Annual Report 08/09

Annual Report 08/09

Annual Report 08/09

Annual Report 08/09

Annual Report 08/09 Annual Report 08/09 Annual Report 08/09 Annual Report 08/09 Annual Report 08/09

Annual Report 08/09

Annual Report 08/09

Annual Report 08/09

Annual Report 08/09

MINISTRY OF ENERGY AND MINERAL DEVELOPMENT Vision Universal access to electricity by 2035

Annual Report 08/09 1 Mission To facilitate provision of electricity for socio-economic rural transformation in an equitable and sustainable manner

Goal To achieve 10% rural electrification access by 2012

Objectives 1. Promoting equitable rural electrification access having and having special regard to those areas of the community that are currently marginalized

2. Establishing and maintaining a comprehensive database on Uganda’s Rural Electrification sub-sector to facilitate informed decision making

3. Enhancing the available financial resource base for Rural Electrification through strategic fundraising

4. Promote institutional sustainability of the Rural Electrification Fund.

2 Annual Report 08/09

TABLE OF CONTENTS

Title Page

ABBREVIATIONS AND ACROYNMNS 14

EXECUTIVE SUMMARY 10

1.0 Introduction 12

1.1.1 The Rural Electrification Board (REB) 15

1.1.2 The Rural Electrification Agency (REA) 15

Board Members 16

REA Management 17

REA Organogram 18

2.0 OPERATIONAL PERFORMNACE OF THE RURAL ELECTRIFICATION PROGRAMME 19

2.1 Main Grid Expansion 19

2.2 Independent Grids (Off main Grid) 22

2.3 Renewable Energy Generation Projects 24

2.4 Photovoltaic Systems 25

3.0 Capacity Building 29

4.0 Short To Medium Term Plans 31

5.0 Financial Performance For The Year 2008/2009 36

6.0 Implementation Constraints And Proposed Solutions. 67

7.0 Conclusion 41

8.0 Audited Reports 42

Annexes 47

Annual Report 08/09 3 ABBREVIATIONS AND ACROYNMNS

BECS Bundibugyo Electricity Cooperatives Society

ERA Electricity Regulatory Authority

KIL Kilembe Investments Ltd

MEMD Ministry of Energy and Mineral Development

PACMECS Pader – Abim Cooperatives Multipurpose Electricity Cooperative Society

PVTMA Photovoltaic targeted Market Approach

REA Rural Electrification Agency

REB Rural Electrification Board

REF Rural Electrification Fund

RESP Rural Electrification Strategy and Plan

UEDCL Uganda Electricity Distribution Company Limited

UETCL Uganda Electricity Transmission Company Limited

4 Annual Report 08/09 FOREWORD

et me take this opportunity to issue the 2008/09 Rural Electrification Annual Report in accordance with the requirements of Section 64(2) of the Electricity Act (1999). The report covers activities undertaken by the LGovernment of Uganda and the private sector, in rural electrification and renewable energy generation. In 2001, the Ministry of Energy and Mineral Development issued the Rural Electrification Strategy and Plan (RESP) which had a goal of increasing the Rural Electrification coverage from 1% then to 10% by 2010. This Annual Report therefore, captures the progress we have so far made in implementing the RESP, challenges and measures being taken to address these challenges and projections of activities and outputs for the 2009/10 Financial Year.

Rural electrification in Uganda is progressing fairly well with successful completion of Energy for Rural Transformation Project Phase I and electricity access as at June, 2009 standing at 6%. Plans are underway to accelerate rural electrification among which is the launch of the Energy for Rural Transformation Phase II later this year. During the 2008/09 Financial Year, several projects have been implemented with support from development partners especially the World Bank, the Swedish International Development Agency (Sida) and the Japanese International Cooperation Agency (JICA) and I am sincerely grateful to them.

The Government of Uganda has also endeavored to increase the renewable energy development to ensure an elaborate supply of electricity, and this includes several small hydro power plants like Bugoye (13MW) in Kasese, Mpanga (18MW) in Kamwenge, Buseruka (9MW) in Hoima and Ishasha (6MW) in Kanungu which are in advanced stages of construction. The construction of 250MW Bujagali project is on course while feasibility studies for the development of about 700MW at Karuma are due to commence.

