UGANDA

Opportunities and Demand for generation projects and tariffs in Uganda.

Eriasi KiyembaEriasi KiyembaManaging Director/Chief Executive OfficerManaging Director/Chief Executive Officer

UETCLUETCL

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Contents

Power sector reforms Power sector objectives Current status Generation projects Transmission line projects Tariff Structure in Uganda

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Power Sector Reforms

In line with power sector reforms and objectives, the Government of Uganda (GOU) has initiated a number of projects on a private-public-partnership arrangement as a strategy to address power generation requirements in the short and medium term.

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Power sector objectives

To make the power sector financially viable To increase sector’s efficiency To meet the growing demand for electricity

and increase area coverage To improve the reliability and quality of

electricity supply To attract private capital through private

sector participation To take advantage of export opportunities

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Power sector objectives (cont.)

The power sector has undergone reforms with the

objective of ensuring adequate availability of

affordable power and create a conducive

environment for private sector participation in the

power sector/economic development of Uganda

The Government of Uganda is committed to the

development and utilization of all available energy

resources and technologies.

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CURRENT STATUS

Over the last 14 years GoU has implemented a comprehensive power sector reform

Enacted a new Electricity Act in June 1999 Established an independent ERA in November 2000 Unbundled the UEB into successor companies in March 2001 Concessioned the generation business to ESKOM(U) Ltd in

November 2002 Concessioned the distribution business to UMEME in March 2005 Collaborated with the EAC and NBI on regional power

interconnection Established the REA in 2002 Formulated the Renewable Energy Policy in 2007 Launched the National Development Plan – (2010-2015)

GoU: Government of UgandaERA: Electricity Regulatory AuthorityREA: Rural Electrification AgencyNBI: Nile Basin Initiative

Uganda Power Sector

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Uganda Electricity Board

Uganda Elect ricity Uganda Electricity

Distribution Company

GENERATION SECTOR TRANSMISSION SECTOR DISTRIBUTION SECTOR

Nalubaale & Kiira Stations Concessionied

AES Bujagali IPP

Electricity Regulat ory

C U S T O M E R S

Uganda Electricity Board

Uganda Electricity Generation Company

Uganda Electricity Transmission Company

Transmission Operator System Operator Single Buyer

GENERATION SECTOR TRANSMISSION SECTOR

Private Generation IPPs

Distribution & Supply Concession (UMEME)Kilembe InvestmentsFerdsult Engineering servicesOthers

Electricity Regulatory Authority

C U S T O M E R S

Government policiesGovernment policies National Development Plan 2010-2015NDP Energy Targetsi. Increase generation capacity by an additional 3500MW by 2015

including 150MW from mini hydro plants

ii. Expand the transmission grid from the current 1300km to 2750km and increase the transmission voltage from 132kV to 220kV and 400kV

iii. Increase the consumption per capita from the current 75kWh/capita to 674kWh/capita by 2015 and 3670kWh/Capita in 2040.

iv. Increase rural electrification coverage to 20% by 2015

v. Reduce total system losses from 40% to 16% by 2015

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Government policiesGovernment policiesRenewable Energy Policy 2007

i. To increase the use of modern renewable energy, from the current 4% to 61% of the total energy consumption by the year 2017.

Sustainable Energy for all by 2030i. This is a UN initiativeii. Uganda was chosen as one of the pilot

countries

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Facts on demand vs supplyFacts on demand vs supply

Current peak demand : 484MW Installed capacity : 814MW

Current firm supply : 501.5MW Large hydro (465MW) Mini hydro (54MW) Bagasse (13.5) Currently zero thermal dispatch is

implemented. Demand growth rate : 10% per annum

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Current Generation Current Generation

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UETCL’S POWER SUPPLIERS

CATEGORY/SUPPLIER INSTALLED CAPACITY (MW) DISPATCH AS AT DEC 2012

LARGE HYDROS

ESKOM UGANDA LIMITED 380MW 215MW

BUJAGALI/BEL 250MW 250MW

MINI HYDROS

MPANGA/EMS 18MW 11MW

BUGOYE/TRONDER 13MW 7MW

KILEMBE MINES 5MW 2MW

KASESE COBALT 9.5MW 0MW

ISHASHA 6.5MW 3MW

KABALEGA 9MW 0MW

CO-GENERATION

KAKIRA SUGAR WORKS 12MW 12MW

KINYARA SUGAR WORKS 5MW 1.5MW

THERMAL

JACOBSEN UGANDA LIMITED (NAMANVE

HFO)

50MW 50MW

ELECTROMAXX (TORORO HFO) 50MW 50MW

Planned Generation CATEGORY/SUPPLIER PROPOSED CAPACITY (MW)

