The Attorney General has agreed with Sinohydro Corporation’s position, joining the contractor’s dismissal as malicious and totally misconstrued, the allegations in a court case filed against it and others over the procurement process.
The case stems from a suit filed by one Henry Kyarimpa, who asked the High court to order for an independent engineering, financial and value-for-money audit to determine the quality of works and viability of the projects and also to cancel contracts of both the Karuma and the 183MW Isimba hydro power contractors.
However, the East African Court of Justice in Arusha had ruled thus in the same case; “With respect to the order to cancel the MoU between Government of Uganda and Sinohydro, we are persuaded that such an order would be academic and futile. As a court of law, we cannot act in vain and we, accordingly decline to order the respondent to cancel the MoU between the GoU and Sinohydro”
The East African court had further stated that it was impractical to reverse the construction of the Karuma dam by Sinohydro adding that the remedy sought by the appellant was inappropriate in the circumstances.
In their defence to the latest appeal, Sinohydro says the matters Kyarimpa raises in his new petition have already been dealt with by the East African Court of Justice hence they cannot be pursued further by the same parties.
The Attorney General’s defence states that Sinohydro together with the government of Uganda, entered into an engineering procurement and construction contract, which provides, among other things, a consultant whose duties include verifications and ensuring proper works site.
The Attorney General further affirms that if there are any construction issues at Karuma or Isimba, such EPC has in-built provisions for addressing and rectifying such issues, and it cannot be open to the second defendant to arrogate to himself the duty of a consultant to the project.
Government says it has put in place adequate supervision capacity. The AG maintains that the regulations are undertaken by Uganda Electricity Generation Company, which is advised by reputable project management consultants such as SMEC International Limited at Isimba and AF Consulting Switzerland Limited at Karuma.
Furthermore, the Attorney General said contrary to allegations of lack of proper supervision of the project, there is adequate supervision on ground at both Isimba and Karuma hydro power projects to check the quality of work which is currently at 31% and 30% construction progress respectively.
“There are no material and fundamental defects on the projects. The defects so far experienced on site are minor and are those which ordinarily occur in the construction and engineering industry and do not affect the functionality and durability of both projects” AG’s defence reads in part.
The AG also denies Kyarimpa's allegations that there is infighting between the Ministry of energy and Uganda Electricity and Generation Company.
"On the contrary, there is a memorandum of understanding that was entered into by the two institutions spelling out the responsibilities of each institution," the government says, adding: "The first defendant [Attorney General] avers that government of Uganda has not received any credible reports or information of alleged corruption, misuse and wastage of public resources as alleged."
The third International Off-grid Renewable Energy Conference and Exhibition (IOREC) will bring together policy makers, private sector leaders, financiers, and development institutions to push forward the global off-grid agenda at a high level meeting which will sit in Nairobi, Kenya from 30 September to 1 October 2016.
The third International Off-grid Renewable Energy Conference and Exhibition (IOREC), organised by the International Renewable Energy Agency (IRENA) in partnership with the Kenyan Ministry of Energy and Petroleum and the Alliance for Rural Electrification (ARE), aims to improve electricity access by scaling up off-grid renewables.
The Director General of International Renewable Energy Agency (IRENA) Adnan Z Amin believes that achieving 100 per cent electricity access by 2030 will require the pace of electricity expansion to nearly double – but this has never been more possible. The conference in Kenya’s capital will therefore look into how this can be expedited.
“Dramatic cost reductions in recent years have made renewable technologies the most economic option for off-grid electrification – even cheaper than diesel-fired generation or kerosene-based conventional lighting in majority of contexts. Off-grid renewables can spur socio-economic growth while also contributing to multiple Sustainable Development Goals." Amin said in a statement released early this month announcing the conference.
The conference this year will focus on four overarching themes: stand-alone systems for rapid expansion of electricity access; technology innovation to unlock new opportunities; mini-grid development to meet growing demand; and socio-economic benefits of off-grid renewable energy system deployment. Participants will share experiences and best practices on the design and implementation of enabling policies, tailored financing schemes, innovative business models, and technology applications to boost off-grid development.