A major element in the developments renewable energy projects and rural electrification is the use of the private and public financial resources and human capacity through public private partnerships (PPPs). Provision of energy services in the world is increasingly being undertaken by the private sector with Government support. Uganda will also continue pursuing this approach and investors are encouraged to come on board and participate in the provision of modern energy services to Ugandans.

I would like to thank His Excellency the President and my Colleagues in Cabinent and Parliament for the continued guidance and support they have provided to the Ministry of Energy and Mineral Development in its effort to modernize rural Uganda through scaling up electricity access. I would like to thank the Local District Authorities who have assisted the Ministry in sensitizing the population on issues pertaining to rural electrification projects, especially the issue of wayleaves.

I wish to pay my gratitude to my Colleagues the Ministers of State in the Ministry , the Permanent Secretary / Chairman of the Rural Electrification Board, members of the Board of Directors of the Rural Electrification Board, the Executive Director and members of staff of the Rural Electrification Agency for the successful implementation of Uganda’s Rural Electrification Strategy and Plan.

For God and My Country

Eng. Hillary Onek (MP) MINISTER OF ENERGY AND MINERAL DEVELOPMENT

Annual Report 08/09 5 EXECUTIVE SUMMARY

Introduction

he Annual Rural Electrification Report 2008/09 presents the activities, achievements, challenges and lessons learnt in the process of implementing the targets set in the Rural Electrification TStrategy and Plan (RESP). The report underscores the operational and financial performance of the Rural Electrification Programme in line with its Short and Medium term Plans that were set to meet the set goal. The report also highlights the institutional capacity building programme, implementation constraints and suggests possible solutions and presents the audited reports.

The 2008/09 Financial Year virtually marked the close of the first lot of the main projects that had been planned to implement the Rural Electrification Programme in line with the RESP (2001). The Energy for Rural Transformation (ERT) Project came to a close at the end of February, 2009 and a number of other priority large grid extension projects financed by the Consolidated Fund and the Swedish International Development Agency (Sida) either had been or were due to be commissioned. The Indicative Rural Electrification Master Plan (IREMP) was also concluded in June, 2008 and the Plan was distributed to stakeholders thereafter.

This phase also marked the fulfillment of Government’s strategy of Public-Private Partnerships in rural electrification. Although the original model as prescribed in the RESP, i.e. upfront private investment in infrastructure development and operation, did not materialize, Government adopted the conventional model of rural electrification development by public financing, but procured private players in management, operation and maintenance of the developed distribution networks.

.In terms of new connections to electricity services, in the year 2008/09 the programme achieved a total of 19,187 rural connections, of which 17,426 were on the main grid, 156 on independent thermal grids, 92 on an independent mini hydro grid of Kisiizi, and 1513 solar PV systems. Although this is an improvement on the figure for 2008/09 (14,005), it fell short of the required average figure of over 40,000 per year, meaning that a lot needs to be done in the following years to scale up access to meet the goal of 10% by 2012..

The second phase of the programme, which includes donor funding from the World Bank under ERT II, Japanese International Cooperation Agency (JICA II) and supported by local financing from the Consolidated Fund and the Transmission Levy is at advanced levels of planning. The projects will start implementation in the 2009/10 Financial Year. Government is looking at other avenues to finance this phase, including the Norwegian Agency for International Development (Norad), African Development Bank, the Organisation of Islamic Countries (e.g. Kuwait Fund, Saudi Fund for Development, and Arab Bank for Economic Development of Africa).

6 Annual Report 08/09 Main Grid Extension

Several grid extension projects were progressed focusing on connection of district headquarters, supporting major agro-processing industries, other economic activities like trading centres and community services including health centres, educational institutions and water supply. Small schemes in the form of spurs on the Umeme network, and intensification within the Umeme footprint were constructed. In the year 2008/09 Financial Year, 11 large grid extension projects were implemented and 91 small projects of which 13 were implemented as community projects.

