UETCL has been in the news recently for good reasons and bad. Paul Busharizi interviewed CEO George Rwabajungu to get a sense of what is happening at the utility, below are excerpts of the interview.
Q. The Auditor General in his current report, reported that UETCL was the most profitable state enterprise. You made sh112b in profit in 2020/21. What were the major drivers of this performance?
A. Electricity Regulatory Authority (ERA) determines the bulk supply tariff at which UETCL sells the energy to various power distributors basing on our revenue requirements for meeting the costs of maintaining the high voltage grid, payment for power purchases from various independent power producers and other operational costs. The drivers of the reported profitability for the financial year ended 30thJune 2021 were on account of growth in electricity demand that saw electricity sales volume increase by 8.79% to 4,537.82 GWh, the appreciation of the Uganda Shilling (UGX) against the US Dollar and other foreign currencies, operational efficiency gains and the impact of Covid-19 pandemic that restricted various operations and activities.
It is about 20 years since the Uganda Electricity Board (UEB) was unbundled into its constituent parts, as a way to increase efficiencies and attract investment into the sector, with UETCL being one of those parts. What have been the highlights of UETCL’s achievements since then?
The energy sector has moved from a power deficit situation to a short-term power surplus anchored by both private and public investments in power generation.
UETCL was established as a public utility company mandated to own, operate and develop the High Voltage Transmission Grid (HVTG) above 33 kilovolts (kV). In accordance with the 1999 Electricity Act, UETCL is issued four licenses by the Electricity Regulatory Authority (ERA), namely: Bulk Power Supply, Operation of the High Voltage Transmission Grid (HVTG), Power System Operator and Power import and export. We also have a license from Uganda Communications Commission as a Public Infrastructure provider. In that regard, UETCL has successfully achieved the following:
In order to ensure sustainable supply of electricity, the generation segment has exponentially grown from 280MW in 2001 to 1350.39MW in 2021, with the potential to grow even further. However, this excludes the generation plants that are currently under construction like Karuma Hydro-Power Plant (600MW) and planning like Ayago (840MW) with an expected cumulative capacity of 1,440MW upon completion.
This has been achieved through Power Purchase Agreements (PPAs) over 50 in number entered into between UETCL in our role as a single buyer and the different Independent Power Producers (IPPs).
The generation mix currently synchronised to the grid is Hydro (80%), bagasse (8%), Thermal (7%) and Solar (5%) from 38 plants including over 35 Independent Power Producers (IPPs). More plants under construction will be completed, commissioned and synchronised onto the grid in the near future and coming years.
Over the years, UETCL has focused on improving the transmission backbone and regional interconnections that have seen the transmission grid grow by more than three times rising from the then 1,386km in 2005 to the current 3,882 Km. The length of transmission infrastructure total of 3,882Km comprises of (496km of 400kV, 1,002km of 220kV, 2,348.36km of 132kV and 35.2km of 66kV). With the various projects underway, the length of the transmission grid is expected to increase to over 5,700 Kilometers by end of 2025.
The higher transmission voltages indicate an increase in the magnitude of power that can be transmitted over power grid while at the same time, a reduction in the level of transmission losses. Indeed, the transmission losses have reduced from an average of 5-6% in the year 2001 to the current 3.7%.
Thus, the projects we have implemented have not only expanded and reinforced the power transmission grid but have also ensured that the generated power is evacuated to the various load centres around the country and further strengthened power transmission interconnections within the wider Eastern Africa region to spur regional power exchange and trade.
The challenges of the sector have not gone away. One major challenge industry watchers say is the challenge of evacuating power from the generation projects which is your job, listed among these is the Achwa dam and even Karuma. What do you say about these challenges?
True, the power evacuation challenges still persist to a certain degree. This is mainly attributed to the long lead time for securing financing for the power evacuation projects, as compared to the generation power plants/ projects, yet land acquisition process for the evacuation project is much more complex. Consequently, there is a lag between the implementation time for the power plants and the readiness of the associated evacuation infrastructure.
