energy, oil, gas and mining: 3rd place (tie)- benon herbert oluka, the observer

8/18/2019 Energy, oil, gas and mining: 3rd place (tie)- Benon Herbert Oluka, The Observer

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Rural Uganda sees the light, but it’s not yet bright enough

Written by Benon Herbert OlukaCreated: 27 February 2015

An electrician connects a mud house to the grid in Amuru

In 2001, the government launched the rural electrification programme with the aim of connectingmore Ugandans to the national grid. Nearly 15 years later, The Observer undertakes an audit ofthe programme in a three-part series of articles.

In Part I of this series, BENON HERBERT OLUKA visits some of the communities benefittingfrom the rural electrification project, questions the authorities on why they failed to meet theirinitial targets and gathers expert views on where the authorities could have got it wrong in theirimplementation of the ambitious project: -

The northern district of Amuru, hitherto recovering from the devastating 20-year war betweengovernment soldiers and Lord‟s Resistance Army (LRA) rebels, is about 350 kilometres from

Jinja, the country‟s hub for hydro-electricity generation.

Ensconced at the border with South Sudan, Amuru is yet to attract some of the modern basicsocial amenities of modern life that many other parts of Uganda have enjoyed for decades. Yet,like any other part of Uganda, Amuru and other far-flung communities require amenities such aselectricity to transform their ways of life.

“Rural communities have a genuine and justifiable need for electricity,” says researcher Zachary

Ezor in his report titled “Power to the people: Rural electrification in Uganda.

“These communities want to use electricity in relatively small quantities in order to: pump water,transport commodities, engage in income-generating activities, practice modernised health care,and increase available light to extend work and leisure hours. Unfortunately, the road toachieving electrification is complex and costly.”

HIGH COSTS, LOW REVENUE

Some of those complexities, as pointed out in Ezor‟s research, include the high costs of

implementing and maintaining generation as well as transmission and distribution facilities in

rural areas, yet revenue collection is low since countryside households only consume smallamounts of electricity. These account for part of the reluctance and inability by private businessto take electricity to rural areas.

In early 2014, however, residents of Amuru received their first taste of grid electricity when thegovernment stepped in to extend power lines to a district that is still trying to shake off theeffects of a long war.


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For Amuru residents who have so far managed to connect to the grid, such as local small business owner Joseph Onegiu, the extension of power to their locality has boosted their businesses significantly.

In an interview with The Observer at Amuru trading centre, Onegiu narrates that prior to the

arrival of grid electricity, he had run his salon on solar energy for five years. With his relativelylengthy experience of using the sun-generated electricity, the 40-year-old Onegiu concludes thatsolar is cheap and reliable. However, he has since found that electricity has its own advantagesthat have won him over.

“I prefer electricity to solar because solar is difficult to supervise. In the morning, you need totake the solar plate out and in the evening you must bring it back inside. When it rains, there isno power; so, we are affected so much during the rainy season,” he explains.

According to Onegiu, because of the presence of grid electricity, he and his two business partners now also recharge (for a fee) and undertake repairs of mobile phones. They also

generally operate for longer hours than ever before.

“When we were using solar, we used to spend few hours at work but now with electricity, we can

work even at night. When there is good business, we are able to go even beyond midnight,” hesays, before disclosing – without going into the specifics – that their financial fortunes have sincechanged dramatically for the better.

The area LCI chairperson, Justin Oloya, says grid electricity has boosted many small-scale andmedium-scale business prospects in Amuru district.

“Having electricity has changed the life of people in my area,” he says. “The first thing is that

business is now going on very well during day and night. Secondly, we now have grindingmachines – some rice, some posho – which operate very well because of this electricity.”

Linking Amuru to the national electricity grid is expected to pave the way for the setting up andoperationalisation of northern Uganda‟s first large-scale factory, a 2,500+ tonne cane per daysugar complex owned by the Madhvani Group of Companies. The Group also plans to use bagasse (sugar cane fibre) to generate 10 megawatts (MW) of electricity, which it will supply tothe national grid.

According to Mayur Madhvani, a director at the Madhvani Group-owned Kakira Sugar Works,the development of a sugar estate in Amuru would create employment for 7,000-8,000

individuals and additionally give a livelihood to about 7,000 out-grower farmers and theirfamilies. The project has, however, dithered due to wrangles over land.