Of the large grid extension projects, six were primarily meant to connect district headquarters, although they would serve other economic and social load centres. Implementation has progressed as scheduled and the projects’ commissioning dates are as follows:- Oyam – January, 2010; Kaberamaido: Katine – Lwala section by December, 2009 while the Lwala – Kaberamaido section is awaiting further funding; Bundibugyo – September, 2009; Kyenjojo – commissioned April, 2009; Pader and Abim – December, 2009; Isingiro – commissioned June, 2009.

The other projects targeted economic and social services as well as other administrative centres. Their commissioning was scheduled as follows: Kagadi-Muhororo-Muzizi – commissioned February, 2009; Kanungu-Rugyeyo-Kambuga – January, 2010; Kyabugimbi-Buhweju – commissioned April, 2009; Kamuli- Bukungu Fish Landing Site - December, 2009; connection to Gulu Youth Centre – commissioning by January, 2010; Kyotera-Mutukula with a T-off to Kasensero – commissioned May, 2009; Kikongoro-Bwera- Mpondwe and Katerera-Kyambura – commissioned April, 2009.

Independent grids

1. Kisiizi Mini grid Project The upgrading of Kisiizi mini-grid from 60kW to 300kW was completed and successfully commissioned in January, 2009. However, commercial operations are expected to start in August, 2009 due to delays in manufacturing of prepaid energy meters.

2. West Nile Rural Electrification Project

In the West Nile concession, WENRECO continued to supply electricity using thermal generation in the districts of Arua and Nebbi until March, 2009 when the Company experienced liquidity problems and shut down the operations and work at Nyagak mini- hydro stalled. Government provided a subsidy to resume operations of the thermal plant in May 2009 while strategies are being worked out on how to complete Nyagak.

3. Kalangala Thermal Mini-grid

In a bid to capture more loads, as the 250 KVA diesel generator installed in 2006 experienced technical and commercial problems due to low loading, an extension of the grid within Kalangala Town Council and environs. The procurement of the contractor to carry out the grid extensions is underway.

4. Ngoma Thermal Mini-grid

Electricity supply within Ngoma town has stimulated tremendous growth of the Town Council and new commercial enterprises like milk cooling plants have been established. A load demand assessment has been carried with view of increasing the capacity of the generator in the near future.

Annual Report 08/09 7 5. Moroto, Adjumani and Moyo Mini-grids

The Government of Uganda, through the Rural Electrification Agency, procured three 750 kVA generator sets to replace the old and dilapidated generators in the districts of Moyo, Adjuman and Moroto. This included refurbishing the network in Moyo and Moroto towns.

Grid Connected Renewable Energy Generation Private sector interest in grid connected renewable energy generation projects has continued to be encouraging in the areas of small hydros and bagasse. The developments to-date are as follows:

1. Kinyara (bagasse) cogeneration project received a licence to generate 7.5 MW, of which 2 MW will be for internal combustion and the rest fed into the grid.

2. Bugoye mini-hydro (13 MW): The construction of the 13 MW small hydro power plant is in advanced stages by Tronder Energi (from Norway) and is scheduled for commissioning in October, 2009. 3. Mpanga mini-hydro (18 MW) is under construction. Commissioning is expected by Febrary, 2011. 4. Buseruka mini-hydro (9MW): Construction is in progress and commissioning is expected in June, 2011. 5. Ishasha mini-hydro (6.5 MW): Mobilisation for construction is ongoing. Commissioning is expected in February, 2011. 6. Kikagati mini-hydro (10 MW): A number of cross boundary issues between Uganda and Tanzania have delayed the project. It is expected that construction will start by end of the year.

