7 Ways Government Can Address Electricity And Oil Development Challenges

Construction of Karuma dam has been characterized by lack of good governance practices INTERNET PHOTO Construction of Karuma dam has been characterized by lack of good governance practices

Early this week, Non-Government Organization (NGO), Africa Institute for Energy Governance (AFIEGO), in an open letter addressed to The President of the Republic Of Uganda H.E. Yoweri Kaguta Museveni proposes key issues that must be addressed in order to maximize electricity and oil benefits for the citizens.

In the letter AFIEGO tells the president how corruption, lack of respect for existing laws, secrecy in licensing processes, failure to conduct regular audits, political manipulations, tax exemptions and total lack of good governance are impediments to the energy sector. Below are measures AFIEGO believes can improve the energy sector. 

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.

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