GROWING COVERAGE, RISING CHALLENGES

The grid electricity that has reached Amuru is one of the results of the rural electrification programme, an initiative launched by the government in 2001. The aim of the programme was to


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increase access to electricity in rural Uganda to 10 per cent by 2010 (later extended to 2012 dueto implementation delays), 22 per cent by 2022 and 100 per cent by 2040.

In 2001, when the government launched the first part of its Rural Electrification Strategy andPlan (RESP) (2001-2010), the programme‟s implementation handbook, only one per cent (or

80,000 people) of Uganda‟s rural population had access to electricity.

In its strategic plan, the government said rural electrification constitutes a critical part of its long-range programme to eradicate rural poverty and to foster opportunities for rural Ugandans inevery part of the country to prosper.

“Providing widespread rural-area access to electricity – (a) stimulates rural employmentdiversification, and draws value-adding enterprises to rural areas in order to improve farmers‟terms of trade and income levels; (b) enhances food security for the entire population; (c) createsthe opportunity for rural citizens to join with the urban population in enjoying electrification‟s

many modernisations and lifestyle benefits; and, (d) contributes significantly to enabling rural

people to participate more broadly and fully in national economic and social development and inharvesting its fruits,” the government notes in its plan.

However, by the end of the first 10-year-phase, access to electricity in rural areas had risen toonly five or six per cent – missing the government‟s own target by about half – and providedsome of the project‟s critics with ammunition to shoot it down.

A mobile money agent in Amuru continues to use solar energy despite hydro-power electriclines hovering overhead

In 2012, a local non-governmental energy resource consumption watchdog called the AfricaInstitute for Energy Governance (AFIEGO) commissioned a study to assess the implementationof Uganda‟s rural electrification project. The report identified 12 challenges to the

implementation of the project.

The challenges include high upfront costs, inadequate financing for the rural electrification project, insufficient power supply, geographical inaccessibility of many areas and limited humancapacity. Others are political interference, inadequate infrastructure, power theft, uncertainconsumer base, limited consumer awareness, apathy and low incomes in rural areas.

“At present, Uganda‟s development partners are providing significant funding towards ruralelectrification. This is not effective and sustainable,” concludes the report.

“In addition, the unit cost of energy for rural electrification is high, co upled with low demandthus needing continuous tariff subsidies. This requires heavy investment by government. Theinvestment through public- private partnerships between the government and private developerscan help deliver socially-desirable but not financially viable schemes.”


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In fairness to the Rural Electrification Agency (REA), some of the challenges were not of theirmaking. An analysis by the Economic Policy Research Centre (EPRC) says the rollout of therural electrification programme was also not helped by the reduction in the water levels on LakeVictoria due to a drought, which forced the government to subsidise by as much as Shs 92 billion per year the private companies that were generating about 150MW of thermal electricity.

“The energy deficits could have affected the rolling out of the electrification programmes, thusaffecting growth in customer numbers. In particular, the rural electrification programme wasgreatly affected by the acute power shortages because most of the financial resources weredirected towards electricity subsidies to buy down the high tariffs arising out of the expensivethermal power generation,” says a June 2012 report co-authored by economists Joseph Mwanje,Ezra Munyambonera and Lawrence Bategeka.

Despite all those challenges, and the inevitable diversion of billions of shillings to subsidisethermal electricity generation, the government has still spent substantial amounts of money onrural electrification. In the first 10-year phase of the project, which started in 2001, the

government spent Shs 1.3 trillion.

So, what did the authorities get so wrong that even with the injection of such money, they wereunable to circumvent some of the challenges and make a better return on the investment than theway-off-target five or six per cent rural access to electricity?

DREAMS AND REALITY

By the admission of the Godfrey Turyahikayo, the executive director of REA, the ruralelectrification project failed to meet its initial target because of failure to develop an effectivestrategy of turning the dreams into reality.

“The 10 per cent was presumptuous, with a number of assumptions,” says Turyahikayo in aninterview with The Observer. “One of them [presumptions] was that the people in the villages

had the capacity to pay for connections but… when you look at their incomes, it came to passthat very few people in rural areas could have that kind of disposable income, and therefore theassumption that there was ready ability to pay did not work.”

