Uganda Energy Situation

Overview   Republic of Uganda     Location Algeria.png Capital Kampala (0° 18′ 49″ N, 32° 34′ 52″ E) Official language(s) Swahili, English Government Democratic Republic President Yoweri Museveni Prime Minister Apolo Nsibambi Total area 236,040 km2 Population 32,369,558 (2009 estimate) GDP (nominal) $17.703 billion (2010 estimate) GDP Per capita $514 Currency Ugandan shilling (UGX) Time zone EAT (UTC+3) Calling code +256

Energy demand and supply in the household sector Uganda has total energy consumption of approximately 6 Mio. Tons oil equivalent. The consumption per head is around 0,2 toe, which is one of the lowest in the world. Biomass is still the most important source of energy for the vast majority of the population with a share of 93% of energy consumption coming from firewood, charcoal or crop residues, is one of Africa’s highest. Only 8.7% of all households use efficient wood stoves. Like most African countries, research, development and dissemination of efficient and modern biomass technologies are inadequate. It provides all the basic needs for cooking and water heating in rural areas and for most urban households. It is also the main source of energy for rural small and medium-sized enterprises and contributes significantly to the rural economy. A further 6% of energy consumption is accounted for by petroleum products, which are mainly used for vehicles and thermal power plants. 1% of the energy consumption is based on electricity. Electrification access in Uganda is very low with 10% at national level but only 5% in rural areas. Access to Electricity in % of households: 2010: 10% (1991: 5,6%; 2006: 9%). Approximately 1% of rural households use off-grid electrification technologies (usually diesel generators or solar photovoltaic systems). Fuel wood is largely used for cooking in rural areas while charcoal provides the cooking needs for the urban population. At the same time, forests are depleted and overused in 30% of the rural areas leading to a severe lack of biomass for daily cooking needs. Currently only 7% of Uganda’s land area is covered with forest. Deforestation continues at a rate of 2,2% per year which leads to fuel wood scarcity in rural areas and price levels of charcoal and fuel wood in urban areas increasing at about 6% per year. In addition illegal cutting of trees increases. About 15-20% of the felling is used to produce charcoal, which is mainly used in urban areas. The production is carried out under primitive conditions with an extremely low efficiency (between 8 to 12% of the original energy). At the same time, households use biomass in a very inefficient way as the three-stone fire is still widely spread. Urban and rural households are facing increasing energy costs or spend more time collecting firewood. Furthermore, the traditional use of firewood is responsible for high indoor air pollution levels, thus causing respiratory diseases that affect women and children in particular. A total of 95% of rural households not having access to electricity are currently using traditional lighting technologies such as candles or kerosene lamps that give poor quality lighting, emit noxious fumes and present a hazard in terms of fires or burns (in particular for small children). Furthermore, the majority of social institutions (e.g. schools and health centres) in rural areas do not have access to electricity which leads to inferior health and education services in comparison with electrified institutions. Lack of access to electricity also severely constrains the economic development of rural areas of Uganda, preventing the establishment of certain businesses that require electric power or forcing companies to buy diesel or petrol generators that are costly to operate and have negative environmental impacts. Lack of electricity also prevents access to information and communication technologies (e.g. mobile phones, computers, Internet). This contributes to further isolating rural areas from the rest of the country. Institutional set up and actors in the energy sector Public institutions There are three main governmental institutions dealing with renewable energies for power generation: ·      The Ministry of Energy and Mineral Development (MEMD) is the lead agency in the energy sector. The Ministry is responsible for policy formulation, promotion, coordination, monitoring and evaluation. MEMD is also responsible for initiating legislation in the energy sector. Ugandas National Energy Policy is so far centralized, i.e. there are no energy officers at sub-national/district level. Part of the MEMD is the Energy Department (ED), which is structured according to sectors. ED comprises four divisions “energy efficiency”, “Innovative and renewable energies”, “electricity” and “provision with oil products”. ·      Rural Electrification Agency (REA) functions as the secretariat to the Rural Electrification Board, which realizes MEMD`s rural electrification plans as stipulated in the Indicative Rural Electrification Master Plan. REA controls public funds as for the subsidization of rural electrification projects. ·      Electricity Regulatory Authority is in charge to issue licences for the generation, transmission, distribution or sales of electricity. ERA has also the mandate to establish a tariff structure and investigate tariff charges and approve the rates of charges.   Projects implementing NGOs Energy is generally a side topic for most Ugandan NGOs. However, there are several NGOs with certain experiences in the field of the introduction of improved stoves. Commercial service provider In the field of photovoltaic systems about 25 providers work in Uganda. The Solar companies in general have difficulties to develop markets in rural areas and focus their interest on urban areas. In the field of stoves there are numerous workshops and craftsmen producing stoves especially for the urban market. Part of these workshops and craftsmen were trained by the EnDev-Uganda programme. Electricity generation, transmission and distribution Power Generation Uganda’s total installed capacity is 380 MW, generated primarily from Owen Falls Dam at Jinja in the South Eastern Uganda.  