Uganda Power Market Outlook to Business Propensity Indicator (BPI), Market Trends, Regulations and Competitive Landscape

Transcription

1 Uganda Power Market Outlook to Business Propensity Indicator (BPI), Market Trends, Regulations and Competitive Landscape Reference Code: GDPE0562ICR Publication Date: September 2012 Hydropower is the Dominant Source of Power Generation in Uganda Hydropower has traditionally been the dominant source of power generation in Uganda due to the presence of large rivers in the country. The emergence of thermal power generation in Uganda was due to droughts occurring in the country during , which led to decreased levels of water in Victoria Lake. This lake provides the water needed for the Kiira and Nalubale hydropower projects, the two main hydropower generating stations in the country. Reduced hydropower generation from these stations led to crippling power cuts in the country, forcing the government to introduce thermal power generation. However, the costly diesel imports that are needed to run these emergency power plants have currently forced the country to plan more hydropower projects. Alongside these, renewable biomass power cogeneration has also been active in the country since Power Market, Uganda, Installed Capacity by Fuel Type (MW), Consumption is estimated to have increased to XX GWh in 2011 at a CAGR of XX%, while total generation is estimated to have increased to XX GWh at a CAGR of XX%. Power Market, Uganda, Power Generation and Consumption (GWh), Total Generation and Consumption (GWh) Generation Consumption Source: GlobalData; Energy Information Agency, 2012 Cumulative Installed Capacity (MW) Thermal Installed Capacity (MW) Renewable Installed Capacity (MW) Source: GlobalData; Energy Information Agency, 2012 Hydro Installed Capacity (MW) Continued Growth in Electricity Generation and Consumption Power consumption and generation in Uganda is expected to increase in the forecast period. The government has been aggressively pursuing economic development but low development in grid infrastructure and power generation capacity has been impeding growth. While consumption in the country in 2000 was XX GWh (Gigawatt-hours), total generation was XX GWh. Significant Opportunities Exist in the Power Sector in Uganda The economy of Uganda has shown considerable growth, and is expected to show a similar trend in the future. According to World Bank data, Uganda s economy is expected to grow at a CAGR of XX% during According to the International Monetary Fund s (IMF) forecast, the population of Uganda is expected to increase at a CAGR of XX% in the forecast period ( ). The country s increasing population and growing economy are expected to increase the electricity demand in Uganda in the future. The country s manufacturing sector is also one of the fastest-growing sectors, with output increasing by more than XX% annually over the last five years. Page 1

2 1 Table of Contents 1 Table of Contents List of Tables List of Figures Introduction GlobalData Report Guidance Uganda, Power Market, Business Propensity Indicator Methodology Methodology for Evaluating the Business Propensity Indicator for Uganda in Africa Supply Security Regulatory Scenario Infrastructure Macroeconomic Scenario Competitive Scenario Future Potential Methodology Adopted to Arrive at Final Rank Uganda, Power Market, Business Propensity Indicator Supply Security Regulatory Scenario Infrastructure Degree of Competition Macro-economic Factors Future Potential Uganda, Power Market, Business Propensity Indicator Ranking Uganda Power Market Analysis, Uganda, Power Market, Cumulative Installed Capacity, Installed Capacity: Breakup by Type of Power Plant, Cumulative Installed Capacity Cumulative Thermal Installed Capacity, Cumulative Hydropower Installed Capacity, Cumulative Renewable Installed Capacity, Uganda, Power Market, Annual Power Generation, Annual Thermal Power Generation, Annual Hydropower Generation, Annual Renewable Power Generation, Uganda, Power Market, Import and Export Scenario Uganda, Power Market, Power Consumption, Uganda, Power Market, Demand and Consumption Scenario Uganda, Power Market, Infrastructure Overview Uganda, Power Market, Leading Active Power Projects Leading Active Thermal Power Projects Leading Active Hydropower Projects Leading Active Renewable Power Projects Uganda, Power Market, Leading Upcoming Power Projects Leading Thermal Power Projects Leading Hydropower Projects Leading Renewable Power Projects Uganda, Power Market, Transmission Network Overview Uganda, Power Market, Distribution Network Overview Uganda, Power Market, Grid Interconnection Uganda, Power Market, Electricity Trading Uganda, Power Market, Regulatory Structure Uganda, Power Market, Regulatory Structure, Overview Uganda, Power Market, Power Market Policies Energy Policy Detailed Structure Under the New Policy Renewable Energy Policy Rural Electrification Uganda, Power Market, Country Investment Scenario Foreign Investment in the Power Sector Uganda, Power Market, Competitive Landscape: Snapshot of Top Power Generating Company Page 3