Joseph Onegiu working at his barber shop. He is a beneficiary of the electrification

According to Turyahikayo, the total dependence on prospective rural consumers to pay allconnection costs led to slow progress meeting the target. It is the reason, he adds, why thegovernment started offering connection subsidies to prospective consumers midway theimplementation of the project.

“We started experimenting with giving subsidies and found that we would get faster

connections,” he says. “In order, therefore, to sort out that issue of getting our numbers,government has now taken on meeting the connection costs almost entirely.


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That was a lesson learnt that the ability to pay in rural areas had been heavily assumed andtherefore we needed to do something to get the numbers we want. We are optimistic that with themeasures we have put in place, we should be able to get even more than what we have projected.”

Turyahikayo‟s analysis, however, tells only part of the story, according to lawrence Bategeka,formerly of the EPRC. Now an independent economist, Bategeka argues that the problems thatUganda‟s rural electrification plan faced in its first implementation phase extend beyond poor

conceptualisation of how to connect people to the grid.

Expounding on his views, Bategeka explained that because Uganda‟s societies are generallyspread out rather than clustered, it makes the provision of electricity in rural communities anexpensive venture if the government is to reach all the people.

“Our people are so scattered, so spread out,” he said. “If you are going to take electricity to them,

I don‟t know how many kilometres of wires you are going to need. By the time you even reach

20 per cent, you have made investments that are not worth it. No private company can recoupthat type of investment.”

Bategeka believes the implementers of the rural electrification project should concentrate on up-and-coming urban centres and forget about the villages. When the urban/trading centres are litup, according to Bategeka, people with the capacity to consume the service will migrate thereand in the process develop a viable consumer market.

To Turyhikayo, however, that assessment only looks at the project from an economic point ofview, which overlooks its other objectives, such as meeting the government‟s goal of ensuringequitable access to electricity across all parts of the country.

“One of the objectives was to ensure that there is equitable distribution in as many parts of thecountry as possible, particularly enabling administrative headquarters to access services and beable to manage administration easily,” explains the REA boss. “So it is not just consumption butalso, „how does government provide services to the people in an optimal manner?‟”

Turyahikayo says despite the failure to meet the 10 per cent target, for instance, REA will by theend of this year meet its objective of connecting all district headquarters to the nationalelectricity grid as a way of “making a very big improvement in terms of government outreach” in

the countryside.

“So, electricity should be looked at more as a catalyst for development other than followingdevelopment,” he says.

REA officials have also complained of substantial political interference, which has seen senior political figures in government pressure the agency to divert from its original plans and threadelectricity lines to their constituencies without any contingency plans for the additional costs. Inits own annual report for 2008, REA offered details on the problem, saying it was digging into itslimited financial coffers.


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RURALELECTRIFICATIO

From no hydropower to

THE OBSERVER | Friday, February 27 - March 1 , 201524

On my maidenreporting trip toKanungu district

in 2005, the entire town –

including the hotel where Istayed – had a specic timefor lights out. Around 11pm,the hotel would suddenlygo dead quiet and pitchdark as the lights went out,the music stopped playingand the thermal electricitygenerator shut down.

Nearly 10 years later, aswe sit at the ofce of theKanungu district LC-Vchairperson, JosephineKasya, the veteranadministrator reects witha mufed smile about thedifculties of keeping thesouth-western district lit atthat time.

Kasya notes that asidefrom private thermalgenerators, the two muchbigger ones providedby businessman GarugaMusinguzi served onlyKanungu and Kihihi towncouncils. Everybody elsehad to make do withcandles.

A HERCULEAN TASKDuring the good times,

authorities would run thetwo generators for up to18 hours. Often, however,as Kasya reveals, keepingthem on for that entire timewas a herculean task.

“We would all contributeon a monthly basis –the district, and some

organisations and tradersaround who would beusing it – but still it wasnot simple. Because of thatlimited funding, we woulduse it say for some specichours and then put it off.Some would default andthen we would have to putit off even much earlier,”she says.

Kanungu nally gotconnected to the nationalelectricity grid in 2008.Since then, Kasya explains,there is evident systematictransformation. It is visiblein the schools that cannow conduct night time

classes and “preps”, tosmall scale businesses thatcan undertake electricity-intensive works such as

wielding and milling.“We had one tea factory,now we have three ofthem, and two more arebeing established. Allthese have stimulated a lotof production,” explainsKasya. “If you comparewhat Kanungu is nowwith what it was before theinstallation of hydroelectricpower, there are a lot ofsuccess stories to tell.”

