Powerless in Uganda
By BARBARA AMONG, The East African, 10/12/07
Dec 10, 2007 - 1:41:30 PM

Norwegian multinational hydropower developer and operator, Statkraft Norfund Power Invest AS (SN Power), is pulling out of four mini-hydropower dam projects in western Uganda.  Though the pullout is on the grounds of the project’s financial viability, SN Power is selling its license to another Norwegian power firm.


SN Power announced in December 2004 that it would make Uganda its entry point for Africa in the energy sector. The government had hoped its entry would help improve Uganda’s ailing energy sector, when it began generation of 43.5 Megawatts of power in six districts in western Uganda. 

The company said it decided to withdraw from the projects in August this year, because they were deemed financially unviable.  “SN Power gave up the Muzizi and Nengo Bridge licence rights, because we realised the projects would be not be commercially viable,” said Marte Lerberg Kopstad SN Power’s external relations manager. 

“The Waki and Bugoye projects were developed to the point of investment decision, but SN Power decided not to go further, as they did not fit our corporate strategy and the commercial viability was not strong enough.”

Mr Kopstad told The East African that SN power had decided to sell its rights to Norwegian power company Troenderenergi. This will now mean that residents of western Uganda will have to put up with irregular or no power supplies longer than the 24-month construction period 

Tronderenergi is based in Trondheim.   It operates hydroelectric power plants and wind-farms as well as power grid in parts of Norway.  The company is entirely owned by 20 municipalities in Norway, though registered as a limited company.

Power generated from these sites was expected to supply the western districts of Bundibugyo and Kanungu, which have no power, and Kisoro, which gets its power from Rwanda.  The other three districts are Masindi, Kabarole and Rukungiri, which are partly connected to the national grid, but do not have adequate power supply. 

Energy Commissioner Paul Mubiru however, said the pullout does not spell doom for the western districts, as Troenderenergi is already preparing to continue with construction work at these sites.  The relatively small hydropower stations are expected to cost between $50 million and $60 million.

The Norwegian government, with some 100 years of experience in developing hydropower, owns SN Power. The company, licensed in November 2004 by the Electricity Regulatory Authority (ERA), was expected to demonstrate its expertise on four sites in western Uganda. 

The sites are Muzizi in Kabarole, with a 20MW capacity; Bugoye in Kasese with 11MW capacity; Nengo Bridge in Rukungiri with a capacity of 7.5MW; and Waki in Masindi, a 5 MW plant.

SN Power first gave up the licences for Muzizi and Nengo Bridge in early 2006.  According to Mr Kopstad, SN Power made an agreement with Tronderenergi whereby the latter took over all the work that SN Power had done on Bugoye.  The final agreement was signed in July this year. 

Tronderenergi is said to have completed the generation licence application, based on the negotiations SN Power had started.   “SN Power informed the government that we did not want to renew the exclusivity rights for Muzizi and Nengo Bridge in spring 2006. The licence for Waki was given up in the fall of 2006, when it became apparent that the project was not commercially viable based on the NPC bids received in late 2006,” said Kopstad. 

Despite an abundance of the natural resources necessary for power generation, including about 10 hydropower potential sites along the Nile alone, Uganda cannot meet its domestic energy needs.  As a result, load shedding is the order of the day.  The country’s power demand is growing at a rate of 9 per cent annually, against a zero percentage growth in supply, leaving a supply gap of 140MW. 

About five per cent of Uganda’s population has access to electricity, and the 250MW Bujagali hydropower project under construction and eight other mini-hydropower projects are expected to expand production to another 15 per cent of the population - and attract more industries, to a country where domestic usage accounts for 70 per cent of power consumption. 

Falling water levels in Lake Victoria and increasing demand have pushed Uganda into a power crisis.  In the face of this crisis, the government last year came up with measures, such as the Energy for Rural Transformation (ERT) project, to mitigate the power shortage. The four projects that SN Power was to develop and operate are part of the ERT initiative.


Source: Ocnus.net 2007