"A growing number of governments, businesses and individuals are recognising the potential of off-grid renewables as a solution to energy access issues,” said Mr. Amin. “In 2015, USD 276 million was invested in the off-grid solar sector alone, a 15-fold increase over 2012. We now must further accelerate off-grid renewable energy deployment, not just for access, but for economic prosperity and poverty eradication."
Africa Institute for Energy Governance (AFIEGO), a Non-Governmental Origination (NGO) dedicated to influencing energy policies has written to President Yoweri Kaguta Museveni an open letter voicing out their concerns in the energy sector. The paged letter was released Monday, 8 August, 2016.
The letter titled ‘Energy sector development concerns’ is signed off by four other organization which include Africa Institute for Energy Governance (AFIEGO), Guild Presidents Forum on Oil Governance (GPFOG), Green Organization Kyambogo, Oil Residents Association and Grafeni Butimba.
In the letter, AFIEGO proposes seven ‘measure to address the challenges facing the energy sector in order to maximize electricity and oil benefits for the citizens.’ The letter largely tackles governance issues in the development of electricity and oil sectors. We reproduce the letter below as it was shared.
The President of the Republic Of Uganda
Y.E. Yoweri Kaguta Museveni
State House, Entebbe
Subject: Energy sector development concerns
Mr. President, we wish to thank you for the dedicated service you have provided to this country for more than 30 years. Under your leadership, the country has witnessed significant social, economic and political progress. The ongoing development initiatives by the government including the recent approval by the cabinet to issue oil production licenses to oil companies, agreement with Tanzania to build a crude oil export pipeline, discussions with East African leaders to build a joint oil refinery in Hoima district, borrow $71 million to expand electricity access in rural areas, complete the construction of Karuma and Isimba dams by 2020, distribution of $4 million worth of free energy savings bulbs to the poor and many other energy development projects provide further opportunities to achieve our national development goals and vision of attaining a middle income status by 2020.
Mr. President, as you have noted before, electricity and oil developments represent are great chance for the country to develop, but also a big risk depending on the quality of our governance as a nation. Indeed, both the National Development Plan (NDP) II and the National Vision 2040 recognize that the electricity and oil subsectors will have to play a massive role in the transformation of Uganda and most importantly to extricate the majority citizens from the current trap of misery. However, if electricity and oil developments are not managed professionally, with maximum transparency, the same sectors have the potential to cause serious environmental, social, economic and political damage that will impact both the current and future generations. Ugandans must understand the reason why all African oil producing countries have continued to suffer extreme debts amidst plenty. They are suffering because of corruption which some government officials to connive with powerful individuals in government against the citizens.
This is why for the last six years, the government has been spending over 10 per cent of the national budget on electricity developments, yet today, over 86 per cent of the population has no access to electricity and businesses are crossing partly because the little available electricity is too expensive. Regarding the oil sector, we wish to remind you Mr. President that since the discovery of oil in 2006, the government has not performed well on the issues of governance, transparency and accountability. This is the reason why it took the government over 6 years to put in place some of the new oil laws such as the upstream, midstream and downstream of 2013 and 2015 but again, to date, we still don’t have a national local content policy, we don’t have oil regulations for upstream, midstream and downstream and no functioning petroleum authority and national oil company.
On July 3, 2016, the cabinet where you are a chairperson agreed to borrow $71m (approximately Shs 234.3 billion) for expansion of rural electrification (RE) in line with the 2013/2022 Rural Electrification Strategy and Plan. But where is evidence that the previous investments in the sector are helping Ugandans? Instead, even the households that gained access cannot afford the said power and those who try to use it a sign of prestige, end up failing to feed their children or take them to school. Similarly, in the oil sector, to date, oil companies have invested over $3 billion (approximately 10 trillion shillings) but as a country we are still failing to commence production. At the end, we have to pay the companies their costs even when the oil activities are in recession. As a result, Ugandans cannot jobs and the private sector will scamper for bail outs from a government that is heavily indebted.
