Ugandan politics are suffering from a very common ailment, a viral disease that plagues most all of Africa’s young democracies and if Uganda is any example, the syndrome is seemingly incurable. The pathogen is power; the disease is the unwillingness to let it go or the sinister coveting to attain it.
Either ways, with exception to but a handful of countries, it seems African democracies are shaken to the very roots of their existence every time a general election comes around.
As Uganda readies itself for its general election’s next year, the country is making rather very negative headlines. Tough words like ‘economic sanctions’ are already being tossed thither.
However, Uganda is suffering from another problem, a very rare kind of problem a problem that is not unique to Africa, on the contrary the problem probably does not exist anywhere else in the World, the problem of having excess power.
Oh, do excuse me, we have now shifted from political power to electrical power! While the rest of the world is struggling to generate sufficient electricity to meet their demands, Uganda is actually facing excess electricity, that is, the country’s power output exceeds its demand, by far.
Local media in the region warns that ‘…if demand for electricity is not increased, the Uganda risks having an excess generation 1000 megawatts (MW).”
This shocking and very rare controversy has been brought to light thanks to a study conducted by Cities for Infrastructure Growth (CIG).
It is reported that Uganda’s total generation capacity is currently 1,246.4 MW yet the country’s total demand seats at a mere 650MW. At current production levels, Uganda is already facing excess production of nearly 600 MW.
As if that is not enough, the country has some other ten power projects in the offing. Once complete, these ten power projects will have the combined capacity of 733.4 MW, and yes you got, that is 733.4MW of additional excess output above the current excess of 600 plus MW.
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Excess Power Dilemma: Lower out Put or Increase Demand
Uganda is aware of its predicament and while on the one hand you may say this is a simple equation, easily resolved or at least reduced by shutting down the new ten power projects, things are not so black and white on the ground.
Nonetheless, Uganda has admitted to the problem and its Ministry of Energy has launched what it calls ‘the roadmap for catalytic power sector.’ Led by CIG, the UK funded programme seeks to solve the power trouble not by cutting supply but by increasing demand.
For example, the proposal suggests increasing demand at various mass production sites in the steel and hydrocarbon sectors.
One such attempt is the Kabaale Industrial Park, if such a mass production area was fully occupied, that is, if investors set up factories, then there will be an increase demand for power. So it is now the task of the Ugandan government, whichever one that is voted into power, to create incentives and an investor friendly environment to actually attract both local and foreign investors.
Another, even more straight forward answer is to export its excess power to its neighbours that have high demand but low power supply.
While it’s a possible solution, however is it feasible? It should be noted that Uganda has the regions highest power tariffs.
Consider this, Uganda’s sole national power distributor, UMEME got the go ahead from the country’s Electricity Regulatory Authority (ERA) to raise the electricity tariffs by up to 11% in the first quarter of 2017 citing depreciation of the shilling against the US dollar from Shs3, 375.45 in September to Shs3, 630.22 in December, 2016.1
Increasing the cost of electricity means increased operating cost for investors, especially the kind of investors that Uganda needs for occupy its industrial parks. If the cost of electricity is high, and expected to keep increasing then investors will shy away. This is because increased operating costs will eat away at their profits, that is unless they hike up their final sale prices that is.
Should that be the case, as is the norm, then it means at the end of the day it is the common Ugandan that will suffer the most. Ugandans will have to shoulder the extra cost of production through increased price of goods. Also, businesses will suffer not only from increased production cost but also from increased competition from cheaper imports.
Mr. Martin Kyeyune, who is the Finance and Economic Advisor at Roofings Group, one of Uganda’s leading producer of steel products, is quoted saying “…if this situation continues, then, local companies which produce goods that are at the same time imported into the country cheaply are likely to become uncompetitive and possibly forced to shut down.”
So will the neighbours be willing to buy Uganda’s high cost electricity? Well, they already are being rather good team players. In 2018, the total net energy export to Kenya, Rwanda and Tanzania was 198 GWh.
We must also tip our hats to the government of Uganda has also signed multiple bilateral agreements with South Sudan and DRC for cross border electrification projects with export potential of 690 MW, this according to the CIG.
So what is the best thing for the government of Uganda right now, “…the best thing at the moment is for the government to create a conducive environment for local firms to produce at full capacity and eventually drive the electricity tariffs downwards,” says Mr. Kyeyune
Statistics from the Uganda Manufactures Association show that the country’s overall industrial capacity utilisation
Commercial consumers such as welders and water pumps have seen their electricity tariff increased by 20.7% to Shs 570.6 per KWh while medium and large industrial consumers have seen their tariffs increased from an average of Shs450.1 and Shs308.5 per KWh in 2014 to Shs526.7 and Shs355.8 in 2016, respectively during the same period.
At current projections, if adequate measures are not put in place to grow demand, there will be an excess capacity of more than 1,000 MW by 2025. This will put significant financial pressure on the already constrained finances if additional demand of power is not created – CIG report.
So as Ugandans head to the polls, they have two power issues to lament on, who to put in power, to resolve their excess power delimma.
1Can Uganda survive with highest electricity prices in EA?