Solar Photo-voltaic (PV) Systems

Under ERT I, a total of 1,513 commercial based PV systems were installed, bringing the total under the project to 7,566. For social services, the delayed packages for the education sector, numbering 403 were made, making a cumulative installation of social services packages (health, water and education) of 1022. Total PV installations over the whole ERT Project, therefore, became 8,588. The Indicative Rural Electrification Master Plan (IREMP)

As a guide for rural electrification project prioritization during the planning phase, the IREMP is now in application after its completion in June, 2009. It has been circulated to stakeholders. It will be used in all aspects of project planning and will be updated on a yearly basis to take cognizance of the projects which have been commissioned and input new information on schemes which had not been captured

Short to Medium Term Plans

During the 2008/09 Financial Year, 35 small schemes for grid intensification have been planned in various parts of the country and will be implemented in collaboration with Umeme. Twenty nine more, whose scope is beyond the Umeme footprint, have been surveyed and are ready for implementation on a turn key basis. Having succefully implemented ERT I, the Government of Uganda and the World Bank have finalized the preparation of another 4-year phase, ERT II, expected to be effective before end of 2009, with the following targets:

i Design and implement publically funded grid extension projects to connect at least 116,000 initial consumers and targeting connection to district headquarters. ii Design and implement independent grids to connect 1200 consumers and stand-alone PV systems to connect 20,000 consumers. iii Facilitate grid connected renewable energy projects up to 30 MW of electricity generation from small hydro stations and other RE sources.

8 Annual Report 08/09 ERT II will cover grid extension projects in the Soroti, Katakwi, Amuria, Apac, Gulu, Oyam, Kiruhura, Ibanda, Lira, Apac, Pader, Masindi, Buliisa, Sembabule, Hoima, Isingiro, Mbarara, and Mukono. It will also support at least two mini hydros and solar PV system installations countrywide through a public-private sector partnerships. Twenty five more large grid extension projects have been planned for implementation over the medium term in the districts of Gulu, Adjumani, Moyo, Lira, Abim, Kotido, Dokolo, Kaberamaido, Mubende, Kyenjojo, Kabale, Kisoro, Kanungu, Rakai, Sembabule, Kayunga, Masaka, Mubande, Mityana, Mayuge, Iganga, Luuka, Lumiro, Bushenyi, Hoima, Apac, Kitgum, Katakwi, Moroto, Sironko, Nakapiripirit, Kapchorwa, Bukwa, Kamuli, Hoima, Kibale, Kiboga, Rukungiri and Ibanda. Development partners expected to contribute to the Rural Electrification Fund for these projects are: Norad, JICA, and African Development Bank.

Challenges

While there was reasonable progress in grid area coverage, there were still a number of challenges which affected the programme. Most notable is the wayleaves issues. These include high costs of compensation which increase unit costs of projects, litigation, and threats of demonstrations from impatient affected persons. As in the earlier years, the issues of inadequate power supply capacity and big expenditure on subsidies for thermal generation have continued to negatively affect the rural electrification programme as it continues to compete for limited public resources.

Slow connection rates on the new networks, reflecting inability of the beneficiaries to either raise connection or house wiring costs or both, as they affect the viability of operations of these networks. Financial mechanisms will have to be put in place to enable these hurdles to be overcome. Attracting local entrepreneurs in renewable energy power generation continues to be a challenge. However, there is also evidence that the publication of the Renewable Energy Policy has resulted into more interest in renewable energy generation by international investors. The entry of international investors is a positive aspect as it may show the way to local investors.

Finally, the change in the public-private partnership model to allow for public investment upfront and bring in the private sector for operation and maintenance has seen a positive way forward in project implementation, particularly for grid extension projects coming years.

F. A. Kabagambe-Kaliisa Permanent Secretary, Ministry of Energy and Mineral Development and, Chairman, Rural Electrification Board

Annual Report 08/09 9 1.0 Introduction

he Government’s Rural Electrification Programme continued to gain momentum during the 2008/09 Financial Year with the medium term objective of achieving a rural electrification access of 10% by 2012 Twhile, at the same time, focusing on the universal access (100% access) target by 2035. Current access is estimated at 6%. The driver of this programme remains the Rural Electrification Strategy and Plan (RESP) of 2001 whose primary objective is to reduce inequalities in access to electricity and the associated opportunities for increased social welfare, education, health and income generation.

