Energy & Industrialization;inseparable for Uganda’s Middle Income Status Goal

440px-japan_energy_and_gdp-svg

Having served as a goal keeper on the village football team from 1988-1991, I must admit that I owe the interest and knowledge of the game so many years later to a blown transformer that took 180 days to replace literally forcing me into the game. Today cases of such prolonged outages are as peculiar as they are rare. There is no doubt in my mind that while the population is higher, there is also a marked improvement in response times to power outage complaints. And that while there are more industries and more power generated, the million dollar question remains, “is it enough to take us into middle income status?”

By the end of 2017, we will have an “inaugural” 30MW of Solar Power added onto the National Power Grid. While 30MW of Solar Power maybe a mere 15% of the total Solar Power Potential (200MW) for Uganda, it is a step closer to saving us from receding into the dark days of 2006 and 2011 when the country was plunged into massive load shedding due to inadequate power supply. The highest potential for Solar Generation (is?) in the North Eastern parts of Uganda and the first generators coming on board are based in Tororo, Soroti and possibly Mayuge. The cost of production notwithstanding; a unit of Solar Power will cost the consumer 11cts, which is competitive within the region with Kenya last year signing on a Solar Power Generator that will cost the consumer 12cts for each unit of power and Rwanda still charging 21cts for each unit of power. All these though are still higher than the unit cost of Solar Power in India which is at 6cts.

30MW of Solar Power will be added to the National Grid by end of 2017. Courtesy Photo

According to a World Bank Paper presented on Financing for Development on Dec 08, 2015, Uganda’s energy profile shows Installed Generation Capacity at just Hydro 680MW (83.9%) and Biomass 125MW (15.4%) against Potential Generation Capacity of Solar 200MW (3.7%), Geothermal 450MW (8.5%), Peat 800MW (15.1%), Biomass 1650MW (31.1%) and Hydro 2200MW (41.5%). Local Industry experts though estimate the potential Generation Capacity of Solar at 2000MW. Diversifying Power Generation Mix for Uganda or any country increases the reliability of Power availability while at the same time yielding more affordable cost to the end-user. Our neighbors, Kenya and Tanzania have six and three power generation sources respectively, giving them a slight edge over us in reaping the benefits of a diversified power generation mix.

In his inaugural address to the Cabinet, President Museveni tasked the Energy Minister to revisit the Bujagali Energy Limited agreements and renegotiate the unit power cost down to 6cts for the domestic consumer and 5cts for the Industrial customer by February 2017 from the present 11cts. Once achieved this will significantly reduce the cost of hydro power and in turn the overall average cost of power when a diversified generation mix is attained.

Hydro power retains a high pc of Uganda’s Energy Profile. Courtesy Photo

The East African Crude Oil Pipeline construction starting in January 2017 is Uganda’s opportunity to introduce a new energy source into the power generation mix. Suffice to say that by the end of 2018 we will have at least an additional 300MW with from hydro generation (200MW), solar generation (60MW), Biomass generation (40MW) and from Heavy Fuel& Oil generation at least (150MW) by 2021. The generation figures shared above are applicable to projects so far licensed excluding Karuma & Isimba Hydro projects, more will be licensed in the coming days, months and years to ensure that we hit our target of an additional 3000MW onto the National Power Grid. This is the premise upon which the Energy ministry was allotted UGS 2.43 Trillion for the Financial Year 2016/17.

The NRM Manifesto themed Jobs and Wealth Creation was premised on moving the Ugandan economy from its current Per Capita Income of $736 to a Middle Income Group Per Capita Income threshold of $1036. It goes without saying that to make this $300 leap while at the same time providing jobs will require the manufacturing sector to play a pivotal role in the process.

The Industrial Revolutions in the United States of America and Singapore are testament to the fact that Industrialization and reliable and sufficient power generation go hand in hand for economic growth and transformation. The PUSH priorities for these nations were mechanization of agriculture, Industrialization, Infrastructural growth and a focus on Education (improved quality of local labor pool), Science & Technology. Going by the President’s inaugural address to the Cabinet, these are the same areas that we’ll have to focus on in order to take Uganda to the Middle Income Status

With an annual Energy demand increment of 10% to the National Power Grid, there has been pressure on the government to ensure that demand for power doesn’t outpace power supply. Suffice to say that generation has been to a large extent addressed and we can now confidently court large manufacturers& industrialists to spur our economic growth.

As we witness more cottage industries develop with amenities within reach both financially and geographically, the President has tasked the Minister of Industry to ensure that Twenty two Industrial Parks will be constructed over the next five years complete with roads, water, internet fibre and electricity available to investors that will set up shop here. With cheap power tariffs, Uganda then becomes an investment destination. The Partnership agreements that have been signed with South Korea and Turkey provide a fertile foundation for such investments that in turn create thousands of jobs for Ugandans. Question is; are we ready to take them up and be part of the solution? That is a choice we have to make daily; to either be a part of the solution or a part of the problem.

2 thoughts on “Energy & Industrialization;inseparable for Uganda’s Middle Income Status Goal

  1. My friend in Europe told me about the investors who come here in our country but we frustrate them and they resort to looking for another destinations. These frustrations include high costs of electricity and bureaucracy.

    With the future prospects under energy as streamlined by the NRM Manifesto will ensure steady supply of power and a conducive investment climate.

    Thank you Charlotte for always showing us a line and among others a paved way for our country to develop and achieve middle income status.

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s