15 TH ANNUAL EAST AFRICAN POWER INDUSTRY CONVENTION

Transcription

1 15 TH ANNUAL EAST AFRICAN POWER INDUSTRY CONVENTION Safari Park Hotel Nairobi, Kenya 10 th September, 2013 Development Plans and Goals for Energy Supply in East Africa: Making the Vision a Reality: The Uganda Perspective By Hon. Eng. Simon D Ujanga MINISTER OF STATE FOR ENERGY THE REPUBLIC OF UGANDA Address 15 th EAPIC Convention Page 1

2 The Chairperson of the session Distinguished Participants The Press Ladies and Gentlemen 1. I am delighted to be here today to address you at this 15 th East Africa Power Industry Convention. 2. I wish to thank the organizers for the effort they put in to ensure that this event takes place every year and for according me the opportunity to deliver this Keynote address at EAPIC In addition to that, I take this opportunity to welcome the guests who have come from different countries outside East Africa specifically to attend this conference. I wish you a very happy stay here and I encourage you to take time off to explore not only Nairobi city but the region as a whole. Address 15 th EAPIC Convention Page 2

3 4. This paper focuses mainly on the Policy goals, development plans for the energy sector in general and the power subsector in particular and how my Ministry and Government have prioritized the power subsector to enable the vision and the plans to be realized. 5. The paper also highlights challenges faced by the sector which are not only unique to Uganda but also being experienced by the sister countries within the East African region and possibly other developing countries in the world. Address 15 th EAPIC Convention Page 3

4 6. Policy Goals : The main sector policy goals for the Uganda power sub sector include the following: Making the energy sector financially sustainable Provide adequate generation to meet the national energy demand and regional obligations To build a robust transmission infrastructure to cope with the growing demand in the national and contribute to regional energy sustainability and To improve utility operational efficiency and reduce power losses Attract private capital investment in Generation and Distribution segments To increase electricity coverage and access to modern energy services through rural electrification and renewable energy development; Take advantage of power export potential Address 15 th EAPIC Convention Page 4

5 7. Power Sub-Sector Development Plans: Government of Uganda conducted a power sector investment master plan study that informed the country of the current sector development needs in the three main sector segments including Generation, Transmission and Distribution. 8. Government has prioritized the implementation of this plan and is implementing measures towards achieving the Vision 2040 of the national development plan to ensure national Grid coverage with emphasis on reliable and quality energy supply at equitable prices. 9. Government also established the Renewable Energy Feed-in tariffs to create a predictable business environment for renewable energy projects. These were revised 2012 in light of a number of developments in the sector to make them attractive to the investors. 10. Government with support from development partners have developed the GET-FIT top-up support on the Renewable Energy Feed in Tariff to fast-track the development of Mini Hydro projects which has attracted investment in this area to a level of approximately 125MW for phase 1 and more for phase 2 is expected. Address 15 th EAPIC Convention Page 5

6 11. Use of the Uganda s indigenous crude from the Albertine region is also being explored to provide a generation Mix top mitigate dry hydrological years. 12. Government also set-up the Uganda Energy Credit Capitalisation Company (UECCC), a financial institution established to provide support in form of credit enhancement instruments, collectively referred to as a Credit Support Facility (CSF), to local financial institutions. 13. Development in the Generation Segment Large Hydropower Development To address power production shortages, government has embarked on the development of four large hydro power plants as follows: The Bujagali plant 250MW is being developd by Bujagali Energy Limited (BEL) was commissioned The second large-scale hydropower potential along the River Nile being developed is Karuma (600 MW). Ground breaking for this plant was done in the month of August 2013 and contract is mobilizing with full commissioning expected within 60 months. Isimba Hydropower Project (188 MW): Feasibility studies complete, EPC contract signed and ground breaking expected this month September Ayago Hydropower Project (600): The feasibility studies under way. This Project is to be developed as a Public Private Partnership. Address 15 th EAPIC Convention Page 6

