising to hear, that Ugandans will have to pay for unconsumed power. personally, I think one of the major reasons as to why there is low power utilisation in the country, is PRICE. Our electricity is very expensive. Without delving into the economics maze, it puzzles me as to why the power generation can not be reduced (by switching off some turbines, etc). Another puzzle is: if already the country is producing surplus electricity, then why are we borrowing money to build more electricity generation dams? Just asking.

  2. An Investor conference selling point, that is what this is; but it needs right people to understand how

  3. If Ugandans were allowed to cook using power this excess will not arise. The PS should be realistic in his thinking. The government has the right to dictate the reduction of Tariffs so that the main purpose of the provision of Power is related to the UN SDGoals…Welfare of people and not economic theories..Moreover less charcoal will be used, thus saving trees and maintaining a healthièr and productive population. Please serve the needs of the people and the vested intetests of profiteers. These resources are Ugandan and for Ugandans.

  4. Lets put it clear. Ugandans can not pay generated but unconsumed electricity, instead, they will pay for “deemed” energy – that’s energy that should have been generated if the right infrastructure and demand were in place. Electricity generation machines don’t remain running without demand. Like Kaka John says up there, the turbines are switched off until the Transmission company orders for energy from that plant.

  5. This is very true,we have 1200mw.very good to have surplus than a power deficit.
    By 2024 electromaxx tender will expire.and it’s the most expensive grid being thermal.this was inevitable to have it.
    Still if the government doesn’t become gredy and continue with rural electrification and putting incentives even to local investors the surplus will not be available.
    We urge the government to continue power investment since the curve is elastic.

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