3 8.1 Uganda, Power Market, Market Share of Major Power Generating Company Key Company in the Uganda Power Market: Eskom Uganda Ltd Eskom Uganda Ltd, Company Overview Eskom Uganda Ltd, Business Description Eskom Uganda Ltd, SWOT Analysis Key Company in the Uganda Power Market: Aggreko Plc Aggreko Plc Company Overview Aggreko Plc Business Description Aggreko Plc SWOT Analysis Appendix Market Definitions Power Installed Capacity Active Installed Capacity Electricity Generation Electricity Consumption Thermal Power Plant Hydropower Plant Nuclear Power Renewable Energy Resources Abbreviations Bibliography GlobalData s Methodology Coverage Secondary Research and Analysis Contact Us Disclaimer Page 4

4 1.1 List of Tables Table 1: Ease of Doing Business-Categories and Definitions Table 2: Country Risk-Categories and Sub-categories Table 3: BPI Scoring Parameters Table 4: Power Market, Uganda, Cumulative Installed Capacity by Type of Power Plant (%), 2011* Table 5: Power Market, Uganda, Cumulative Installed Capacity (MW), Table 6: Power Market, Uganda, Cumulative Thermal Installed Capacity (MW), Table 7: Power Market, Uganda, Cumulative Hydropower Installed Capacity (MW), Table 8: Power Market, Uganda, Cumulative Renewable Power Installed Capacity (MW), Table 9: Power Market, Uganda, Annual Power Generation (GWh), Table 10: Power Market, Uganda, Annual Thermal Power Generation (GWh), Table 11: Power Market, Uganda, Annual Hydropower Generation (GWh), Table 12: Power Market, Uganda, Annual Renewable Power Generation (GWh), Table 13: Power Market, Uganda, Total Annual Power Imports and Exports (GWh), Table 14: Power Market, Uganda, Annual Power Consumption (GWh), Table 15: Power Market, Uganda, Leading Active Thermal Power Projects (MW), Table 16: Power Market, Uganda, Leading Active Hydropower Projects (MW), Table 17: Power Market, Uganda, Leading Active Renewable Power Plants (MW), Table 18: Power Market, Uganda, Leading Upcoming Thermal Power Projects (MW) Table 19: Power Market, Uganda, Leading Upcoming Hydropower Projects (MW) Table 20: Power Market, Uganda, Leading Upcoming Renewable Power Project (MW) Table 21: Power Market, Uganda, 132kV Transmission Lines Network, Table 22: Power Market, Uganda, Completed Projects, Table 23: Power Market, Uganda, Future Projects, Table 24: Uganda, Foreign Direct Investment (FDI), $m, Table 25: Power Market, Uganda, Installed Capacity Share of Major Power Generating Companies (%), Table 26: Eskom Uganda Ltd., SWOT Analysis Table 27: Aggreko Plc, SWOT Analysis Table 28: Abbreviations List of Figures Figure 1: Weights Assigned to the Six Factors (%), Figure 2: Power Market, Uganda, Business Propensity Indicator Ranking Figure 3: Power Market, Uganda, Cumulative Installed Capacity by Type of Power Plant (%), 2011* Figure 4: Power Market, Uganda, Cumulative Installed Capacity (MW), Figure 5: Power Market, Uganda, Cumulative Thermal Installed Capacity (MW), Figure 6: Power Market, Uganda, Cumulative Hydropower Installed Capacity (MW), Figure 7: Power Market, Uganda, Cumulative Renewable Power Installed Capacity (MW), Figure 8: Power Market, Uganda, Annual Power Generation (GWh), Figure 9: Power Market, Uganda, Annual Thermal Power Generation (GWh), Figure 10: Power Market, Uganda, Annual Hydropower Generation (GWh), Figure 11: Power Market, Uganda, Annual Renewable Power Generation (GWh), Figure 12: Power Market, Uganda, Total Annual Power Imports and Exports (GWh), Figure 13: Power Market, Uganda, Annual Power Consumption (GWh), Figure 14: Power Market, Uganda, Installed Capacity Share of Major Power Generating Companies (%), Page 5