However, in 2009 only 140 MW could be used as a result of the low levels of Lake Victoria. Two dams in Uganda are equipped with desilting gates and have proper plans for the management of upstream water and land use issues. However, there are no national plans for optimised operation of power plants under variable flow regimes. A new hydro facility is under development at Bujagali, which is expected to become operational in 2012. This installation can generate approximately 180 MW. In the meantime 150 MW thermal capacities have been added in order to bridge the gap till 2011. All big power generation plants belong to the Ugandan Electricity Generation Company Limited (UEGCL) but are operated and managed by ESKOM, Aggreko and other companies. Transmission The Uganda Electricity Transmission Company Ltd. (UETCL) is the bulk supplier and single buyer of power for the national grid in Uganda. It is the purchaser of all independently generated power in the Country and it also imports electricity from neighbouring countries. UETCL is also responsible for publishing standardized tariffs for renewable energy generation of up to 20 MW capacity based on the avoided cost principle. Length of Domestic Transmission and Distribution Lines 14312 km. Distribution The biggest company empowered to trade and supply electricity at 33kV and below is Umeme Ltd, leased the assets of the formerly government owned distribution company (Uganda Electricity Distribution Company Ltd). There are some mini-grid distribution systems and one offgrid generation and distribution company (West Nile Rural Electrification Company Ltd). Non governmental service providers for rural areas in the field of energy Policy framework Poverty reduction strategy and Energy policy Energy is an integral part of the Ugandan Government’s Poverty Eradication Action Plan (PEAP) which includes frequent references to the link between energy and poverty alleviation. The Ugandan Government has set the target of providing 10% of rural population with access to electricity until 2012. This target has been specified in the Rural Electrification Strategy and Plan as well as in the PEAP. It is planned to be achieved by grid extension (including through private sector involvement), mini-grids and stand-alone electrification systems. Furthermore, the government has stated its commitment to increase the use of renewable energy from 4% today to 61% in 2017 as outlined in the Renewable Energy Policy (March 2007). In April 2010, the Government of Uganda launched the National Development Plan (NDP), which covers a number of energy issues. One of the objectives of this plan are increased access and consumption of electricity for growth, employment and socio-economic transformation. Limitationsn of the forestry sector and their impacts on the country's development are elaborated as well as challenges of the power sector. In consequence, the NDP highlights the following strategies to overcome the barriers of the energy sector towards achievement its goals: Increase power generation capacity to reach 780-820 MW, mainly through large and small hydro; increase rural electrification from 6 % to 10 % by, among others, subsidization of mini-grids; promotion of energy efficiency, reduction of power losses from 40 % to 16 %; revision of existing policies in the energy sector and promotion of renewable energies, esp. biomass and solar.  In addition to the technical and financial assistance from Germany Uganda’s energy sector is supported by the World Bank, Norway, ADB and to a lesser extent by Japan, Denmark and the European Community. The World Bank has provided loans for three major projects in the area of energy supply: the Energy for Rural Transformation (ERT) for USD 84 million (up to 2012); the Uganda Power Sector Development Project for USD 300 million (up to 2011) and the Private Power Generation Project (Bujagali) for USD 115 million (up to 2017). The main objective of the Private Power Generation project is to provide least-cost power generation capacity that will eliminate power shortages at the time of its commissioning. The Power Sector Development Operation Project is to reduce short-term power shortages and financial imbalances, and facilitate orderly longer-term expansion of electricity service. This also comprises a set of investments and policy measures designed to reduce the supply-demand gap until the Bujagali hydropower plant comes into service in 2011 as well as financial support for the Government to absorb a part of the higher oil prices. Key problems hampering access to modern energy services in rural areas Obstacles for grid based rural electrification The Government of Uganda has limited resources for extending the grid to rural areas.  At the moment, the Government’s focus is on solving the power supply crisis that is crippling the national economy. Based on an improved power generation it will concentrate its efforts to extend the grid to major urban and periurban areas. Tariff rates for customers differ according to the category of client. They reflect the cost of electricity supply to that category. Implementation of this principle eliminates cross-subsidization of any category of customers by other categories. As a result, the tariff for domestic consumers is relatively high with 0,17 € per kWh (426 U. Shs). This tariff is often higher than the tariff for industrial consumers because domestic consumers who take supply at the low voltage impose higher investment and operational costs on the system than industrial consumers who are supplied at the high voltage or medium voltage. For Umeme it is generally profitable to extend the grid. However, poor households cannot afford the connection fee and the electricity costs. In addition, collection costs are high in areas with dispersed population and low numbers of clients. Prepaid meters are not common in Uganda. Beside Uneme, private companies invest only in exceptional cases in minigrids. Normally, costs of providing access are too high due to remoteness of the sites, dispersed populations and difficulty of the terrain. Local communities don’t dispose of sufficient proper financial resources to make infrastructure investments in their community. Obstacles for off grid energy technologies and services There is strong political motivation to improve access to electricity of rural populations, particularly those remote from the grid. However, in the case of SHS both the affordability and the availability were seen as major problems for the dissemination of the solar systems in rural areas. In the case of hydropower, the investment costs are generally not affordable for rural communities and investors. In addition, there is a lack of management skills to operate MHPPs. Generally, the availability of micro-finance schemes for energy technologies in rural areas is limited. Large parts of the country have almost no access to institutional micro-finance services and must rely largely on moneylenders, suppliers, family and friends for short term seasonal loans. There are no secure liquid savings options available to these households, which would enable them to build assets over time. Existing micro-finance institutions often have a narrow credit product line, limited experience in rural markets and a lack of access to best practice information and technical tools. In addition marketing and maintenance structure for energy technology devices in rural areas are weak. Almost all retailers are established in the big cities with no outlets in rural communities. Thus, clients have to travel to cities to purchase energy devices and for repair orders, which is difficult for most rural families. Establish rural outlets are considered not to be profitable due to the high costs for transportation and mobilization, the dispersed nature of the populations and the low income and low demand of the local population.