$1b rural power project for Uganda

KAMPALA, UGANDA – When the Ministry of Energy and Mineral Development issued the Rural Electrification Strategy and Plan (RESP) in 2001, the goal was to increase rural electrification coverage from 1% to 10% in 2012.

However, this goal was not realized as the Rural Electrification Agency (REA) managed to achieve only 7% rural electrification coverage. This was partly because of the delay in setting up REA (in 2003) with the agency embarking on its first project in 2006. 

Now REA has embarked on a 10 year $1b plan aimed at increasing rural access to electricity from the current 7% to 26% in 2022.

Speaking to a Stakeholders’ Workshop to celebrate REA’s 10 years of existence in Kampala last week, Medard Muganzi, the Manager Energy for Rural Transformation at ERA said that the major reason for failure to achieve the 10% target in the first RESP was because of the Private Sector’s inability to invest in rural electrification coupled with the low financial resources available. 

He however noted that the agency had learnt important lessons over the last decade and that the new RESP (2013 – 2022) will achieve the intended goal of increasing rural electrification coverage from 7% to 26% as a result.

“We now know that there are about 1.5 million connections needed; 1.3 million on grid and the 200,000 on solar PV so as to increase rural access to electricity. To achieve that, we have learnt that there is a need for public sector-led as opposed to private sector-led investment in rural electrification. This is because the private sector mainly looks at a financial return.

“Government on the other hand funds the project with the knowledge that there is going to be economic development,” Muganzi stated. 

He added that investment in rural electrification does not bring in immediate financial returns and that even the few private firms that are involved are finding it difficult to break given that consumers in these areas are very few.

“Private sector and cooperatives of rural concessions in Pader, Kibaale, Bundibugyo, Kasese and Kanungu are all struggling and run the risk of collapse due to lack of connectivity viability. So in this second RESP, government will take the lead in investment and then the private sector takes over the management”

Muganzi also notes that for rural electrification to be viable, there is need to empower the rural communities so that other services are brought nearer to them.

“In terms of transformation, electricity is only a means and not an end. Productive use of electricity is a broad issue and in this case we want to take the bull by its horns. REA for instance needs to be transformed into an autonomous body.” 

He disclosed that of the $1b needed to increase rural access to 26%, REA had secured the $300m needed for the first three years. The agency is now sourcing for the remaining $700m so as to realize the intended target by 2022. 

Godfrey Turyahikayo, the Executive Director ERA agrees that there was limited support from the government during the first RESP with most of the projects done using mostly donor support.

“Without donor support, we wouldn’t have been able to do even a tenth of what we have done so far. Everything we have so far done has been as a result of the either the donors or targeted financing from the energy fund.”

The rural electrification body has been lauded for not only increasing rural access to electricity but also raising national access to 14% in 2013 from 4% in 2001. REA has also done a total of 506 grid extension projects countrywide, translating into 5,192km of medium voltage network and 2,790km of low voltage network. 

As provided for by the Electricity Act, sources for funding of the rural electrification program include money appropriated by parliament, surplus monies made from the operations of the Electricity Regulatory Authority (ERA), a levy of 5% on transmission bulk purchase as well as donations and loans. 

Information from REA shows that the sources and amounts of funding have increased through the years of the program.