The lengthy and protracted land acquisition processes enormously contribute to such delays. This creates both cost and time overruns in the implementation of power infrastructure projects. Court injunctions, rejection of the Chief Government Valuer (CGV) approved compensation amounts, outright rejection of the transmission lines projects passing through some people’s land and community/ family disputes over the land have made this process even more challenging; thus delaying delivery of timely projects.
UETCL is working with Ministry MEMD and MoFPED to have a policy shift in acquiring at least 70% of the continuous stretch of the Right of Way corridor (wayleaves) first before the contractor is on the ground. This will eliminate the associated claims that come with the delayed handover of the project corridor to the contractors.
As a single buyer, UETCL is also working on the plan of extending the transmission grid to areas with high concentration of some mini hydro power plants such as the Mbale-Bulambuli area with a 132kV transmission line so as to relieve the pressure from the distribution network.
As for evacuation of the 600 MW Karuma Hydro Power Plant, when ready, the total capacity will and can be evacuated by the 400 kV Kawanda-Karuma Transmission line. The transmission line and associated Substation for evacuating the 83 MW ARPE plant will be completed and commissioned by February 2023.
Recently UETCL has been embroiled in some controversy over your project in Luzira-Namanve transmission line. The controversy surrounds UETCL’s compensation of landowners who had property in wetlands. What is your comment about this?
The Namanve-Luzira transmission line aims at improving power supply to the Luzira industrial park, by connecting the Luzira industrial park substation to the 132kV power grid at Namanve. The transmission line traverses a wetland, where it was discovered that some project affected persons already held Certificates of Title, and thus required compensation to allow UETCL access to the Right of Way to enable construction of the line.
During the consultation with the Ministry of Lands, Housing and Urban Development (MHLUD) and National Environment Management Authority (NEMA) in 2016 over the legitimacy of the Certificates of Title in the section of the corridor considered as a wetland, it was confirmed that the respective Titles fell within wetlands. Hence, MHLUD advised UETCL to halt all pending payments to the PAPs within the wetlands, and further proceeded to issue Title Cancellation Notices to the registered Proprietors of these Titles.
Consequently, the registered proprietors of the said land were aggrieved by the above decisions of both UETCL and MHLUD, and subsequently filed a suit against UETCL, the Attorney General and the Commissioner Land Registration, challenging majorly the utilisation of their land without prior compensation as well as the decision to cancel the respective titles. The plaintiffs secured a court injunction against UETCL in May, 2017, thus halting works in the said section and effectively delaying the project implementation over the years.
While considering UETCL’s appeal in November 2018, Court allowed UETCL to access the suit land for purposes of implementing the delayed project, subject to depositing a sum of UGX 28.9billion into an Escrow Fixed Deposit Account created by the Parties. Furthermore, another team of PAPs also secured a court injunction to deposit UGX 5.4billion into the escrow account before the wayleaves could be accessed.
UETCL’s position has always been that the decision whether or not to pay the owners of land in protected areas, is informed by government policy as communicated to it by either the line/regulating Ministry or the Attorney General in the exercise of his role as the Government’s chief legal advisor. In this case, UETCL held off paying the owners of these titles for over five years and only paid after being advised by the Attorney General.
UETCL now has access to the site albeit five years late; work is progressing after reaching an out of court settlement upon advice from the relevant Government organs.
Looking to the future what can we expect from UETCL in the next few years?
UETCL project portfolio presently stands at US$ 546million spread amongst twelve projects. UETCL is committed to hasten the completion of these projects in order to offer a robust and highly reliable power transmission backbone infrastructure to support the industrialization and socio-economic development of the Country. Thus, we shall continue to exercise diligence and professionalism through our technical, professional and competent workforce to expedite delivery of the Company goals.
UETCL is committed to playing a critical role in the regional power trade as more inter-regional power transmission lines and substations are built and/or strengthened. There are ongoing projects (under construction) which have encountered different challenges. As UETCL continues to engage different stakeholders at all levels to address the challenges, the support received from the various organs in ensuring timely completion and commissioning of projects is highly appreciated.