Regarding corruption, since 1986, you have been promising to stamp out corruption the recent report on National Roads Authority (UNRA) and revealations that both Karuma and Isimba dams have serious technical faults clearly indicate that corruption still remains our biggest national challenge. Again, it is corruption that explains why Own Falls and Kiira dams cannot produce power to capacity or why we lost $220m (approximately Shs726 billion to Tullow against her sale to Total and CNOOC in 2012. It is also corruption that explains why since 2013 when the oil laws were put in place, we have failed to put in place oil regulations and to operationalize the petroleum authority and the national oil company.
Both the electricity and oil sectors in the country are still characterized by political manipulations, secret dealings, Production Sharing Agreements (PSAs) that have bad clauses such as confidentiality clauses, tax exemptions and others. How then do you expect Ugandans to trust your promises of a new Uganda?
For sure, there are many challenges facing electricity and oil sectors in Uganda. They include lack of respect for existing laws by the politicians, weak institutions to implement the laws and supervise the projects efficiently, secrecy in licensing processes, failure to conduct regular audits to assess value for money and others.
Your Excellency, as concerned Ugandans, we would like to ask you to do the following as a measure to address the challenges facing the energy sector in order to maximize electricity and oil benefits for the citizens:
Production licenses: You need to appreciate that the oil sector is very technical and requires high levels of skills. For this matter, the government should operationalize the Petroleum Authority and support it to take responsibility of approving or disapproving the issuance of both exploration and production licenses as well negotiation of PSAs. This will allow the technocrats to do the real job and the politicians can use their powers to supervise the authority.
Value for money audit regarding rural electrification: Before borrowing the $71m from the World bank, first conduct an independent audit to establish whether the citizens have been benefiting from the previous investments. The audit should address the issue regarding the impact of current tariffs on the poor and how best the poor can use the current electricity to improve their lives. It should also provide recommendations such as the use of off-grid electricity such as solar, wind, biogas and others to meet some the energy needs by the poor and isolated communities.
Access to information regarding a refinery and pipeline as Uganda’s oil development options: Government should make public, information regarding the economic logic for Uganda to build both a refinery and a pipeline. What are the advantages and disadvantages of building a pipeline alone and or a refinery only or building both a refinery and a pipeline at the same time? The government should not commence transactions to spend billions of dollars before providing evidence to the citizens to support the social, environmental, economic and political benefits of such projects.
The cost of Karuma and Isimba dams: While we are still stuck with the high costs of Bujagali dam, there is fear that both Karuma and Isimba dams are the most expensive dams in Africa. Today, Ethiopia is building a 6,000wm dam at a cost of $4.8 billion while our Karuma dam of 600mw will cost $1.7 billion. There is for the government to work with the parliament to investigate the cost and quality of the two dams. High costs of dams and corruption in distribution is the reason why 35 million Ugandans cannot consume 850mw during off-peak time. Without transparency, government will struggle to get consumers for Karuma and Isimba power but whether we consume it or not, as tax payers, we shall be compelled to pay the returns on investments that are always guaranteed by our government. Indeed, building a dam is important but ensuring that the cost is competitive both nationally and internationally-(a factor that is always ignored by our government), is the most important. Even the East African and African power pools will help us if our power is too expensive. So, we need to investigate and close the gaps.
Power as a big factor of production: Government must appreciate that the current crisis facing the business community who are asking for bail out are symptoms of deeper problems ranging from high costs of production. Companies like Uchum closed but as a country, we did not care investigate why they closed. Now, our own are closing and we think the solution is bail out. Bailing out is good but if its done before addressing the defects in production factors such as the cost of electricity, it will not help.
Mortgaging oil: We are concerned that since the discovery of oil in 2006, the borrowing by the government has continued to increase steadily and it is clear that other than oil, we don’t have any other source to generate money to pay back the billions of dollars being accumulated in debts. So, it is logical to conclude that the government is borrowing against the oil that is still underground, and this is a big mistake. These are the mistakes that explain why majority African oil producing countries the biggest indebted governments in the world. Let’s not take Uganda to that direction.
