Ugandan taxpayers are likely to lose even more money on electricity on top of the Shs 100 billion lost last year as the completion and commissioning of the 600MW hydropower station by June 2022 is highly unlikely, the Auditor General has said.
In his annual report to parliament, the AG says several related programs of the dam are far from being concluded. These include substations in different parts of the country as well as transmission lines that are supposed to evacuate the electricity from Karuma to these stations.
The dilemma, however, is that should the power station be complete and commissioned before the transmission infrastructure, power produced and not used, also known as deemed energy, will have to be paid for by the government.
The dam, which will be Uganda’s biggest so far, will be three-and-a-half years late than the original date set for its completion. The delay to complete construction was mainly due to unfinished works such as spillway rehabilitation and other minor defects.
According to the AG’s report for the financial year ended June 2021, the country paid over sh87.7 billion for energy produced by independent power producers. This was in regard to 13 power purchase agreements, which were financed through the electricity tariff system, hence negatively impacting the electricity price to the final consumer. Only one hydro power plant did not fall in this category.
According to several power purchase agreements and other implementation agreements between the power producers, the government and the Uganda Electricity Transmission Co Ltd (UETCL), the government committed to construct power evacuation infrastructure from the generation facilities to the distribution network upon commencement of generation and dispatch of power by IPPs.
“I noted that UETCL continues to pay significant amounts relating to deemed energy purchases. These are significant losses for which the company did not generate economic value. Payment of this amount would significantly affect the company’s cash flows,” says the Auditor General.
Recently, the minister for Energy and Mineral Development, Ruth Nankabirwa said the government had completed the construction of the 248km 400Kv Karuma-Kawanda high voltage line, as well as the 54km 132Kv line from Karuma to Olwiyo in Nwoya and to Lira.
“I noted that the completion of land acquisition process or the Resettlement Action Plan (RAP) for the 132kV Karuma-Lira Transmission Line and Karuma Dam Reservoir by UTECL and MEMD, respectively, remain outstanding,” says the AG’s report.