LARGE HYDROS

Karuma 625

Ayago 600

Isimba 188

Murchison Falls ---

Oriang 400

Kiba 400

Achwa 88

MINI HYDROS

Maziba 1

Nyagak 3 3.5

Kikagati 18

Waki 5

Muzizi 26/52

Kyambura 8.3

Planned Generation CATEGORY/SUPPLIER PROPOSED CAPACITY (MW)

MINI HYDROS CONT’D

Nyamwamba 14

Muyembe 10

Siti I&II 21.5

Lubilia 5.4

Rwimi 5.5

Nengo Bridge 7.5

Nsongezi 35

Kakaka 5

THERMAL AND SOLAR

Invespro 50

Albatros 50/230

Kabaale peat 33

Sesame Taylor 33

Geothermal 300

Namugoga Solar 50

Mputa (Gas) ?

Bujagali Hydro Power Project

Project description

• Development, construction and maintenance of a 250MW HPS on a Build-own-operate-Transfer (BOOT) basis.

• Bujagali Energy Ltd. (BEL) the project company supervised the construction of 100km of 220/132kV transmission lines on behalf of UETCL.

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Bujagali Hydro Power Project

• BEL the IPP sells electricity to UETCL under a 30 year PPA

• UETCL’s payment obligations under the PPA is guaranteed by the GOU through a government guarantee

• GOU signed an IA with BEL

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Project sponsor

The project sponsor is Industrial Promotions Services (Kenya) Ltd. {IPS(K)} and SG Bujagali Holdings Ltd.

IPS is the industrial development affiliate of Aga Khan Fund for Economic Development (AKFED), which promotes private sector initiatives and entrepreneurship through equity investment in Africa and Asia.

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Project sponsor

BEL is backed by IPS (Kenya) Ltd., and SG Bujagali Holdings Ltd. an affiliate of Sithe Global Power LLC.

The project was implemented on a IPP (PPP) arrangement. IPS raised financing on a 20:80 equity to debt ratio from various financiers i.e. IFC, AfDB, EIB, Nederlandse Financierings-Maats-chappij Voor Ontwikkelingslanden NV

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Thermal Power Projects• For all thermal power projects, the

development, construction and maintenance of project is undertaken by the private sector.

• The IPPs sell electricity to UETCL the off taker under short to medium term PPAs.

• Payment terms are on take or pay deals.• GoU signs an Implementation Agreements

with the IPPs to give waivers on duty on fuel as well as import and re-export duties on the power plants and accessories

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Thermal Power Projects

Year Plant Developer/IPP Project financing

2005 50 MW ADO Lugogo Aggreko I BOO

2006 50 MW ADO Kiira Aggreko BOO

2008 50 MW HFO Namanve

Jacobsen BOT

2008 50 MW ADO Mutundwe

Aggreko BOO

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Thermal Power Projects

Year Plant Developer/IPP

2008 12 MW Bagasse Kakira Sugar Works BOO

2009 20 MW HFO Tororo Electromaxx BOO

2009 5 MW Bagasse Kinyara Sugar Works BOO

2012 30 MW HFO Tororo Electromaxx II BOO

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Thermal Power Projects

Year Plant Developer/IPP

2012 20 MW Bagasse Kakira Sugar Works II

BOO

2014 57 MW Gas & Crude oil Kabaale

Jacobsen BOT

2014 35 MW Bagasse Kinyara Sugar Works II

BOO

2014 40 MW Kabale Peat Kabale Energy Ltd BOO

Mini hydro power Projects

• For all mini hydro power projects, the development, construction and maintenance of project is undertaken by the private sector.

• The IPPs sells electricity to UETCL the off taker, under long term PPAs.

• Payment terms are either on pay as you take or take or pay deals.

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Mini Hydro Power Projects

Year Plant Developer/IPP Project financing

2010 13 MW Bugoye Tronder Power Ltd BOO

2011 18 MW Mpanga Africa Energy Management Systems

BOO

2011 6.5 MW Ishasha Eco Power Ltd BOO

2012 3.5 MW Nyagak 1 WENRECO BOOT

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Mini Hydro Power Projects

Year Plant Developer/IPP Project financing

2012 9 MW Buseruka Hydromax BOO

2014 16 MW Kikagati Kikagati Power Co Ltd

BOO

2014 14 MW Nyamwamba Africa Energy Management Systems

BOO

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Hydro Power Projects

Year Plant Developer/IPP Project financing

2018 600 MW Karuma PPP BOOT

2016 200 MW Isimba Private sector BOOT

2017 600 MW Ayago PPP BOOT

2015 4.4 MW Nyagak 3 WENRECO BOOT

2015 26 MW Muzizi Private sector BOO (GoU?)

Transmission Line ProjectsProject financing

• Most of the projects have been financed by multilateral agencies i.e. AfDB, World Bank and bilateral agencies i.e. NORAD,NDF,JBIC, JICA,SIDA,DANIDA and GoU as well as through the tariff.

