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Unconsumed power will hit the budget hard – Muhakanizi

Ongoing works at Karuma. The dam is now 96% complete. Photo: UEGCL

Kampala, Uganda | THE INDEPENDENT  |  Uganda must now reserve money to pay for generated but unconsumed power for the next five years, The 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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