5 2 Introduction Uganda s GDP stood at $XX billion in 2011, according to International Monetary Fund (IMF) estimates (IMF, 2011). The service sector is estimated to be the largest contributor to GDP, and is expected to contribute around half of the total share. The remaining share of GDP is expected to be accounted for by the agricultural sector and manufacturing industries. Despite the small share of the agriculture and fishing sector in GDP, it provides employment to approximately XX% of the population. In Uganda, more than XX% of the population lives in rural areas, making its economy predominantly agrarian, which accounts for most of the export earnings. The country is rich in natural resources, such as copper, cobalt, hydropower, limestone phosphate, oil and salt. The major industrial sectors in Uganda are agro-processing, including sugar, tea, dairy processing, fish processing, and cooking oil production. Other activities include textiles, paper products and tobacco processing. In 2010, the country s total export value stood at $XX billion (US Department of State, 2010). The total import value stood at $XX billion in 2010 (US Department of State, 2010). The major trading partners of Uganda are South Sudan, Kenya, Rwanda, the Democratic Republic of Congo, the United Arab Emirates, China, India, South Africa, and the European Union. Uganda is Africa's second largest producer of coffee, which was estimated to have a share of around XX% in the country's total exports in 2009 and After decades of internal unrest, Uganda has now grown to become an open market economy, with strong economic growth and abundant natural resources. This opens the door for good investment opportunities in Uganda, although the country suffers from load shedding, power outages and high energy and production costs, which discourages investment in any industry that relies on a good supply of electricity. These frequent power outages and load shedding problems are creating a major hurdle when it comes to improving the country s economic activities. The country s growth is further restrained by the lack of developed road infrastructure, and high corruption levels. However, the government s focus on developing hydropower projects in coming years is expected to increase the power supply in the country. There are three main companies that manage the electricity sector in Uganda, namely; Electricity Generation Company Limited, Electricity Transmission Company Limited, and Electricity Distribution Company Limited. These are made responsible to separately execute generation, transmission and distribution activities. The Ministry of Energy and Mineral Development (MEMD) is the main government department, which is responsible for the formulation, implementation and monitoring of energy policies in the country. The Electricity Regulatory Authority (ERA) is the body responsible for issuing licenses for the generation, transmission, distribution, sale, export and import of electricity in Uganda. Page 6

6 2.1 GlobalData Report Guidance The report begins with an executive summary capturing the key growth trends in Uganda s power market. Chapter three covers the methodology for evaluating the Business Propensity Indicator scores and ranking of a country. Chapter four covers the Business Propensity Indicator scores and ranking for Uganda. Chapter five covers the consumption scenario of the Ugandan market during , with forecasts to This is followed by cumulative capacity and power generation information, and the segmentation by source of energy during , with forecasts to Chapter six provides information on the power infrastructure of the country, including leading active and upcoming power plants by source of energy, existing and planned developments in transmission and distribution infrastructure and cross-country interconnections. Chapter seven on regulatory structure describes in brief the power regulatory structure, and prominent policies influencing the future of the power market. Chapter eight describes the competitive landscape of the country s power market, with a complete description and SWOT analysis of the top companies. NOTE: All 2011 market numbers provided in the report are estimates. Page 7

7 4 Uganda, Power Market, Business Propensity Indicator 4.1 Supply Security Uganda s power security is dependent on hydropower, which constitutes XX% of the power mix of the country; while thermal power constitutes XX% of the power mix. Currently, the whole of the country s thermal power generation is derived from diesel-powered generators, which are highly expensive. 4.2 Regulatory Scenario The power sector of the country underwent unbundling in 1999 after a severe crisis in the 1980s. The electricity board of the country was segmented into independent companies responsible for power generation, transmission, and distribution. Page 14

8 4.3 Infrastructure The power grid infrastructure of the country covers only XX of the XX districts of the country. Uganda had only a XX% electrification ratio in T&D losses in the country amounted to XX% in Degree of Competition The power sector of the country has been unbundled and private participation in the power generation sector has been allowed. 4.5 Macro-economic Factors According to the World Bank, the country s GDP stood at $XX billion in 2006, increased at a Compound Annual Growth Rate (CAGR) of XX% until 2011, reaching an estimated $XX billion by Future Potential With the economy of the country growing, the GDP is expected to increase from an estimated $XX billion in 2012 to $XX billion in 2016, at a CAGR of XX%. Page 15

9 4.7 Uganda, Power Market, Business Propensity Indicator Ranking The chart below shows the BPI ranking of the country in comparison to other African countries. It also shows how Uganda scores on individual parameters compared to the preceding and succeeding countries in the ranking. Figure 2: Power Market, Uganda, Business Propensity Indicator Ranking Source: GlobalData Refer to BPI methodology section for more details Page 16