During the period under review, the Rural Electrification Agency (REA) continued carrying out a number of activities with the purpose of fulfilling its mandate of implementing the Government’s Rural Electrification Programme as stipulated in Statutory Instrument No. 75 of 2001, which established the Rural Electrification Fund (REF), The Rural Electrification Board (REB) and its Secretariat, the Rural Electrification Agency (REA). REA worked in collaboration with other institutions in the power sector including the Electricity Regulatory Authority (ERA), UMEME, UEDCL, UETCL and other Government Institutions responsible for social services including Ministries of Health, Education, ICT and Water.

During the 2008/09 period, the programme continued to focus on the following specific objectives:

i) Achieving equitable regional distribution access to electricity while, specifically, targeting connection of district headquarters and economically productive activities;

ii) Maximizing the economic and social benefits of the Rural Electrification Fund in extending electricity services while taking care of the attendant environmental issues;

iii) Promoting the use of various technical solutions in the design and implementation of projects, including grid extension and off-grids as well as introducing low cost technologies for infrastructure and service provision; and

iv) Promoting private sector generation of electricity from small renewable energy sources and selling to the grid.

Major project activities were in the following areas:

i Main grid epansion;

ii Small schemes, mainly within Umeme’s footprint (grid intensification), particularly with community contributions;

iii Packaging of projects identified under the Indicative Rural Electrification Master Plan (IREMP) for funding with different donor agencies;

iv Support to renewable energy power generation projects, including planning for constructing the inter- connectors to the main grid;

v Implementation of the Photovoltaic Targeted Market Approach (PVTMA) which is based on the provision of credit and subsidies to targeted communities to enable them afford solar PV electrification; and

vi Planning for additional energy packages (PV systems) for health centres, educational institutions, ICT and water supply under ERT II.

10 Annual Report 08/09 Major infrastructure developments, especially in main grid extension, were undertaken. The financing of this infrastructure was from various sources, including the World Bank, Sida, JICA, Government’s Consolidated Fund and the Transmission Levy. Large grid extension projects which offered potentially viable business opportunities were curved out as new concession areas to private companies. These were the original Priority Rural Electrification Projects (PREPs) identified at the beginning of the ERT I project, i.e. the Mbarara–Kikagati–Ntungamo and the Masaka-Bukakata/Kyotera-Mutukula-Kasensero projects.

Both concessions were awarded to Ferdsult Engineering Ltd. The development of the pilot rural electric cooperatives for the Fort Portal-Bundibugyo-Nyahuka and the Corner Kilak-Pader-Abim projects continued, culminating in the takeover of the networks for operation by the Bundibugyo Energy Cooperative Society (BECS) and Pader/Abim Multipurpose Electricity Cooperative Society (PACMECS) respectively. Kilembe Investments Ltd (KIL) also started the operation of the Kasese-Mpondwe/Kyambura-Katerera networks.

1.1 Institutional set up for Rural Electrification

The major institution responsible for the Rural Electrification Programme is the Rural Electrification Agency (REA), which is the Secretariat of the Rural Electrification Board (REB). REA has the overall responsibility of planning and implementing the mainstream Rural Electrification Programme which includes main grid extension, independent (mini) grids, isolated commercial solar PV systems (e.g solar home systems), and promotion of private sector investments in renewable energy generation (below 20 MW installed capacity).

1.1.1 The Rural Electrification Board (REB)

REA has a strong and high profile Board comprised of Permanent Secretaries of the key ministries as well as representatives of other important stakeholders. The Rural Electrification Board (REB) is charged with the responsibility to manage the Rural Electrification Fund (REF) on behalf of the Minister of Energy and Mineral Development as prescribed in Statutory Instrument No. 75 of 2001 which established the REF.