Indeed, of all the placesthat I visited for this series,Kanungu had the highestnumber of visible electricityconnections. Nearly everyother house by the roadsidehad tapped electricity fromthe poles snaking acrossthe hilly district.

LESS ROSY PICTUREHowever, conversations

with some recent entrants tothe national electricity gridpresent a slightly less rosypicture. One such entrantis Kinkiizi DevelopmentCompany, the biggest localbusiness here. As powerarrived, KDC expanded itsoperations.

According to CharlesByaruhanga, thecoordinator of KDC’s teadevelopment project, theyopened up a total of threefactories. However, he

In Part II of thisseries, BENON

HERBERT OLUKA looks at the challengesthat electricity usersin Uganda’s ruralareas face and whichofficials in the variousentities involved inthe implementationof the ambitious ruralelectrification projectcontinue to grapplewith.

says, electricity supplyis largely unreliable,which affects operationsat the manufacturing

arm of the sprawling,Garuga Musinguzi-ownedbusiness empire.

“They have connectedthe lines but the poweris always not there,”Byaruhanga tells me. “So,with this power which is on-and-off, we are relying ondiesel to run the industries.They removed duty-freediesel for industries, so theexpenses are slowing theindustry. All these othersmall industries are indisarray; most of them aregoing to close because ofthat problem.”

At the farmer-ownedKayonza growers’ teafactory, Marcel Asiimwe,

the chief executive ofcer,offers a more detailedinsight into their woes.Before grid electricityarrived, they operatedthree generators, whichcost them Shs 750 millionmonthly.

Reliable supply of gridelectricity, with powerconstancy at 90 per cent,helped reduce Kayonza’senergy costs to Shs 300million, according toAsiimwe. In fact, they wereeven tempted to increasetheir output.

However, the company’selectricity-related troubles

resurfaced when the powerconstancy dropped to about60 per cent. Asiimwe saysthe regular interruptions

which, according to recordsthey keep, are sometimesas many as 10 every fourhours in the evenings,damage the machinery.

“Those uctuations

are very devastating toour equipment,” he says.“Every now and againwe are losing our circuit

breakers, our conductors;we are losing variousequipments. We lost ametering unit that we hadprocured at $27,000 [Shs77m]. We lost our intercom

A worker shovels tea onto an electricity-run mill at Kayonza tea factory in Kanungu PHOTOS/ BENON HERBERT OLUKA

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5 Star Plate Sets

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Microwave Oven

Griddle

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which we had installed Shs 100m.”

Anthony Ndyanabathe production manasays the interruptions acompromise the qualitythe processed tea, whmust go through a delictime-bound producprocedure in order retain its distinccharacteristics. Kayopacks three to four tonof tea each month.

“When you have these power cuts, fermentation is affecour drying is affeceven the cutting is actuaffected; so, we end losing quality in thareas,” says Ndyanaba“The most delicate parthe tea is when you havecrushed it. Once crushit is supposed to sp80 minutes on the trIf there is an interruptand the tea spends minutes, the characteristhat people look for inare destroyed. It losesquality, its value.”

POWER LOAD ISSUESAccording to Asiim

after the grid electrilured them to incretheir production, interruptions have forthem to purchase anotgenerator and stock mfuel for the times t

opt to switch to therelectricity altogether order to reduce machdamage. This has oagain pushed their costthe Shs 700m region.


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THE OBSERVER | Friday, February 27 - March 1 , 2015

RURALELECTRIFICATION

problematic electricity Another recurrent problem

was visible in the northerndistrict of Amuru. On one side of

Amuru trading centre is a three-phase electricity line which cansupport heavy machinery suchas grinding mills. On the otherside, where Charles Kidega’smill is located, is a two-phaseline, which can only be used forlighting and other light-dutyactivities.

Kidega is dismayed that whileone line runs above his milland another is a few metresaway, he has not been able toaccess electricity to reduce hisproduction costs.

“The power on our side is toolow to run the machines. Theyare asking us to pay Shs 3 millionto connect power from the otherside of the road,” says Kidega.

The executive director of the

Rural Electrication Agency(REA), Godfrey Turyahikayo,explained in an interview thatthe installation of power lines inevery part of the country wherethey are so far followed a needsassessment.

