There is a $2.5 billion investment bounty on offer for those who wish to be players in Uganda’s electricity transmission industry.
The Electricity Regulatory Authority in April released its plans on how it intends to get a consultant to design a guiding framework for private companies to invest in the transmission of electricity, considering government has limited resources and competing interests.
This is the first time that a private investor will be spending money in the electricity transmission sector in Uganda. Before, private investors have participated in the electricity generation and distribution segments. The Uganda Electricity Transmission Company Limited has operated the transmission grid single-handedly.
ERA estimates that Uganda’s electricity transmission segment needs about $2.5 billion worth of investments over the next seven years if the power being generated is to be evacuated onto the national grid. Without a strong transmission network in place, Ugandans could be forced to pay higher tariffs as consumption fails to use up the available electricity in place considering the country usually signs take-or-pay contracts with the power producers.
“Based on the installed capacity of generation plants (including operational, licensed but still under construction and committed plants), Uganda in the medium-term is expected to experience surplus generation of electricity,” ERA writes in a March 2020 report.
The electricity regulator warns that “there is a risk of the planned generation power plants achieving commercial operations date without the requisite evacuation lines in place, thus creating a need for investment in the transmission backbone to facilitate growth in electricity demand and to avert deemed energy payments that would otherwise affect the financial sustainability of the Electricity Supply Industry.”
Power tariffs in Uganda tend to go down when there is more consumption of power. While private investors coming onto the transmission grid might lead to higher costs in the sector, more consumption of power should lead to a drop in tariffs. ERA has not said when it will issue the expression of interest calling for applications for the consultancy job.
The total installed capacity as at end of December 2019 was 1,252.4MW, of which 1,246.5MW supplies the main grid and 5.9MW is off the main grid, according to ERA. That number is expected to shoot up to more than 1,800MW when the Karuma power dam is launched in late November.
The government wants at least 30 per cent of the population to be connected to the national grid by June 2021, from the current 24.5 […]