• In the recent past new financing institutions have shown interest in financing some projects i.e. KfW,China Exim Bank, India Exim Bank

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Transmission Line Projects

Year Project Project financing

2011 Bujagali Interconnection project

AfDB ,JICA & GoU

2014 220kV Bujagali Switchyard Upgrade

JICA & AfDB

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Transmission Line ProjectsYear Project Project financing

2014 132kV Mbarara-Nkenda AfDB & GoU

2014 132kV Tororo-Opuyo-Lira AfDB & GoU

2014 220kV Bujagali-Tororo-Lessos AfDB, JICA & GoU

2014 220kV Mbarara-Mirama-Birembo

AfDB, JICA & GoU

2015 220kV Kawanda-Masaka IDA & GoU

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Transmission Line Projects

Year Project Project financing

2014 Nkenda – Kabaale – Hoima project

NORAD/AFD

2015 132kV Mutundwe-Entebbe KfW

2015 132kV Opuyo-Moroto Islamic Development Bank & GoU

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Transmission Line Projects

Year Project Project financing

2016 Isimba Interconnection project NORAD ?

2017 Karuma Interconnection project NORAD/AfDB & JICA ?

2020 Ayago Interconnection project JICA ?

2016 220kV Hoima-Kinyara-Kafu NORAD ?

2016 132kV Lira-Gulu-Nebbi-Arua IDA ?

2016 132kV Mirama-Kabale AfDB ?

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Transmission Line Projects

Year Project Project financing

2016 132kV Mirama-Kikagati-Nshongezi

NORAD ?

2016 220kV Nkenda-Mpondwe-Beni NORAD under NELSAP ?

2016 220kV Masaka-Mwanza IDA ?

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Transmission Line Projects

Year Project Project financing

2016 400kV Karuma – Nimule - Juba

AfDB under IGAD & COMESA ?

2017 132kV Agago - Achwa

Interconnection 132kV

?

2016 132kV Bulambuli-Kachumbala and associated Mbale s/s

?

Tariff structure in Tariff structure in UgandaUganda• Transmission tariff

• UETCL acts as a single buyer and sole exporter and importer of power

• Prices between generation and transmission are bided or negotiated in form of Power Purchase Agreement

• UETCL sells power to distribution concessionaires at a Bulk Supply Tariff (BST)

• BST reflects the cost of power acquisition and transmission costs (O&M, ROI and mini investments cost provided in tariff)

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Tariff structure in Uganda Generation tariff

• The price paid by UETCL depends on whether the transmission company is paying for capacity tariff or energy tariff

The revenue requirement of generation component of tariff is made up of the following cost components

i. The investment requirementii. The operation and maintenance (O&M)componentiii. The concession fee or lease componentiv. Other costs such as regulatory fees and loyalties

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Tariff structure in Uganda Generation tariff cont’d-GETFIT• For small generation projects of less than 20MW,

feed-in tariffs are applied established by the Renewable Energy Policy (2007)

• Feed-In Tariff (REFIT Phase 1) run from 2007-2009 but had limited uptake by project developers

• In 2010, Renewable Energy Feed-In Tariff (REFIT Phase 2) commenced to encourage and support greater private sector participation in power generation from renewable energy technologies

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Tariff structure in Uganda Generation tariff cont’d-GETFIT Electricity needs in the short and medium terms

required a more aggressive program hence the special incentive scheme – GET FiT East Africa Program-Uganda pilot

The main objective is to assist East African nations in pursuing a climate resilient low-carbon development path resulting in growth, poverty reduction and climate change mitigation.

The premium of the Levelised Cost of Electricity will be paid as a top –up on the current REFIT levels

Annual monitoring review shall be every financial year and comprehensive review every 3years 36

Revised Tariffs (Usc/kWh)Technology Current

Refit TariffRevised LCOE

Premium increase over 20 years

Hydro(9><=20MW) 7.9 9.8 1.9

Hydro(1><=9MW) 9.1 11.1 2.0

Hydro(500kW><=1MW)

10.9 12.7 1.8

Bagasse 8.1 9.1 1.0

Biomass 10.3 10.9 0.6

Biogas 11.5 11.5 0.0

Landfill gas 8.9 8.9 0.0

Geothermal 7.7 7.8 0.1

Wind 12.4 13 0.6

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Challenges

Unstable hydrology which impacts on hydro power generation

Depreciation of the Uganda Shilling against foreign currencies

Raising oil prices on the international market

Lack of adequate spinning reserve

The Bulk Supply Tariff is not yet fully cost reflective.

Rampant vandalism of transmission lines

Timely disbursement of GoU subsidy to UETCL

Acquisition of way leaves

Securing funding for new investments

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Thank YouThank You

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