“When we are doing oursurveys, we registered all theactivities which require three-phase [lines] or we look at peoplewho have concrete plans. Thenwe put there an appropriatetransformer,” he says, adding,“The problem is that when wehave set up the power lines,people start saying they want torun machinery but during thetime we carried out the surveythey never told us. That’s whyyou nd issues.”

JUST TIFIABLE REASONSTuryahikayo added that

if locals apply to REA for anupgrade of the lines that gothrough their community, theagency can make the change,but only after their own reviewnds justiable reasons for theupgrade.

“Normally they [should]inform us and justify. We will goback [to review] and, if we getresources, we will upgrade,” hesays, emphasising however thatthe changes can only be madewhen the resources are available.

The challenge faced by Kidegain Amuru is merely a microcosmof the recurrent issues that

plague the rural electricationprogramme. In other cases,residents can see the power linesalright, but they do not have thecapacity to connect themselvesto the grid, let alone pay billsregularly.

“Very many people had highexpectations because power had just come (sic) and they assumedthat almost every householdwould get power. Unfortunately,it is not the case because youknow power is relativelyexpensive to get,” said MartinMugabi, the resident districtcommissioner of Kanungu.

REA ofcials say the cost ofinstallation is Shs400,000 and

Shs 500,000, which Kanunguboss Kasya says is out of reachof most of the locals in her area.“The initial cost of installationis not simple by our people’sstandards,” she said.

While electricity consumptionstatistics for rural Uganda arestill hard to come by, the amountof electricity used across thecountry – where an additionalsix per cent increase in ruralpopulation has raised the totalnational electricity access to 14per cent – power usage gurestell a miserable story.

According to the REA managerfor Project Development andManagement, Godfrey KhaukhaWerikhe, Uganda still has one ofthe lowest per capita electricityconsumption rates in the world.

SYMBOL OF CONTRADICTIONSWith electricity consumption

rates still low even in urban areas,some analysts fear that the ruralelectrication infrastructurecould be yet another symbol ofthe contradictions in public policyimplementation: the governmentdevelops a foresighted plan butcannot effectively implement it touplift the intended beneciaries.

Dickens Kamugisha, theexecutive director of the AfricaInstitute for Energy Governance

(AFIEGO), a local non-governmental energy resourceconsumption watchdog, saysif the government intended toprovide electricity to stimulatedevelopment in rural areas – asREA chief executive GodfreyTuryahikayo said in the rstpart of this series – then itshould have taken the centralrole in providing the service.Instead, Kamugisha notes, thegovernment has outsourced theimplementation to prot-drivenprivate companies that end upleeching the poor of their meagreresources rather than proppingthem up.

“The government pulled

out of the electricity sector[by unbundling the UgandaElectricity Board] and at the sametime you are saying you want togo and help the poor. So, whowas to help the poor; the privatecompanies or the government?”he asked.

In Kanungu and Amuru,private companies such as

Ferdsult, which won multi-billion shilling contracts toextend power lines and connectlocals to the grid, are installingpre-paid meters which requireusers to purchase units beforethey can access electricity.AFIEGO’s Kamugisha sayscommercialised arrangementdefeats the purpose of tryingto prop up rural Ugandans byproviding them with electricity.

“By using pre-paid meters, youare saying the peasants shouldrst pay and then get the power.You are assuming that thepeasant already has money. So,if one is doing a small business,you are not even saying let him

rst do the small business, getsome prots to pay for power,”argues Kamugisha.

He added: “If you want tohelp transform the poor people,it must be the government totake that responsibility to givethe service so that they use itto increase their capacity andthen they can start paying. That

is the entry point for privatecompanies to come in becauseprivate companies want returnon investment from day one.”

The manager in charge ofenergy for rural transformationat REA, Medard Muganzi, toldThe Observer that the governmenthad managed to circumvent theconnection problems by offeringfree connection materials toincrease access to electricity,as well as connection subsidiesfunded by donor partners suchas Norway and the World Bank.

Muganzi explained thatthese programmes, which havesuccessfully been implementedin Mubende, Kyenjojo and

Kanungu districts, benhouseholds and businessituated near power lines

have remained unconnected18 months or more from the tthe lines were commissioned

“The government obtaiadditional nancing to connection materials and athem to the service providso that they can connect thpeople and enable them to in instalments rather than the money upfront. Once peohave paid, the service providcan return the money intorevolving fund at REA, whcan still be used to buy materand we continue the cycle,”said.