According to Regulation 5 (2) of the Statutory Instrument, the Board should consist of the following members:- i The Permanent Secretary of the Ministry responsible for Energy, who is the Chairperson; ii The Permanent Secretary of the Ministry responsible for Finance; iii The Permanent Secretary of the Ministry responsible for Local Government; iv A representative of the private sector involved in Rural Electrification, nominated for appointment by the Private Sector Foundation; v A representative of the financial sector nominated for appointment by the Uganda Bankers Association; and vi A representative of the Non-Governmental Organizations engaged in rural development projects, apart from the energy sector nominated for appointment by the NGO community). vii A representative of Uganda Bankers’ Association. (Vacant)

1.1.2 The Rural Electrification Agency (REA)

The major role of REA is to implement Government’s Rural Electrification Programme in line with the Rural Electrification Strategy and Plan, with specific focus on the following functions prescribed in Section 11 of the the Statutory Instrument: i Building and maintaining a national rural electrification data base; ii Preparing annual status reports on the rural electrification programme; iii Recommending to the Board the most efficient use of the REF; iv Generating information relating to investment opportunities in rural electrification; and v Processing application for financial support from the REF

Annual Report 08/09 11 REA is headed by an Executive Director, who is supported by a team of 3 managers and 24 other members of staff to oversee the Rural Electrification Programme in Uganda Board Members

Mr. Fred. A. Kabagambe-Kaliisa Mr. Chris Kassami Chairman, REB Member, REB Permanent Secretary, Ministry of Energy Permanent Secretary, Ministry of Finance, & Mineral Development Planning and Economic Development

Eng. Samuel Sebide Sentongo Mr. George Omona Representative of Private Sector, Member, REB Representative of NGO Northern Uganda Area Programme Manager, ACCORD – Representative of NGOs

Mr. V. B. Ssekkono Mr. Godfrey Turyahikayo Member REB Ex –Officio Member, REB Permanent Secretary, Ministry of Local Executive Director, Rural Electrification Government Agency

12 Annual Report 08/09 REA Management

Mr. Godfrey R. Turyahikayo Mr. Charles Sabiiti Executive Director Manager Finance and Administration

Mr. Godfrey Werikhe Mr. Andrew Muguwa Ag. Manager Project Monitoring Ag. Manager Project Planning & Evaluation.

Ms Barbara Asiimwe Kasule Assistant Board Secretary

Annual Report 08/09 13 REA Organogram

Executive Director

PA/ED Asst. Board Sec.

Public Relations Officer Internal Audit

Project Planning Project M & E Finance and Admin

Network Planning Finance / Accounts

PVTMA Administration

IT / GIS Procurement

PA/ED Personal Assistant to Executive Director M & E Monitoring and Evaluation IT/GIS Information / Geographical Information System PVTMA Photo Voltaic Target Market Approach

1.1.3 Other Institutions Involved in Rural Electrification Implementation

Several other institutions of Government carried out other activities, especially with regard to the World Bank assisted Energy for Rural Transformation (ERT) project. The Ministry of Energy and Mineral Development (MEMD provides policy guidance and oversight for the Rural Electrification Programme as well as implementing some pilot projects in emerging areas of electricity supply (e.g. gasification technology) and generating basic data on new resources (e.g. geothermal energy). The ministries responsible for Health, Education and Water continued the installation of solar PV systems in health centres, educational institutions and for supplying water in rural areas respectively. The Uganda Communications Commission (UCC) continued to install PV systems for communication purposes.

Private Sector Foundation Uganda (PSFU) also continued with its role under the ERT project of helping the private sector to develop its capacity for investing in and /or operating rural electrification and renewable energy projects, developing the required business plans for investment and carrying out market development for rural electrification services.

14 Annual Report 08/09 2.0 Operational Performnace Of The Rural Electrification Programme

The Rural Electrification Programme has been implemented in line with the provisions of Section 62 of the Electricity Act 1999. It prescribes project types to be supported by the REF as grid extension, independent grids, renewable energy generation projects and photovoltaic systems (i.e. solar electrification). 2.1 Main Grid Expansion

Since the inception of REA, grid extension has been the main delivery model of the Rural Electrification Programme. By utilizing the IREMP, REA has packaged and implemented a number of main grid extension infrastructure developments ranging from small to large projects focusing on the following demand centres:

• District Headquarters

• Economic and social rural growth centres

• Communities, e.g. trading centres or villages, through community initiated schemes

As REA scales up rural electrification, more funds will be required. Therefore, in addition to the regular funders i.e. World Bank, JICA, SIDA and GOU, the following development partners were approached during the 2008/09 financial year for support in form of grants and loans:- NORAD, African Development Bank (AfDB), Kuwait fund, BADEA, OPEC and Saudi Fund for Development:-

During the period of review, the following progress was achieved.

