07 May 2017, Kampala — Karuma Hydropower plant’s electricity will cost $0.0497 (Shs179.5) per unit for the first 10 years after commissioning.
The tariff will then drop from $0.0497 (Shs179.5) to $0.0297 (Shs97.5) during the 11th through the 15th year. And from the 16th to the 38th year it will drop to $0.0117 (Shs42.2).
On the other hand, Isimba Hydropower plant’s generation tariff during the first 15 years will be $0.0416 (Shs150.2) and $0.0101 (Shs36.4) after the fifteenth year, according to documents seen by the Daily Monitor.
These tariffs are what the Uganda Electricity Generation Company Limited (UEGCL) will charge the Uganda Electricity Transmission Company Limited (UETCL) for every unit.
UEGCL’s corporate affairs manager Simon Kasyate says Karuma and Isimba’s tariffs would be a game changer in the electricity sector.
“This is where the good news comes in. It is only the Kiira and Nalubaale plants that are cheaper than Karuma and Isimba,” Mr Kasyate said yesterday.
The government wants to reduce power tariffs to lower the cost of production and encourage the establishment of factories to absorb many unemployed Ugandans.
The Karuma and Isimba power generation tariffs though are not what the electricity end-users will pay.
End-user tariffs are arrived at by factoring in the reasonably incurred generation costs, transmission costs, distribution costs divided by the total number of units of power generated, multiplied by one, minus the target energy loss. However, Karuma and Isimba plants generation tariffs are lower than Bujagali Hydropower plant’s $0.11 (Shs397.3).
However, they are higher than Kiira-Nalubaale Hydropower Complex’s $0.010 (Shs36.1) tariff.
Bujagali’s tariff, which the government has now engaged the African Development Bank to help to refinance in order to lower the tariff.
Karuma and Isimba, which will generate 600MW and 183MW respectively, are being constructed using loans from China.
The loans have to be repaid in 15 years, starting from when the plants are commissioned.
Uganda got a loan of $1.4 billion (Shs5 trillion) to finance the construction of Karuma and $482.5 million (Shs1.7 trillion) for Isimba.
Ugandans will have to repay the loans in 15 years after the commissioning of the plants.
Although the two dams were supposed to be commissioned next year, it looks increasingly unlikely.
Work at both sites was last year interrupted for close to four months after it emerged that the contractors, Sinohydro Corporation Limited and China International Water & Electric Corporation, were breaching contractual obligations.
Both were accused of poor workmanship after the engineers from the Uganda Electricity Generation Company Limited discovered cracks in the dam structure.
Issues at hand
Karuma Hydropower plant’s electricity will cost Shs179.5 per unit for the first 10 years after commissioning.
Drop. The tariff will then drop from to Shs42.2 through the years to the 38th year.
Isimba. Isimba Hydropower plant’s generation tariff during the first 15 years will be Shs150.2 and Shs36.4 after the fifteenth year.
Loan. Karuma and Isimba, which will generate 600MW and 183MW respectively, are being constructed using loans from China.
Delay. Commissioning of the two dams that had been slated for next year was interrupted for four months.
*Nelson Wesonga – Monitor