7 Small hydro power projects Aver 60 MW of power from small to medium Hydro power plants a further 150MW is expected within the next three years using the Get-fit program. Co-generation Over 55 MW of the electricity is being generated from bagasse cogeneration by the sugar producing industries. There are Plans to upgrade the cogeneration facilities to generate over 100 MW within the next 4 years. Geothermal Developments: In the area of geothermal development, Government is planning to undertake detailed exploration studies at various sites before detailed feasibility studies can be undertaken at the most promising site. In addition to that, part of the Katwe area was licensed in 2010 to Cozumel Energy LTD. to carry out a prefeasibility study and a feasibility study while earlier this year Buranga exploration area was licensed to GIDS Consult Limited to carry out a prefeasibility study. Address 15 th EAPIC Convention Page 7

8 14. Development in the Power Transmission Segment The transmission network will double from the current 1700km to 3400km within the next four years Six transmission line projects totaling over USD $500m are being implemented concurrently. These include among others the following national grid expansion lines with the associated substations: Nkenda -Hoima (132KV, 224km); Kawanda Masaka (220KV, 142km), Tororo Opuyo Lira upgrade (132KV, 260km); Mbarara Nkenda (132KV, 160km). And the following regional projects aimed augmenting our interconnection with our neighbors include Uganda Kenya (220KV, 127km) Uganda Rwanda (220KV, 66km). 15. On Distribution and Rural Electrification, Government is promoting and encouraging Loss reduction and has set the loss target to reduce from the current 23% to 14.8% by the year Installation of Prepayment meters for all our electricity consumers is currently on going Address 15 th EAPIC Convention Page 8

9 Government has further prioritized investments in the distribution infrastructure to improve power supply availability, quality of supply, quality of service and embrace new automated technologies for optimum operation of the distribution segment. Under the Rural Electrification strategy, Government is looking at the Introduction of service territories to make the rural concessions financially viable to attract investors. Furthermore Government continues to subsidize rural electrification expansion projects through the Rural Electrification Fund and development partner initiatives line the Output Based Aid. 16. Challenges: Uganda like the rest of countries in East Africa is faced with various challenges that are being addressed and as we deliberate on critical issues in the power sector during this convention, it will be vital to come up with concrete solutions to address these challenges. These among others include the following: a) Untapped natural resources: The East African region is well endowed with enormous natural resources such as hydro, Geothermal, petroleum resources, wind, solar thermal only a small fraction of this potential has been developed yet grid access is very law. Tapping these Address 15 th EAPIC Convention Page 9

10 resources require dedicating funds towards their development. b) Mitigation of expensive diesel based thermal power plants through adequate planning and timely resource allocation for project development to bridge generation Capacity gap. c) Promotion of renewable energy to mitigate high tariffs resulting from imported fuels based generation. Investment in least cost technologies in the power sector across the region has not been sufficient to match the growth in power demand. As a result, we have been forced to invest in emergency thermal power plants that have turned out to be very costly. This has further necessitated governments to divert resources intended for other sectors to provide subsidies to make the tariff affordable. Such subsidies not only choke the economy but are not sustainable. d) The Need to increase Access to modern forms of Energy: In East Africa, more than half of the population has no access to modern energy services. This has several consequences: Social and economic development cannot be achieved without access to clean and modern energy services. Low connectivity hinders the achievement of the UN Millennium Development Goals. The majority of the population depends largely on traditional energy sources (biomass), this is not Address 15 th EAPIC Convention Page 10

11 sustainable as it is mainly used with inefficient technologies. e) The transmission and distribution infrastructure cannot support power trade in the region: A number of our countries have weak infrastructure which are not interconnected. This cannot support inter-regional energy trade which would enhance security of power supply in the region. f) Fostering Efficient Utilization of Energy in both Industries and households. In most East African countries and Africa at large, efficiency of energy use is still very low. There is less attention paid to efficient use of energy than to efficient energy supply, yet demand-side management not only benefits consumers in reducing their bills, but also makes the same supply available to more consumers, which is particularly important in supply constrained African economies. Government of Uganda currently offers free energy audit services to industrialists to enable them monitor their energy consumption and adopt energy efficient operational methods. Government with aid from development partners distributed free energy saver bulbs to domestic consumers to enable them realize the advantage of efficient energy methods in form of reduced electricity bills. This has attracted the majority of urban consumers to using energy saving low wattage bulbs. The current tariff structure also provides a relatively lower tariff for industries which can shift their energy intensive activities to off-peak hours. Address 15 th EAPIC Convention Page 11