Off-grid electricity solutions: The government, instead of spending billions of money to extend grid power to isolated and rural poor communities, it should invest in solar, wind, biogas and other renewable technologies to provide clean energy to households where they will not be required to pay monthly bills. After all, the available evidence indicate that that even those who have grid power, they use less than 15 Kwh units per month and these can be supplied by off-grid technologies. In effect, grid power should ring fenced for industrial parks and areas where a lot of electricity is needed for manufacturing. But for off-grid to reach every corner and household in Uganda, our government must take a deliberate step to invest in the subsector and not leave it completely to private companies. It is also necessary that those managing the off grid and grid power projects connect to avoid wastes.
Your Excellency, we hope, you will put our proposals into considerations for the benefits of the citizens.
The Ministry of Finance, Planning and Economic Development has been given the green light to acquire a $71m loan from the World Bank to finance the grid expansion under the Rural Electrification Strategy Project (RESP) for 2013-2022.
A Cabinet meeting that sat on Wednesday 3rd August 2016, at parliament building approved the a loan request from the ministry of finance. The money will also reinforce the project which is in pursuit of the objectives of the Rural Electrification Strategy Project which provides for the Road map to increase power access to 26% by 2022.
According to a statement released after the meeting, the loan will finance a series of investments in power distribution and off-grid solutions required to achieve the rural electrification 2013-2022 strategy. Some of the beneficiary districts include Gulu, Lira, Nebbi, ARUA, Kole, Oyam and Nwoya.
The World Bank board of executive directors last week approved a financial package of USD 200 million for the Tanzania Rural Electrification Expansion Programme from the International Development Association (IDA). The loan will boost rural electricity connectivity.
The new financing is a big boost to the project that is expected to connect up to 2.5 million households in rural areas to the national electricity grid over the next five years, according to a statement from the WB headquarters in Washington.
“The programme aims to build on the recent achievements of expanding nationwide access to 36 per cent in 2014. In addition, the Programme will scale up the supply of renewable energy in rural areas while strengthening sector institutional capacity,” said Bella Bird, WB country director for Tanzania, who also covers Malawi, Burundi and Somalia.
“Access to electricity is critical to extend economic opportunities and reduce poverty...this programme not only offers the opportunity for many more Tanzanians to have access to power in their homes and businesses, but also enables small power producers to access finance to invest in production, including renewable energy sources.”
The government of Tanzania is currently implementing a national energy policy whose goal is to increase the country’s overall electricity connectivity to 50 per cent by 2025 and to at least 75 per cent by 2033.
The National Rural Electrification Programme (2013–2022) under which the new programme is to be implemented, includes both on-grid and off-grid solutions and has four priorities: the connection of new customers to the grid in already electrified settlements; new connections to the grid; electrification through off-grid investments; and the development of distributed technologies, in particular off-grid solar and other renewable technologies.
In addition to household beneficiaries, Institution’s financing will also, in part, benefit 25,000 education facilities, 25,000 health facilities, 150,000 businesses. And Small Power Projects would also benefit from access to capital to enable them to contribute 33MW in renewable energy under the programme.
The Electricity Regulatory Authority (ERA) will hold a consultative meeting at Musasa Church of Uganda in Musasa Village, Kyondo Sub-County in Kasese District to discuss the pending application for a License by Nyamagasani II HPP Ltd to construct, generate and sell electricity from the proposed 6 MW hydropower plant across River Nyamagasani in Kasese District.
According to a public notice issued by the regulatory body, government agencies, electricity sector stakeholders and persons affected by the application are invited to attend the hearing to be held on the 28th day of July 2016.
“All stakeholders and affected persons wishing to make a presentation and or comments before the Public Hearing may register and or submit their respective comments to the Secretary to the Authority at the address above not later than the 26th day of July 2016.” The notice reads in conclusion.
Kasese district is home to a couple of small hydro power project including finished Bugoye Power Station, Mubuku I Power Station, Mubuku III Power Station, all on River Kibuku and Nyamwamba Power Station on river Nyamwamba.
