In his 2015 report on, the Auditor General revealed that Uganda was spending shs.11.57 billion on unused electricity, also known as deemed energy.
The Auditor General was concerned that the efforts towards power generation which has grown from 300 MW in 2009/10 to 862 MW in 2016 were not commensurate with the efforts to increase demand.
He said government was committing to investment projects without first analysing demand limitations, which he feared may lead to government failure to pay off the loans spent on the construction of these projects.
Uganda has spent over $2 billion on power generation in the last five years alone.
Three years later, the Auditor General’s fears appear to have been confirmed if one goes by the Electricity Regulatory Authority tariff report.
The report notes that while the electricity demand was growing at over 10% per year in 2012 it has now reduced to 6.8%.
Yet, with the completion of the projects in the pipeline- Isimba (183 MW), Karuma (600MW) and other mini-hydros, generation capacity is expected to increase to about 1,700 MW by the end 2019.
Current demand is 550MW.
The ERA report attributes the slowdown in growth of domestic demand to the low macro-economic performance and a constrained evacuation and distribution network infrastructure.
On the needed infrastructure, there is worry that the required evacuation lines are behind schedule and that the dams will be completed before.
For instance, while Karuma dam is scheduled to be completed by the end of this year, the construction of the transmission line is still riddled with compensation issues.
Uganda Electricity Transmission Company Limited (UETCL), the agency in charge of transmission however says the lines are on course.
The agency is confident the Isimba transmission line will be completed in August this year ahead of the dam’s scheduled completion at the end of this year and says the Karuma line is at about 70% completion.
The distribution network is not any better. About 80% of Uganda’s population has no access to electricity.
This has slowed down demand amidst increased generation and there is worry that there will be idle capacity (deemed energy) which is costly to the tax payer through high tariffs or government subsidies.
But some people are advocating for more investment in generation.
Uganda Electricity Generation Company Limited (UEGCL) CEO Harris Mutikanga in his article on electricity demand and supply in one of the dailies in 2016 argued that Uganda needs to increase its generation capacity to 6,200MW by 2020 if it is to attain UN Sustainable Development Goal (SDG) No.7 of universal access to electricity by 2030.
But the regulator is confident the efforts being made by the government will increase electricity demand.
Its report, for instance notes that the reduction of the Central Bank Rate (CDR) to 9.5% will build “momentum of economic growth in the country”.
The regulator also says that the implementation of the planned 25 industrial parks will provide opportunities for industries to set up and are expected to increase demand by 500 MW.
Government is also banking on the regional market The ERA tariff report says there is an export potential of 690 MW to Burundi, Rwanda, Democratic Republic of Congo and South Sudan.
Government also, through the Rural Electrification agency, plans to make free connections to increase the number of people on the grid.
This, the report says, will translate into 300,000 connections per year leading to an additional demand of 10 MW to 15 MW per year.
ERA recommends an investment of up to $4,510 million in the transmission and distribution network to evacuate and distribute all the generated power.
But Mutikanga says generation should take precedence arguing that planning and developing generation plants takes much longer than expanding the transmission and distribution infrastructure.