10 5 Uganda Power Market Analysis, Uganda, Power Market, Cumulative Installed Capacity, Installed Capacity: Breakup by Type of Power Plant, 2011 Hydropower constituted XX% of the total power mix of the country in 2011, followed by thermal power, which accounted for XX%. Thermal power in Uganda is derived entirely from diesel oil-fired emergency power plants. Renewable power accounted for the remaining XX% of the power mix. Figure 3: Power Market, Uganda, Cumulative Installed Capacity by Type of Power Plant (%), 2011* Renewable Thermal (Oil) Hydro Source: GlobalData; Energy Information Agency, 2012 *Note: 2011 numbers are estimated Table 4: Power Market, Uganda, Cumulative Installed Capacity by Type of Power Plant (%), 2011* Type of Power Plant Share (%) Hydro Thermal (Oil) Renewable Source: GlobalData; Energy Information Agency, 2012 *Note: 2011 numbers are estimated Page 17

11 5.3 Uganda, Power Market, Import and Export Scenario Uganda is a net exporter of electricity. In 2005, the total imports and exports stood at XX GWh and XX GWh, respectively. During the period, electricity imports increased at a low CAGR of XX% to reach XX GWh in The total exports increased at a CAGR of XX%, to reach XX GWh in Uganda Electricity Transmission Company Limited (UETCL) has contract obligations to export power to Tanzania (XX MW), Rwanda (XX MW) and Kenya (XX MW) during off-peak hours. When the Bujagali Project becomes operational, Uganda s export obligation to Kenya will increase to XX MW (Pro- Biodiversity Conservationists in Uganda, 2011). Figure 12: Power Market, Uganda, Total Annual Power Imports and Exports (GWh), Total Imports and Exports (GWh) Imports (GWh) Exports (GWh) Source: GlobalData; Energy Information Agency, 2012 Table 13: Power Market, Uganda, Total Annual Power Imports and Exports (GWh), Year Imports (GWh) Exports (GWh) Source: GlobalData; Energy Information Agency, 2012 Page 35

12 9 Appendix 9.1 Market Definitions The geographical range of the report is Uganda. The report covers market segments related to installed electricity capacity, generation, consumption, power infrastructure and power regulations. The report covers the whole of Uganda, providing a quantitative and qualitative assessment of its power market Power The rate of production, transfer, or energy use, usually related to electricity. Measured in watts and often expressed in kilowatts (kw) or Megawatts (MW), it is also known as "real" or "active" power Installed Capacity Installed capacity refers to the generator s nameplate capacity as stated by the manufacturer or the maximum rated output of a generator under given conditions. Installed capacity is given in Megawatts (MW) on a nameplate physically fixed on the generator Active Installed Capacity Active installed capacity refers to that component of electric power that actually performs work. It is given in Kilowatts (kw) or Megawatts (MW) Electricity Generation Producing electric energy by transforming other forms of energy. Also refers to the amount of electric energy produced, expressed in Gigawatt-hours (GWh) Electricity Consumption Consumption of electricity calculated as generation, plus imports, minus exports, minus transmission and distribution losses and measured in Gigawatt-hours (GWh) Thermal Power Plant A plant in which turbine generators are driven by burning fossil fuels Hydropower Plant A plant in which turbine generators are driven by falling water Nuclear Power The electricity generated by the use of the thermal energy released from the fission of nuclear fuel in a reactor Renewable Energy Resources Naturally replenishing energy resources limited in the amount of energy that is available per unit of time. For example, biomass, geothermal, solar, wind can all be termed as renewable resources. Page 58

13 9.2 Abbreviations Table 28: Abbreviations Abbreviation Full Form $m Dollars Million AES Aggreko Event Services ASDI Agency for Promoting Sustainable Development Initiatives BOT Build-Operate-Transfer BPI Business Propensity Indicator CAGR Compounded Annual Growth Rate CHP Combined Heat and Power CSP Concentrated Solar Photovoltaic DWD Directorate of Water Development EAC East African Community EEL Eskom Enterprises (Proprietary) Limited ERA The Electricity Regulatory Authority EUL Eskom Uganda Ltd. FAR Frequency Accident Rating FDI Foreign Direct Investment FIT Feed-in-Tariff GDP Gross Domestic Product GWh Gigawatt Hour HHI Herfindahl Hirschman Index IPP Independent Power Producer kv Kilo Volt kw Kilowatt kwh Kilowatt Hour LOCOG London Organizing Committee of the Olympic Games and Paralympic Games MEMD Ministry of Energy and Mineral Development MVA Megavolt-Ampere MW Megawatt NDP National Development Plan NOSA National Occupational Health and Safety Association OSH Occupational Safety and Health PV Photovoltaic PV Photovoltaic REA Rural Electrification Fund REB Rural Electrification Board RESP Rural Electrification Strategy and Plan SCOUL Sugar Corporation of Uganda Ltd T&D Transmission and Distribution UEDCL Uganda Electricity Distribution Company Limited UEGCL Uganda Electricity Generation Company Limited UETCL Uganda Electricity Transmission Company Limited UIA Uganda Investment Authority Source: GlobalData Page 59

