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UGANDA. Opportunities and Demand for generation projects and tariffs in Uganda. Eriasi Kiyemba Managing Director/Chief Executive Officer UETCL. Contents. Power sector reforms Power sector objectives Current status Generation projects Transmission line projects Tariff Structure in Uganda.

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    1. UGANDA Opportunities and Demand for generation projects and tariffs in Uganda. Eriasi Kiyemba Managing Director/Chief Executive Officer UETCL

    2. Contents • Power sector reforms • Power sector objectives • Current status • Generation projects • Transmission line projects • Tariff Structure in Uganda

    3. Power Sector Reforms • In line with power sector reforms and objectives, the Government of Uganda (GOU) has initiated a number of projects on a private-public-partnership arrangement as a strategy to address power generation requirements in the short and medium term.

    4. Power sector objectives • To make the power sector financially viable • To increase sector’s efficiency • To meet the growing demand for electricity and increase area coverage • To improve the reliability and quality of electricity supply • To attract private capital through private sector participation • To take advantage of export opportunities

    5. Power sector objectives (cont.) • The power sector has undergone reforms with the objective of ensuring adequate availability of affordable power and create a conducive environment for private sector participation in the power sector/economic development of Uganda • The Government of Uganda is committed to the development and utilization of all available energy resources and technologies.

    6. CURRENT STATUS Over the last 14 years GoU has implemented a comprehensive power sector reform Enacted a new Electricity Act in June 1999 Established an independent ERA in November 2000 Unbundled the UEB into successor companies in March 2001 Concessioned the generation business to ESKOM(U) Ltd in November 2002 Concessioned the distribution business to UMEME in March 2005 Collaborated with the EAC and NBI on regional power interconnection Established the REA in 2002 Formulated the RenewableEnergy Policy in 2007 Launched the National Development Plan – (2010-2015) GoU: Government of Uganda ERA: Electricity Regulatory Authority REA: Rural Electrification Agency NBI: Nile Basin Initiative

    7. Uganda Uganda Electricity Electricity Board Board DISTRIBUTION SECTOR GENERATION SECTOR GENERATION SECTOR TRANSMISSION SECTOR TRANSMISSION SECTOR C C Uganda Electricity Uganda Elect ricity U U Uganda Electricity Uganda Electricity Generation Company Transmission Company Distribution Company S S T T O O Nalubaale & Kiira M M Stations Concessionied ¨ Distribution & Supply Transmission Operator E E Concession (UMEME) Kilembe Investments Ferdsult Engineering services Others ¨ System Operator R R Private Generation IPPs ¨ Single Buyer S S AES Bujagali IPP Electricity Regulatory Authority Electricity Regulat ory Uganda Power Sector

    8. Government policiesNational Development Plan 2010-2015 NDP Energy Targets • Increase generation capacity by an additional 3500MW by 2015 including 150MW from mini hydro plants • Expand the transmission grid from the current 1300km to 2750km and increase the transmission voltage from 132kV to 220kV and 400kV • Increase the consumption per capita from the current 75kWh/capita to 674kWh/capita by 2015 and 3670kWh/Capita in 2040. • Increase rural electrification coverage to 20% by 2015 • Reduce total system losses from 40% to 16% by 2015

    9. Government policiesRenewable Energy Policy 2007 • To increase the use of modern renewable energy, from the current 4% to 61% of the total energy consumption by the year 2017. • Sustainable Energy for all by 2030 • This is a UN initiative • Uganda was chosen as one of the pilot countries

    10. Facts on demand vs supply • Current peak demand : 484MW • Installed capacity : 814MW • Current firm supply : 501.5MW • Large hydro (465MW) • Mini hydro (54MW) • Bagasse (13.5) • Currently zero thermal dispatch is implemented. • Demand growth rate : 10% per annum

    11. Current Generation

    12. Planned Generation

    13. Planned Generation

    14. Bujagali Hydro Power Project Project description • Development, construction and maintenance of a 250MW HPS on a Build-own-operate-Transfer (BOOT) basis. • Bujagali Energy Ltd. (BEL) the project company supervised the construction of 100km of 220/132kV transmission lines on behalf of UETCL.

