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Uganda: S. African Firm Eyes Uganda's Renewable Energy Market

The Monitor (Kampala)

11 December 2007
Posted to the web 10 December 2007

Godwin Muhwezi-Bonge

The company will develop micro-hydro power dams on small rivers around the country

UGANDA's deprived energy sector is on the verge of taking off after another company
expressed interest in generating power from renewable sources such as small rivers,
agricultural waste, wind, and solar.

Okhela Renewable Energy Corporation, a South African energy company with
experience in producing energy from natural resources, is negotiating with the
government for a power purchase agreement.

"The long term power purchase agreements of say 20-30 years will make it possible to
bring a significant change in the market," Mr Jacob Mabena, the chief executive officer
of Okhela Renewable Energy Corporation, told Business Power.

In the first phase of the project the company plans to invest 3.5 million euros (Shs6
billion) to produce 10MW of electricity from domestic wastes before exploring other
alternatives such as solar and wind energy.

The company will also develop micro-hydro power dams that produce about 5 MW of
electricity on small rivers around the country.

Uganda has suffered energy deficits following the reduction of water levels in Lake
Victoria that has seen the government open up the sector to allow more players.

It is estimated that the current demand for electricity is 360MW. However, the country
can only produce 120MW from Kiira and Nalubale Power Stations and 100 MW from
thermal power generators. Two more 50 MW thermal power plants will soon be installed
in Mutundwe and Namanve.

"We believe it is important to open up the energy sector to more players and to have a
clear and supportive regulatory environment," Mr Mabena said.

The government, in 1999, enacted the Electricity Act, which removed the monopoly in
power generation, transmission and distribution, and established the Electricity
Regulatory Authority with subsequent creation of Uganda Electricity Generation
Company Uganda Electricity Transmission Company and Uganda Electricity Distribution
Company (UEDCL).

Umeme Ltd, a private power consortium, was granted the distribution concession in
March 2005 taking over from (UEDCL). The power tariffs have since risen, hitting the
peak in October 2006. Commercial, medium consumers currently pay Shs261.5 and
Shs282.8 respectively. Domestic consumers have to pay 298.2 shillings, an increment of
37 per cent.

Jacobsen, Electomaxx, Wanereco, and Aggreko are some of the energy power houses in

However, the energy produced is still not enough to satisfy the ever-increasing demand
for electricity.

It is projected that the demand for electricity in the next 20-years will be at 11,000 MW
as the economy continues to grow at a rate of 6.2 per cent.

Currently, it is estimated that only 5 per cent of Uganda's population has access to
electricity. And it is this gap that Okhela seeks to address.

"We want to work with the government to produce affordable, modern and clean energy
for Ugandan citizens. We want to go all around the country and not just focus on the
urban centres," Mr Mabena said.

According to the Ministry Energy, the government's long-term is to develop the other
Victoria Nile hydropower sites, effect grid connection with as well as developing the
renewable energy resources including small hydros, biomass, peat and geothermal.

OREC South Africa together with their technical partners, Venture SA, and the
Stellenbosch are working on developing fourth generation large wind turbines mainly for
the African market, which will also be deployed in Uganda.

"Karamoja region has with adequate wind speeds for production of wind energy," Mr
Mabena said. "Uganda has enormous natural resources which can be harnessed to
produce clean sources of energy, and significantly contribute to Uganda's energy

Although the country has abundant natural resources that could be used for clean
energy production, the country currently relies on the expensive and environmental
unfriendly thermal power generation.
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Biomass resources in the form of the immense forests, agricultural wastes, municipal and
animal waste, are some of the sources that the company will utilise to produce energy.

The combined contribution of renewable energy sources to the country's energy
consumed is estimated at 1 per cent.

"We are serious about working in partnership with the Ugandan Authorities to increase
access to energy for both the short and long term," Mr Mabena said.