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Rliament of Uganda PARLIAMENT OF UGANDA o PARLIAMEMtr THE n€PutucoF UGAilOA REPORT OF THE COMMITTEE ON NATIONAL ECONOMY ON THE PROPOSAL BY GOVERNMENT TO BORROW EURO 37.I MILLION FROM THE FRENCH AGENCY FOR DEVELOPMENT (AFDI AND EURO 35.O MILLION FROM KREDITANSTALT FUR WIEDERAUFBAU (KFWI THE GERMAN DEVELOPMENT BANK TO F'INANCE THE MASAI(A -MBARARA a POWER TRANSMISSION LINE r\/(1" ct, } DECEMBER 2017 \^ 1 M Srr 1.O INTRODUCTION Hon. Speaker, Hon. Members, the Committee on National Economy considered the request by Government to borrow Euro 37.I Million from the French Agency for Development (AFD) and euro 35.0 Million from Kreditanstalt Fur Wiederaufbau (KFW) the German Development Bank to finance Masaka - Mbarara Power transmission line in accordance with Rule 166 (2) (b) of the Parliamentary Rules of Procedure. The request was presented to this House by the Hon. Minister of Finance, Planning and Economic Development on 24.5.2017 and was accordingly 'o referred to the Committee on National Economy for consideration. The Committee considered and scrutinized the request and now begs to report. 2.O METHODOLOGY The Committee held meetings with; i. The Ministry of Finance, Planning and Economic Development; ii. Ministry of Energr and Minerals; and iii. Uganda Electricity Transmission Company Limited Officials The Committee studied and made reference to the following Documents; i. The Minister of Finance, Planning and Economic Development's brief O on the loan request; ii. Financing Agreement; r iii. Project Implementation Plan; iv. Appraisal Documents; v Resettlement Action Plan; and Environmental and Social Impact Assessment Committee also undertook field inspection visits to Mbarara and Masaka implementa sites to appraise the project Cb w t\*+ 3.O BACKGROUND The current restructuring and reforms in the electricity subsector have registered positive results in the country. The total installed electricity generation capacity increased from 595MW in 2OlOlIl to 85OMW in 2OI3l14. The growth in overall installed capacity in recent years has largely been due to additional capacity at Bujagali (250 MW) in 2012. According to the National Budget Framework Paper FY20 LB I 19, the overall, electricity generation capacity in Uganda has increased to 929.6MW and access to electricity is at 22.5o/o. o Despite the registered progress country wide, the current power generation sites and transmission lines have changed little over the past forty years. Uganda electricity subsector is currently characterized by insufficient generation and transmission capacity to meet demand, which is growing steadily. The present electricity situation in South - Western Uganda is characterized,by; voltage at l lkVand 33kV nodes, under normal loading is as low as 8.9kV and 2334kV respectively. This is lower than the acceptable lower limit; the technical losses associated with the 33kV and 1lkV feeders are about l7o/o of a the total power delivered. A big proportion of the industrial enterprises, businesses and institutions do not have either sufficient or uninterrupted access to electricity from the national grid. Uganda's electricity consumption per capita is also still low, estimated at only 80kwh per capita at the end of 2012, which is significantly than Africa's average of 578kwh per capita and the world,s average of 72kwh per capita. This level of consumption compares poorly with tries like Kenya at 133 kwh, Ghana at 246 kwh and Zambia at 551 kwh per capita. \-1 3 I\ffl/ w The key ener$/ subsector challenges in Uganda still remain the lack of a good mix of ener$/ sources in power generation; Lack of adequate and reliable power supply, weak sector finances, increased access and sustainability of hydro resources, low level of access to electricity ; high distribution system losses of more than 3Oo/o, inadequate infrastructure for generation, transmission and distribution; low level of ener$/ efficiency; high tariffs; unreliable and inefficient supply; inadequate Institutional and regulatory capacity. Failure to meet these challenges has led to poor operating performance and unsustainable operations. O To combat the challenges being faced within the electricity sector, GoU launched the National Development PIan II in which strategies were laid down to increase generation capacity from the current 85OMW in 2013 to 2,5O0MW in 2O2O and prepare for achievement of the required 41,738 Mega Watts by year 2040 and to expand the transmission grid and voltage from the current 1300km to 275OKm and 132kV to 22OkY and 400kV respectively. The proposed Construction of the Mbarara - Masaka Transmission Line project to be supported by financing from the KfW of Germany (5JW and AFD is meant to support the Government stratery by improving service quality and reliability to existing customers, expanding the capacities of the transmission system to o meet the growing power demand in Masaka, Mbarara and its environs; and reduce system losses. The project will increase electricity availability and connectivity; increasing supply quality and quantity for the manufacturing, industrial activities and service delivery in