    15. Bujagali Hydro Power Project • BEL the IPP sells electricity to UETCL under a 30 year PPA • UETCL’s payment obligations under the PPA is guaranteed by the GOU through a government guarantee • GOU signed an IA with BEL

    16. Project sponsor • The project sponsor is Industrial Promotions Services (Kenya) Ltd. {IPS(K)} and SG Bujagali Holdings Ltd. • IPS is the industrial development affiliate of Aga Khan Fund for Economic Development (AKFED), which promotes private sector initiatives and entrepreneurship through equity investment in Africa and Asia.

    17. Project sponsor • BEL is backed by IPS (Kenya) Ltd., and SG Bujagali Holdings Ltd. an affiliate of Sithe Global Power LLC. • The project was implemented on a IPP (PPP) arrangement. IPS raised financing on a 20:80 equity to debt ratio from various financiers i.e. IFC, AfDB, EIB, Nederlandse Financierings-Maats-chappij Voor Ontwikkelingslanden NV

    18. Thermal Power Projects • For all thermal power projects, the development, construction and maintenance of project is undertaken by the private sector. • The IPPs sell electricity to UETCL the off taker under short to medium term PPAs. • Payment terms are on take or pay deals. • GoU signs an Implementation Agreements with the IPPs to give waivers on duty on fuel as well as import and re-export duties on the power plants and accessories

    19. Thermal Power Projects

    20. Thermal Power Projects

    21. Thermal Power Projects

    22. Mini hydro power Projects • For all mini hydro power projects, the development, construction and maintenance of project is undertaken by the private sector. • The IPPs sells electricity to UETCL the off taker, under long term PPAs. • Payment terms are either on pay as you take or take or pay deals.

    23. Mini Hydro Power Projects

    24. Mini Hydro Power Projects

    25. Hydro Power Projects

    26. Transmission Line Projects Project financing • Most of the projects have been financed by multilateral agencies i.e. AfDB, World Bank and bilateral agencies i.e. NORAD,NDF,JBIC, JICA,SIDA,DANIDA and GoU as well as through the tariff. • In the recent past new financing institutions have shown interest in financing some projects i.e. KfW,China Exim Bank, India Exim Bank

    27. Transmission Line Projects

    28. Transmission Line Projects

    29. Transmission Line Projects

    30. Transmission Line Projects

    31. Transmission Line Projects

    32. Transmission Line Projects

    33. Tariff structure in Uganda • Transmission tariff • UETCL acts as a single buyer and sole exporter and importer of power • Prices between generation and transmission are bided or negotiated in form of Power Purchase Agreement • UETCL sells power to distribution concessionaires at a Bulk Supply Tariff (BST) • BST reflects the cost of power acquisition and transmission costs (O&M, ROI and mini investments cost provided in tariff)

    34. Tariff structure in Uganda • Generation tariff • The price paid by UETCL depends on whether the transmission company is paying for capacity tariff or energy tariff The revenue requirement of generation component of tariff is made up of the following cost components • The investment requirement • The operation and maintenance (O&M)component • The concession fee or lease component • Other costs such as regulatory fees and loyalties

    35. Tariff structure in Uganda • Generation tariff cont’d-GETFIT • For small generation projects of less than 20MW, feed-in tariffs are applied established by the Renewable Energy Policy (2007) • Feed-In Tariff (REFIT Phase 1) run from 2007-2009 but had limited uptake by project developers • In 2010, Renewable Energy Feed-In Tariff (REFIT Phase 2) commenced to encourage and support greater private sector participation in power generation from renewable energy technologies

    36. Tariff structure in Uganda • Generation tariff cont’d-GETFIT • Electricity needs in the short and medium terms required a more aggressive program hence the special incentive scheme – GET FiT East Africa Program-Uganda pilot • The main objective is to assist East African nations in pursuing a climate resilient low-carbon development path resulting in growth, poverty reduction and climate change mitigation. • The premium of the Levelised Cost of Electricity will be paid as a top –up on the current REFIT levels • Annual monitoring review shall be every financial year and comprehensive review every 3years

    37. Revised Tariffs (Usc/kWh)

    38. Challenges • Unstable hydrology which impacts on hydro power generation • Depreciation of the Uganda Shilling against foreign currencies • Raising oil prices on the international market • Lack of adequate spinning reserve • The Bulk Supply Tariff is not yet fully cost reflective. • Rampant vandalism of transmission lines • Timely disbursement of GoU subsidy to UETCL • Acquisition of way leaves • Securing funding for new investments

    39. Thank You