The construction of Karuma Hydroelectric Power Station, a 600 megawatts hydroelectric power project, is ‘progressing well’, a report by Energy and Mineral Sector Working Group (EMSWG) observed.
A team from the Energy and Mineral Sector Working Group led by the Permanent Secretary for Ministry of Energy and Mineral Development Dr. F.A Kalisa Kabagambe visited Karuma Hydro Power Plant on 1st July 2016 to assess the ongoing work.
The team found out that the work on this dam is progressing well with the excavation of power, main transformer caven and surge chambers, ventilation shafts, cable vertical shafts fixed, steel reinforcement works and concreting for the dam is also running and furnishing of employer's camp is ongoing.
The work covered so far is 27% and the first unit is expected to be commissioned in 2018 the energy ministry said in a report.
The Karuma project has been under scrutiny especially from President Museveni who has been told the contractor Sinohydro Corporation China from China was doing a shoddy job including cracks into the walls built.
The president directed the Energy Minister Irene Muloni to start an inquest into the matter. Following investigations, President Museveni suspended engineers working at Karuma and Isimba dams over the cracks.
However A team of dam construction experts from Sinohydro said the cracks which were reported on the spillway at the Karuma are just “common cracks in construction industry” which are remediable and therefore won’t affect the overall functionality of the 600MW dam.
Uganda Electricity Transmission Company Limited (UETCL) has said the country will spend $100m on construction of transmission lines connecting four mega sub-stations at Luzira in Kampala, Namanve in Mukono, Mukono, and Iganga industrial parks to consumers in different parts of the country.
The construction works will be conducted by China CAMC Engineering Co. Limited, a Chinese firm, in 30 months. The money to fund the project has been provided by Exim Bank of China as a loan. Refunding of the money to the Bank will be done in 15 years, with a three years grace period, at an interest rate of 2.5 percent per annum.
This is according to a memorandum signed between government of Uganda and Exim Bank in 2013. 85 percent of the money will be spent on construction of the sub-stations while 15 percent will be used for resettlement. During the process, buildings, farms, properties and homesteads will be destroyed.
“We know some buildings and pieces of land may be affected during the construction of the transmission lines. The lines will pass through open spaces not on top of buildings thus calling for resettlements.” Mark Namungo, the senior power analyst at the Uganda Electricity Transmission Company Limited (UETCL), told a press conference.
The land titles on which the sub stations will sit have been secured by UETCL and China CAMC Engineering Co. Limited, the contractors. Namungo is confident the contractors will do a good job leading to reduction of power losses due to efficient transmission of energy on the 132KV voltage level compared to the current transmission of 33KV.
Yang Guo Liang, the CAMC project manager, speaking to journalists at a press conference confirmed that the project will be completed in a period of 30 months. “We hope to complete this project in 30 months period. We have so far constructed over 100 power dams and sub-stations in Asia, Europe and Africa.” Liang said.
The project works include construction of 15km of 132kV double circuit metallic transmission line from Namanve South Industrial Sub-station to Luzira Industrial Park Sub-station, and construction of 132/33kV, 3x32/40MVA Luzira Industrial Park.
Construction of approximately 8km of 132kV double circuit metallic transmission line from the existing 132kV Nalubaale-Namanve transmission line to the proposed Mukono Industrial Park sub-station and construction of 132/33kV, 3x40/63MVA Mukono Industrial Park.
Construction of the approximately 10km of 132kV double circuit metallic transmission line from existing 132kV Bujagali-Tororo transmission line to the proposed Iganga Industrial Park sub-station and construction of 132/33kV, 2x32/40MVA Iganga Industrial Park.
Construction of approximately 5km, 132kV double circuit metallic transmission line from the existing 132/33kV Namanve sub-station and 132kV Nalubaale-Namanve transmission line to the proposed Namanve South Industrial Park sub-station and construction of 132/33kV, 3x40/63MVA Namanve South Industrial Park.
The government of Uganda is working towards harmonizing electricity tariffs and make the utility product cheap for both domestic and manufacturing, President Yoweri Kaguta Museveni said Tuesday during his State of the Nation Address at Serena Hotel in Kampala.