However, Kamugisha beliethat such a stop-gap measstill leaves residual challenwhich will continue to houthe project and could lead tofailure since the rural poor costill not have the capacity to for tariffs.

“You are helping peopleconnect with subsidies but tis not the only obstacle,” he s“If you connect me, then whDoes subsidising the connectwithout subsidising the tasolve my incapacity to pay power?”

In late August 2014, wlaunching a phase of the ruelectrication project to cothe ve districts of MbarBushenyi, Ibanda, Sheema Mitooma, President Musevtold residents to improve thhousehold income so that t

are able to pay for electricity.“It is good to have electribut it is also important to msure that each household has a source of income. Otherwhow will you pay for electriwithout an income?” Musevasked Bushenyi locals.

With even the presidexpressing fears that ruUgandans may not be ablepay for the electricity that been extended to their localitanalysts such as Kamugisay REA needs to carefully think the next phase of the ruelectrication project to avbuilding infrastructure could end up unused.

In the final part of this ser

we look to the future for wthe next 10-year phase of

rural electrification proj

promises to achieve and whe

the government has re-jig

its plans and put in place

requisite infrastructure to del

on its promis

hobenon@observe

This series is the mai

product of “The Watchd

a centre for investiga

journalism at The Observer.

articles were produced with

support of grant funding f

the African Centre for Me

Excellence (ACM

Students of St Theresa Calcutta Girls School, Kanungu use laptops in their computer laboratory. The school recently

connected to the national electricity grid through the rural electrification project

A building along the Kanungu-Kihihi road with a Zuku television dish


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Can a new strategy redeem the rural electrification project?

Written by Benon Herbert OlukaCreated: 02 March 2015

In the third and last part of these series, BENON HERBERT OLUKA looks forward to whatthe next 10-year phase of the rural electrification project promises to achieve and whether the

government has put in place the requisite infrastructure to deliver on its promise.

For four years now, Godfrey Okello, a resident of Abim district in Karamoja, has lived within300 metres of a grid electricity line but does not enjoy the utility which was threaded to the

largely underdeveloped sub-region at great cost.

Okello, a member of the Abim district local council, says he applied for his house to getconnected immediately authorities started receiving the applications – even before the rural

electrification power lines had reached Abim. To this day, the wait continues.

“They have been telling us to wait. We have been waiting. We have even failed to understand

what is happening,” laments Okello to The Observer.

At Abim town, where a few of the 70,000 residents have been able to tap hydro-electricitycourtesy of available step-down transformers, a considerable number of electricity-inspired

businesses have sprung up.

Though the town is still dusty due to lack of tarmac roads, electricity has led to the emergence of

metal fabrication workshops, hair salons, entertainment outlets, refrigeration facilities in shops,as well as typing and photocopying services. The lines that run near Okello’s home are high -

voltage lines, from which he cannot tap electricity directly.

Okello and his neighbours need a step-down transformer. Like the lines that snake their wayacross 2,337 square kilometres of Abim, this problem affects other trading centres in the north-

east Uganda district.

“Some centres such as Kala Kala, Angwee, Otalabar and Kiru also have power lines nearby butthey require transformers in order to get electricity,” says Okello.

The manager in charge of Energy for Rural Transformation at the Rural Electrification Agency(REA), Medard Muganzi, concedes that cases such as that of Okello are not unique. He attributes

the delays to the attitudes of service providers, those private companies sub-contracted by thegovernment to connect people to the grid.

“If we are to achieve the government targets for connections, then we must definitely strive to

change this attitude of thinking that the customers should come to us rather than us going tocustomers,” he said.


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Late last year, REA held a conference with its service providers. Muganzi tells The Observer thatthey emphasised the need to improve their efficiency.

However, as the auditor general notes in his 2010-2013 audit reports, which are currently being

scrutinised by the parliamentary committee on Commissions, Statutory Authorities and State

Enterprises (Cosase), part of the problem is “lack of supervision and monitoring of thecontractors,” by REA. This implies that the electrification agency should pull up its own socks.

