New ownership in Bujagali won’t reduce power cost.

April 13, 2016       ,

The change in ownership in Bujagali power dam will not lead to a drop in the cost of power, officials have said.

Last week, Norwegian firm SN Power announced it was buying Sithe Global’s stake in Bujagali hydropower as the latter opts out. But according to Brian Kubeck, the Sithe Global president, “this is just a change in ownership and may not impact on the cost of Bujagali power… Government has where it wants power costs to be, but investors also look at the costs incurred.”

Sithe Global, which has owned interest in Bujagali for eleven years, is incorporated in Mauritius. President Museveni’s biggest complaint has been that Bujagali is too expensive because it is operated by private investors.

At one point, he said government was going to use money from the oil industry to buy them out so as to cut the cost of power. In June last year, he said the country had made a mistake to accept to buy power generated by Bujagali at $10.1 cents per kilowatt hour, which, he added, was partly responsible for high prices of electricity in the country.

SN Power’s entry had been understood as a move by government to reduce the cost of electricity. SN Power says Uganda was a stepping stone to launch in the sub-Saharan region.

“We look to more hydro-power investment opportunities in the sub-Saharan Africa,” said Torger Lien, the SN Power CEO.

SN Power, owned by Statkraft, the Norwegian state-owned power firm, and Norfund, a Norwegian development financial institution, will operate alongside the Aga Khan fund for economic development.

Bujagali was opened in 2012, having cost around $900m. It added 250MW to the grid, halting rampant power blackouts that had plagued the country. Also, it led government to discontinue annual subsidies to thermal power generators.

Uganda expects Karuma and Isimba dams, under construction, to come on board by 2019, bringing a combined capacity of 788MW to the grid. Both dams are being constructed using loans from China. According to government, the power from these dams will be cheaper, costing between $4 cents and $5 cents per kilowatt hour.

Currently, the energy ministry is investigating reports of shoddy works, especially at Karuma, which is likely to delay the completion of the dam. Bujagali was tendered internationally to private companies to build, operate and transfer to government after 30 years.

Karuma and Isimba dams will be owned and managed by the government through Uganda Electricity Generation Company Limited (UEGCL).