Currently the two leading producers of electricity Nalubaale and Bujagali sell electricity at different prices. Nalubaale sells at 1.04 US cents per unit while Bujagali is at 11UScents per unit. These prices are still on the high. Consumers especially manufacturers continue to complain saying these high prices leave them will little profit.
“By a combination of measures, we shall resolve this handicap in a win-win way. The future electricity stations, especially, the big ones, will never be expensive in the same way.” The president stated.
The cost of power and supply deficit have been a mainstay despite the power generation capacity and volume increasing. The supply is increasing with every project government is undertaking. Uganda now has a generation capacity of 850mgws of electricity compared to the 60mgws of 1986.
President Museveni promised that an extra 1000mgws of electricity will be added onto the national grid in the next five years by working on Karuma, Isimba, the minihydros, the geo-thermal in Lake Katwe, the gas-powered stations and those using HFO (Heavy Fuel Oil).
“We already have a surplus of 100mgws during even the peak hours in the evening (6:00p.m to 10:00p.m). At night only 350mgws is consumed. During the off-peak hours of the day, 500mgws are consumed. Therefore, during the night hours after 10:00 p.m., the surplus is 500mgws.
“That is why I would encourage some factories to work at night. The only problem we have are the high prices of electricity caused by the expensive money the Bujagali developers used. We shall get a solution for it.
“With this better base of electricity and the improved roads, we are now, for the first time, in a position to decisively tackle the haemorrhage by attracting and incentivizing investors that will save the huge money in dollars that we are currently donating to India, China, UAE, Japan, EU, USA, etc. ─ a total of US$5.528 billion per year.
“This huge amount of money goes for textiles (US$888million), leather goods (US$0.22million), fruit products (US$20.2million), second hand cars (US$568.7million), carpets, etc. etc. All these can now be made here.
“Fortunately, the investors are there. They just need a good atmosphere for investing. What is the good atmosphere needed? First of all, now that the electricity is abundant, we need to ensure that it is cheap for, at least, manufacturing ─ not more than 5 US cents per unit. This, we have started implementing.” The president confirmed.
The contractor undertaking the construction of Karuma Hydroelectric Power Station has pledged to construct hospitals to help residents of Karuma community. Chinese construction firm Sinohydro Corporation is undertaking the construction of the 600MW dam.
“In the next 3years, we will commit to construct hospitals and schools worth millions of dollars for the communities which together with Karuma Project will form a significant part of our monument”. Deng Chang-Yi the Deputy Manager of Sino Hydro said.
Deng Chang-Yi was speaking at Karuma Primary school in Northern Uganda during an event at which the Corporation offered free medical care and treatment to hundreds of resident from both banks of Karuma dam.
The medical day, which is part of the Company’s CSR initiatives, saw a team of Chinese Medical Experts including doctors and nurses from China, spend Saturday diagnosing a myriad of ailments and administering treatment to the people of Kamdini and Kiryadongo districts.
Deng Chang-Yi said the Company’s mandate has not ended with construction of the dam but also extended to improving the living conditions of the people around the project area. He added that they have integrated CSR in their operation and strategic planning.
“The neighboring communities have been with us every step of the way. As a gesture of good will and part of our commitment to “give back” to the supporting communities. To date, we have made donations of school supplies and learning materials to Karuma Primary School, drilled boreholes and wells for the Village around Karuma.
We have also renovated several access roads for the adjoining villages and provided road accident rescueincluding the initiation of this Free Medical Service. All these activities are aimed at enhancing our bond and fostering a harmonious environment,” Deng Chang-Yi said.
Isaac Mwesigwa, Uganda Electricity Generation Company limited (UEGCL)’s Sociologist, hailed Sinohydro for the good gesture of providing free medical services to communities but urged them to keep it in regular basis.
He said government is working on a Community Development Action Plan that will see most of the health centers in both banks of the project upgraded. Chu Mao Ming, the Political Counselor of the Chinese Embassy in Uganda said the Free Medical Day was a demonstration of the cordial relationship Uganda has with the People’s Republic of China.