DIRECT GOVT INVOLVEMENT

The dilemma that prospective electricity users in Abim face offers an insight into the challenges

that the Rural Electrification Agency (REA) is grappling with in its attempt to deliver electricityto rural dwellers without the active, direct and systematic involvement of government in

implementing or monitoring service provision up to the grassroots level.

In 2011, a local non-governmental organisation called Pro-Biodiversity Conservationists in

Uganda (PROBICOU) undertook a study to assess the most salient energy sector issues andchallenges in Uganda. The study, titled “Key issues in Uganda’s energy sector,” notes that thegovernment lacked “appropriate mechanisms” to “enable modern and efficient energy services to

be accessed by the rural population.”

“The report recommends better monitoring and regulation of operations, improved regulation ofaccess to natural resources by investors, and increased stakeholder involvement in the energy

sector. It calls for the government to recognise the role that improved energy supply can play in poverty reduction by designing sustainable energy policies,” says the study, jointly prepared by

Robert Tumwesigye, Paul Twebaze, Nathan Makuregye and Ellady Muyambi.

The Africa Institute for Energy Governance (AFIEGO), which has carried out studies onUganda’s rural electrification programme, is not entirely sold on the private sector being themajor provider of what should ideally be a public good.

“If you want to help transform the poor people, it must be the government to take that

responsibility to give the service so that they use it to increase their capacity and then they canstart paying. That is the entry point for private companies to come in because private companies

want return on investment from day one,” says Dickens Kamugisha, the executive director ofAFIEGO.

Another report by Joseph Mawejje, a research analyst at the Economic Policy Research Centre

(EPRC), is not as dismissive of private sector involvement. It says the government can still use private sector players to achieve its targets, but must ensure that “the policy framework has to

provide adequate incentives to realise the benefits” of the programme.

Mawejje’s report, titled “Uganda’s Electricity Sector Reforms: Lessons and Challenges,”

recommends making rural electrification programmes pro-poor while minimising the costs ofaccess through using low cost electrification technologies, promoting decentralised electricity

generation in rural areas using hydro, wind, bagasse-based co-generation and where applicable


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geothermal, as well as ensuring that power concessions and purchase agreements to privatesector power distributors have specific targets for electrifying the poor.

In 2012, REA undertook its own soul-searching exercise with the aim of drawing lessons from

the first 10 years of the programme’s implementation. The result of that exercise was that REA

consequently developed the second phase of its rural electrification strategy and plan (RESP),which covers the period 2013-2022.

“The RESP was developed in a consultative process with the rural electrification programme’s principal stakeholders to identify corrective measures for improving the performance of the

sector, focusing on measures to accelerate electricity access while ensuring programmeefficiency and sustainability,” says the document.

According to REA officials, R ESP II is a more refined version of the agency’s initial master plan, which it expect to deliver electricity to Ugandans in villages with fewer complications than

they had to grapple with before.

INSIDE THE NEW PLAN

In its revised 33-page strategy and plan, which was released in September 2012, REA says it willemploy a modified approach for rural electricity service expansion under a simplified set of

implementing mechanisms.

According to the latest plan, the special-purpose vehicle for reaching the 26 per cent penetration

rate target by 2022 comprises two specific electricity service expansion goals. The goals hingeon expanding on-grid services to provide 1.28 million new service connections and increasing

off-grid services by 140,000 additional services of solar PV systems and mini-grid distribution

service connections.

“This means that approximately 1.42 million new rural consumers will have access to electricity,

making a total of approximately 1.6 million rural electric services (current rural access isapproximately 180,000 consumers),” notes the plan.

To pave the way for the special-purpose vehicle to reach its destination, REA will implement

nine “programme and policy adjustment measures.” The first measure is that the government willremove critical obstacles to rapid investment in rural electrification by absorbing the major

commercial and financial risk for development of the project.

Secondly, rural electrification is now being implemented on a model of scaled, multi-technologyelectricity service territories comprising the entire rural territory of the country, with governmentexpecting it to increase the commercial viability of rural electrification investments in a shorter

timeframe.

Explaining the rationale of this model, REA boss Turyahikayo said the plans identified thecreation of smaller master-plans for each part of the country, which will be marketed separately,

and which will make implementation easier.