12 g) Vandalism of power network grid components: Vandalism of the complete infrastructure compromising the integrity of the network and affecting network availability. Government is considering making this a crime by law which will attract imprisonment and heavy penalties. THE OPPORTUNITIES TO ADDRESS THE CHALLENGES 17. To address the issue of infrastructure Gap, there is need to increase the level of investment in the power sector. Appropriate actions could include: a) Governments should make energy infrastructure development a key priority in the national development plans. b) There is need to allocate adequate resources for the Power sector. Putting in place a dedicated fund would help address the area of financing energy infrastructure. c) Developing sector investment plans based on realistic demand projections and well designed mechanisms for meeting this demand would guide the process. d) Resources should be availed to undertake the necessary studies so that bankable projects are packaged to be developed by either the public or the private sector. e) There is need to promote private sector participation under public-private partnerships (PPPs). Governments in the region should put in place policies for PPPs as well as build capacity to negotiate and manage PPPs. Address 15 th EAPIC Convention Page 12

13 18. To increase access to modern energy services, priority actions could include: a. Governments taking the lead by putting up deliberate programmes that promote rural electrification. b. Establishing an enabling policy environment that takes into account the energy needs of the poor or rural populations and designing appropriate mechanisms for modern energy access. c. Developing modern energy service access programmes, including, electricity connection mechanisms for the urban poor, with clear targets. These programmes should incorporate low cost technical solutions to make service provision affordable. d. Putting in place policies which promote renewable energy in the energy mix such as: Tax incentives, Feed in tariffs and Standardized Power Purchase Agreements for renewable energy projects. 19. To improve efficiency use of energy, realizing that the cost of producing energy is high, it is high time we address the issue of energy efficiency. To improve energy efficiency the proposed policy actions could include: a) Introducing policies and regulations aimed at fostering efficient utilization of energy. Such could include mandatory declaration of specific energy consumption by large consumers and a requirement to put in place measures to address inefficiency in energy consumption. Address 15 th EAPIC Convention Page 13

14 b) At end-use, we need to introduce the culture of regular energy audits in industries and commercial buildings and adoption of energy efficient appliances in households. c) Governments should introduce incentives to promote energy efficiency. Such incentives could include tax holidays for energy efficient technologies and credit enhancement schemes for energy efficiency improvement. 20. To promote Power trade in the region, there is need to address the following: a. Regional projects targeting the regional demand should be developed to enhance energy security. b. There is need to invest in regional interconnections and improve the capacity of the transmission network so that power trading in the region is enhanced. c. Enter into arrangements for regional energy trade to take advantage of energy surpluses in neighboring countries, e.g. power pools and cross-border electrification. d. The Regulatory and Institutional framework should be strengthened to ensure improved efficiency in the sector as well as a framework for power trading in the region established. Address 15 th EAPIC Convention Page 14

15 21. Concluding remarks As I conclude let me emphasize that, for the East African region to get out of the current power supply deficit, the following key issues must be addressed by the key stakeholders. Adequate financial resources for investments should be mobilized to bridge the financing gap. The governments should take the lead in the development of the sector while providing incentives for private sector to compliment its efforts. Renewable energy and Energy Efficiency programmes should be promoted to support the clean energy agenda. The energy access programs should be promoted to facilitate social and economic development in the region. Regional programmes should be fast tracked to boost energy sharing and power supply security in the region. 22. We hope the conference will come up with practical recommendations that can promote the development of the sector. 23. I thank you for your attention and wish you fruitful deliberations. Address 15 th EAPIC Convention Page 15