Business

Umeme pegs $440m plan on power output rise

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By BERNARD BUSUULWA The EastAfrican

Posted  Saturday, May 17  2014 at  10:08

In Summary

  • Umeme will spend about $200 million on new distribution lines required to carry electricity generated from big dams like Karuma and Isimba, scheduled for completion in 2018.
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Uganda's power distributor Umeme has unveiled a $440 million investment plan designed to achieve a sharp increase in power generation starting 2018.

The distributor will spend about $200 million on new distribution lines required to carry electricity generated from big dams like Karuma and Isimba, scheduled for completion in 2018.

The new power lines will be supported by 13 new substations spread across the country in an effort to reduce energy losses and risks of power theft.

This will bring its total investment in network reliability and load growth to around $222 million, with prepaid metering taking up $109 million. An investment expenditure of $73 million is budgeted for in the 2013-2018 period.

Loss reduction projects will cost $15 million while safety projects will consume $12 million. Business efficiency initiatives will cost $9 million, according to data released by Umeme.

Financing

Apart from the $190 million raised last year through a syndicated loan provided by Stanbic Uganda, Stanchart Uganda and the International Finance Corporation, Umeme intends to finance its investment plan with retained earnings valued at $258 million at the end of 2013.

Whereas the $1.4 billion Karuma dam project has an installed capacity of 600MW, the Isimba hydro plant has a 180MW capacity. Other pipeline projects are the Ayago hydro plant with 600MW and the Kabale peat plant with 33MW.

Expansion of co-generation plants at Kakira and Kinyara sugar works is expected to yield 20MW and 30 MW respectively. The country’s electricity needs are rising as a result of high rates of urbanisation and increased investments in the manufacturing sector.

Though the average power distribution costs have recorded a steady decline since 2005, Umeme executives said that increases in expenses incurred on generation and transmission operations could affect tariffs prior to the commissioning of new power stations.

According to Umeme data, distribution costs stood at Ush244 ($0.09) per kilowatt hour (kWh) in 2005, but fell to Ush150 ($0.06) per kWh in 2010. These costs rose slightly to Ush160 ($0.063) per kWh in 2011 before declining to Ush111 ($0.04) at the close of 2013.