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FINANCIAL INCENTIVES

“The plan has identified a number of ways which lend themselves to scaling up,” he said. “Oneof them is using a number of financial incentives to increase connections. The other one was,

instead of planning for the whole country and getting lines scattered all over, to divide the

country into service territories and in each one of them you develop a master plan instead ofhaving one master plan. Those master plans include projects that need to be done, which make both economic and practical sense, and construction plans in a systematic manner.”

While the master plans will be smaller, the rural electrification plan itself and its management

format under REA will be centralised. According to the proposal, this is being done to reducecomplexity and eliminate overlapping roles. However, this proposal calls for the reconstitution of

REA into an autonomous government entity in the mould of the Uganda Revenue Authority(URA), which has not yet been done to-date.

Under the new plan, energy service technologies not dependent on the national grid will also be

planned, offered and furnished to eligible consumers in the service territories in tandem with on-grid electrification services.

“These include islanded community-based mini-grids and solar PV systems,” says anexplanation in the plan. “The solar PV program may be implemented as REA-sanctioned projects

proposed by solar PV providers or under customer aggregation schemes facilitated or owned bythe on-grid service providers and directly financed by REA to improve program planning and

implementation scale.”

The government also adopted a system of long-term leasing and financing contracts withelectricity distribution licencees to furnish capital financing for infrastructure development for

electric distribution-based investment. Another measure is to offer discounts on the cost ofwholesale power to rural concession licencees in order to make on-grid electricity service more

affordable across Uganda.

Finally, the government will give more priority and enhanced support to investment in small

distributed power generation facilities so that they operate as local sources of electricity supply,thereby stemming power fluctuation problems such as those experienced at Kayonza growers tea

factory in Kanungu district.

“This investment has the potential to mitigate potential bottlenecks in rural electrificationexpansion caused by power supply limitations on the national transmission network,” says the

plan.

“Under circumstances such that the central grid cannot sufficiently meet the power demand ofthe rural service providers, in such case special rules and regulations will be provided concerning

licensing power projects and wholesale power contracting to allow rural electric service providers to purchase directly from such facilities or to engage directly in small-scale powerinvestment for their own consumption needs.”


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A DREAM TOO FAR?

Kamugisha is not too optimistic about the new plan because, he argues, it is not guided by anational policy but, rather, by politics.

“There must be a policy guide because the rural electrification strategy and plan is not a policyguide,” he says. “The biggest guide is politics and if you have a service like electricity, you cannever succeed [with] politically- driven motives.”

Bategeka shares a similar view, arguing that “we should differentiate from short -termism andlong-term goals” in the implementation of goals that would ideally improve the fortunes of

people in rural Uganda.

Bategeka believes aspiring to take electricity to all parts of the country, rather than focussing onup-and-coming urban areas in villages that people can converge to, is putting short-term targets

ahead of a more integrated national development agenda that would include providing other

services such as water, education, transport and health services to communities in rural areas.

REA boss Turyahikayo argues that even with the initial rural electricity plan, which it admits had

some shortcomings, the agency was able to construct more electricity lines in eight years starting2006 than Uganda had constructed in 1954-2005.

Between 1954 and 2005, according to Turyahikayo, Uganda had only 6,000 kilometres ofmedium voltage (MV) reticulation network. However, between 2006 and 2014, REA constructed

8,000km of MV network, while another 3,000km of MV are under implementation andapproximately 10,000km of MV are earmarked for implementation in the 2015/16 calendar

years. Those figures, Turyahikayo says, show the successes that are being registered due to

consistent improvement of their plans, and are a sign of better things to come.

“With these measures in place and the approval of the rural electrification strategy and plan

2013-2022, the targeted rural electrification access rate is 26 per cent by 2022. REA remainsoptimistic that the goal is achievable,” he says.

That new rural electrification strategy and plan is already into the third year of its

implementation, with another seven years to go. However, even the new plan is yet to enable thegovernment meet its initial target of increasing rural access to electricity to 10 per cent, which

should have been achieved in 2011. It remains to be seen whether REA can accelerate its projects fast enough to achieve its 2022 target.

[email protected]

This series is the maiden product of “The Watchdog,” a centre for investigative journalism atThe Observer. The articles were produced with the support of grant funding from the African

Centre for Media Excellence (ACME).
mailto:[email protected]:[email protected]:[email protected]

energy, oil, gas and mining: 3rd place (tie)- benon herbert oluka, the observer

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