the area which will result in to increase in the Gross Domestic Product (GDp) of the country. ( ,") /vt f\rkl (L 4 4.O THE PROJECT AND COUNTRY STRATEGY The project is in line with the National Development Plan II (NDP II) which aims at achieving "Vision 2O4O", a long-term vision of Uganda. The goal of the NDP II is to lead the country to become a middle-income country by 2O2O, with a focus to promote ambitious infrastructure investment in Energr, exploitation and expansion of the national electricity power grid network; and promoting ener$/ efficiency and use of alternative sources of energr. The Project will hence contribute to the NDP II interventions that will take substantial steps towards implementation of the Uganda Vision 2O4O through the construction of 400KV transmission lines between Mbarara and Masaka and Extension of two O substations of 22OI<\I to develop the national electricity grid. 5.O PROJECT OBJECTTVE The objective of the project is to construct a 40OKV transmission line between Masaka and Mbarara located in the south-west part of Uganda to improve the Ugandan electric network and to allow increases of electricity transmission; enhance the security of electricity supply in south - west of the country; and contribute to the interconnection between Uganda, Rwanda and Kenya. 6.0 PROJECT DESCRIPTION: The project is composed of three components mainly; o i. Transmission Line 4O0kV works. ii. Extension of the Substations 22Oky works. iii. Supervision and Monitoring of works implementation c[ Jt--.t t- 5 tF+r The 400kV Masaka-Mbarara transmission line that will initially be operated at 22OkV will cover a distance of about 135km from the proposed 220kV Masaka West Substation up to the proposed 22OkV Mbarara North substation. This project is expected to increase voltage reliability, security and stability in Western Uganda and will form part of the Northern corridor infrastructure projects, completing the 22O kV interconnection in the Nite Equatorial Lakes Subsidiary Action Program (NELSAP) region and hence provide adequate capacity for power exchange in the region. a Component 1 -Transmission line 4OO kV T-line (l32l This component includes the cost of constructing the transmission line; equipment and infrastructure including accessories such as the conductors, insulators, and tower parts. Government of Uganda through the Uganda Electricity Transmission Company Limited (UETCL) will construct a 400 kV transmission line from Masaka West Substation up to Mbarara North substation. The line will be constructed as a 40O kV infrastructure but operated at 22O kV. From this, a double circuit 22O kV transmission line to Mirama substation in Ntungamo district, and eventually to Rwanda (a new Birembo substation) is to be built. The proposed Masaka-Mbarara 4OO kV project is therefore expected to complete tlne 22O kV ring in the NELSAP region o and hence provide adequate interconnection for power exchange in the region. The existing 132kV Masaka- Mbarara transmission line is operating at approximately 8O7o transmission capacity, transferring just over 70 MW to southern and Western regions of the country. To improve the transmission capacity and for larger transfer of energr to above S0OMW there is need upgrade the line to higher voltage capacity of 22OkY and eventually 4 -tt\ vol q r tF#r Component 2 - Extension of Masaka and Mbarara substations In every transmission line project there is the offtake and entry into the transmission network through the interconnection configuration. The substation works are required for the Masaka to Mbarara transmission line interconnection with the existing transmission system at Masaka and Mbarara which if not implemented would have otherwise left the line isolated from the transmission system. The Extension of Masaka and Mbarara Substation therefore includes the cost a of terminating / connecting the line onto the existing substation facilities including installation of equipment such as the 2x22OkY line Bays, Associated Civil and earthworks, Associated Control, Communication and Protection Installation within the Masaka and Mbarara Substations. Component 3 -Supenrision and Monitoring of Works Supenrision (Consultancyf This component is for the allocation of the consultancy contract fees for UETCL's project engineer who shall be responsible for execution of the EPC contract and construction supervision throughout the procurement, o engineering, installation, testing, commissioning, and defect liability periods 7.O PROJECT COST AND FINANCING Government of Uganda is seeking financing for the implementation of the transmission line, associated substations and supervision consultancy services from the Development Agency (AFD) and the German Developmenf CU 7 Cost: The total cost of the project is estimated at US$ 94.2M (Euro 84.7M) (See Table 1). KfW and AFD will jointly fund the project with a combination of concessional loans. KFW - Euro 37.lM, ADF - Euro 35.0M and GoU - Euro 12.6M (See Table 2)'. Government of Uganda will fund land purchases, compensation of properties, taxes and the RAP Implementation consultancy servlces.
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