Diesel thermal generators to be phased out next month

All diesel thermal generators will be phased out with effect from next month (September) as government battles the power shortage that has led to endless load shedding. The government can no longer afford to run the expensive generators, which have apparently not created any impact as far as bridging the power supply gap is concerned.

In his response to the report of the National Resources Committee on the Ministerial Policy statement and budget estimates for the financial year 2008/9 on August 20, Energy Minister Mr Daudi Migereko said that by September this year, the government will have 50MW of Heavy Fuel Oil (HFO) at Namanve.

Mr Migereko said the HFO, will be followed by 10MW of HFO at Tororo by Electromax, followed by 50-85MW of HFO at Kaiso Tonya, followed by 50MW of HFO at Njeru by Invespro. He said the HFO equipment being procured will also be able to use natural gas from our Oil fields as discoveries and production of oil and gas progress.

“Our biggest problem has been the limited power generation and supply capacity which had given way to load shedding. This necessitated installation of expensive emergency diesel thermal generation capacity of 100MW as a stop gap measure,” Mr Migereko said. The Minister said all big power projects will in future also be financed by the government to avoid past experience of delays like in the case of Bujagali. He said the projects will be readily facilitated by funding through the Energy fund.

The government decision stems from numerous complaints about the viability of the power project. The Committee has expressed concern about the Bujagali costs, a matter that has been raised a number of times on the floor of the House.

On the Renewable Energy projects which are ongoing in Kakira, Nyagak, Bugoye, Mpanga, Buseruka, Ishasha, Kisizi, Mr Migereko said, that the work being undertaken with the development of the renewable, oil exploration and production plus development of the large hydros, will help Government address diversification of energy supply mix.
“All this is possible because Government has come up with the right policy framework and incentives. We are trying to see how we can improve on the incentives for instance Private Sector Foundation financing the feasibility studies upfront,” he said.

On the Bujagali project, Mr Migereko said both the developer and the contractor were procured through international competitive bidding.
He said there are a number of key considerations that needed to be taken into account. He cited world price of materials like steel, cement and fuel. He also cited limited appetite of Development Finance Institutions to finance projects in the country.

“The above are reflected in additional costs like interest during construction debt service reserve account, and high insurance premiums. All these led to the high development cost for Bujagali,” he said.
The committee raised concern regarding the feeding of the Karuma generated power into the National grid at Kawanda substation which is about 200Km from the source of power.

“I wish to inform the house that the Karuma Power Project will have three transmission lines namely Karuma – Olwiyo, Karuma – Lira District, and Karuma–Kawanda,” he said. On Umeme issues raised by the committee, Mr Migereko said the government has requested the Electricity Regulatory Authority to study the Umeme/government agreement with a view to ensuring better performance on the part of Umeme.