Uganda will need to pay Eskom Uganda Limited over Shs324.3bn approximately USD85 million as part of the conditions for winding up the 20-year concession of managing the Kiira and Nalubaale power projects.
Eskom concession is set to end in March 2023, and the government has already prepared the Uganda Electricity Generation Company Limited to take over the plants.
According to the ministry of Finance, Planning and Economic Development, arrangements to make the money available are underway because failure to avail the money will see Eskom, a South African company, carry on with the projects on a caretaker basis.
Both the Nalubaale and Kiira power projects have a combined generation capacity of 380MW, which accounts for nearly a third of Uganda’s overall capacity.
However, the end of Eskom’s concession for the generation plants breeds attention to another arrangement that government has with Umeme for the distribution network. The 20-year Umeme concession is scheduled to also end in March 2025.
The government is currently locked in negotiations with Umeme Limited to conclude the matter. Umeme manages more than 90 per cent of the electricity distribution network in Uganda, with customers of more than a 1.5million.
Unfortunately, according to the government, the pay-out amount for Umeme is higher, nearly Shs763.3bn (USD200M) a factor that might play a part in keeping Umeme around for a while. However, according to the Ministry of energy and Mineral development, the government is likely to change the set-up of managing the distribution network by also being a participant.
Sources within the Ministries of Finance and Energy say Umeme may stay since the Uganda Electricity Distribution Company Limited has not yet built enough capacity on the generation side to handle the responsibility of distributing Umeme’s segment and this might be seen as handing a young boy a man’s job.
Although the government wants to take over Eskom, currently it is facing critical financing needs since its debt threshold is beyond 50 per cent of its gross domestic product. However further delay in making the decision is holding back investment capital in the distribution network, which will affect the quality of service on the network.
Last year in July, Eskom Uganda invested Shs888 million to refurbish Nalubaale Plant powerhouse staircases. The refurbishment of the Units 1,5 and 9 staircases was undertaken by Babcon Ltd, a Ugandan Company to improve their structural integrity and ease access to the lower gallery of the powerplant in order to access the turbines and waterways for maintenance.
In September of the same year, it invested over Shs11.6 billion (USD3.25M) in a project to carry out repairs on all damaged and cracked surfaces of on Nalubaale dam to cure leakages. The project was contracted by Sinohydro Corporation Limited and is one of many projects undertaken to extend the lifespan of the 67-year-old dam.
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