14 9.3 Bibliography Byakola T and Mukheibir P (2009). Energy Systems: Vulnerability Adaptation Resilience (VAR), Regional Focus: sub-saharan Africa, Uganda. Helio International. Available from: French Development Agency (2010). A technical and economic study on the feasibility of Renewable Energy and Energy Efficiency projects in Uganda. L'Agence Française de Développement. Available from: Uganda 3_.pdf. IMF (2011). World Economic Outlook Databases [Database]. The International Monetary Fund. Available from: on: June 19, Pro-Biodiversity Conservationists in Uganda (2011). Key issues in Uganda s energy sector. International Institute for Environment and Development. Available from: Semitala N. (2009). Power Supply Situation in Uganda. Energy Regulators Association of East Africa, 1 st General Assembly, May 28-29, 2009.Available from: Tuzinde M (2011). Accelerating Rural Electrification through Energy Cooperatives in Uganda, November Electricity Regulatory Authority. Available from: atives.pdf Uganda Electricity Transmission Company Limited (UETCL), Operations and Maintenance Department, Transmission Lines Network. Uganda Electricity Transmission Company Limited (UETCL), Operations & Maintenance Department. Available from: Accessed on: June 19, Uganda Investment Authority (2012). Energy Sector Profile. Uganda Investment Authority. Available from: Accessed on: June US Department of State (2010). Background Note Uganda. US Department of State. Available from: Accessed on: June 21, World Bank (2012) via Doing Business. Doing business in a more transparent world. The World Bank Group and the International Finance Corporation. Available from: GlobalData s Methodology GlobalData s dedicated research and analysis teams consist of experienced professionals with backgrounds in marketing, market research and consulting in the power industry, and advanced statistical expertise. GlobalData adheres to the codes of practice of the Market Research Society ( and the Strategic and Competitive Intelligence Professionals ( The following research methodology is followed for all country outlook reports. Primary Research and Analysis The capacity, generation and consumption data is collected and validated using a number of secondary resources including but not limited to: Government agencies, ministerial websites, industry associations, the World Bank, statistical databases Company websites, annual reports, financial reports, broker reports and investor presentations Industry trade journals, market reports and other literature Page 60

15 Globaldata s proprietary databases, like the Capacity and Generation Database, Power Plant Database and Transmission and Distribution Database Further to this, the following secondary information is collected and analyzed to project the country s power market scenario through to 2030, analyzing factors such as the following: The country s macroeconomic scenario Government regulations, policies and targets Government and private sector investments Contract and deal announcements Utility expansion plans The sector s historic track record Other qualitative insights built through secondary research and analysis of company websites, annual reports, investor presentations, industry and trade journals, and data from industry associations Coverage This report gives detailed information on the country s power market. It examines the country s power market structure and provides historical and forecast numbers for generation, capacity and consumption up to The report provides insights on the market s regulatory structure, import and export trends, competitive landscape and leading active and upcoming power projects. The report also provides a Business Propensity Indicator (BPI) assessment, which benchmarks the country s power sector against other countries in the region by analyzing the power sector of the country on six broad parameters supply security, regulatory scenario, infrastructure, macroeconomics, competition and future potential. Each parameter has a weight assigned, and a weighted average score is calculated to obtain the country s ranking in the region Secondary Research and Analysis Secondary research is further complemented through primary interviews with industry participants to verify and fine-tune the market numbers obtained through secondary research and get first-hand information on industry trends. The participants are drawn from a diverse set of backgrounds, including equipment manufacturers, industry associations, government bodies, utilities, distributors, and academia. The participants include, but are not limited to, C-level executives, industry consultants, academic experts, business development and sales managers, purchasing managers, plant managers, government officials, and industry spokespeople. Page 61

16 9.6 Disclaimer All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of the publisher, GlobalData. This report is a licensed product and should not to be reproduced without prior permission. Page 62