2.1.1 Electricity Supply to District Headquarters

Electrification to District Headquarters continues to be a Governments Priority. As such, Priority Rural Electrification Projects have been planned, packaged and implementation to achieve this objective. These have been funded by Government through the consolidated fund and donor funds.

The following are ongoing and or completed electrification projects aimed at supplying electricity to District Headquarters.

2.1.1.1 Government of Uganda Funded Projects a) Electricity Supply to Oyam District Headquarters and Environs. The contract for construction of 33KV and associated LV networks to supply Oyam District Headquarters was signed in March 2009 and works are progressing. The project is expected to be commissioned in January, 2010. This project will electrify Iceme Subcounty Headquarters, Acet trading center, Agabadong trading center, Oyam District Headquarters, Oyam trading center, Acaba Subcounty Headquarters, Acaba Technical institute and Obangangeo trading center. b) Kaberamaido District. The restoration of the electricity supply to Kaberamaido district was embarked on under the Peace and Recovery programme in the Office of the Prime Minister. The scope of Phase one of the project covers Soroti – Katine – Lwala section and the contract was signed in October 2008. The works are expected to be completed in December 2009. More funds are being sought to extend the grid from Lwala to Kaberamaido district headquarters and environs as Phase Two of the project.

Annual Report 08/09 15 2.1.1.2 Grants from the Government of Sweden through Swedish International Development Agency (SIDA)

The Government of Uganda received a grant of SEK 74 Million from the Government of Sweden through the Swedish International Development Cooperation Agency (SIDA) to support Rural Electrification projects in the districts of Pader, Abim, Bundibugyo, Kyenjojo and Bugiri.

a) Bundibugyo District Headquarters. The contract for the construction of 33 kV power line from Fort- portal to Nyahuka through Bundibugyo District headquarters and the environs with the associated low voltage network was signed on 26th February 2008. The scope of works includes the construction of over 90km of High Voltage lines with over 30km of associated LV networks, electrifying Karugutu, Itojo, Sempaya, Ntandi, Bubukwanga, Busaru and Nyahuka trading centers respectively and Bundibugyo Town and District Headquarters

At the time of reporting, construction works are complete and commissioning is expected in September, 2009. This network will be managed as a concession by Bundibugyo Energy Cooperative Society (BECS), targeting 2200 connections.

b) Kyenjojo District Headquarters. The contract for the construction of 33 kV power line from Rugombe (Umeme substation) through Kyenjojo District Headquarters to Katooke trading center with the associated low voltage network was signed on 26th February 2008. The scope of works included the construction of 45km of High Voltage with 14km of associated LV networks to electrify Kaihura, Rwamukora, Katoosa and Nyantungo trading centers respectively and Kyenjojo District headquarters and town.

This power line was commissioned (technically) on 25th April 2009 and is being operated by Ferdsult Engineering Services Ltd. Over 700 initial connections are targeted.

c) Pader and Abim District Headquarters. The contract for the construction of 33 kV power line from Corner Kilak to Abim through Pader District headquarters, Patong and a Tee off to Kalong with the associated low voltage network was signed on 4th December 2008. The scope of works include the contraction of 130km of high voltage networks and associated 40km of low voltage networks to electrify Corner Kilak, Tyer, Lamiyo, Kwon Kic, Lira Palwo, Corner Pachulu, Patongo, Ligi ligi, Gere gere, Patong, Kalong, Adilang, Kanu, Kiru and Lukole trading centers respectively and Abim and Pader District Headquarters and towns.

Construction works under this project are underway and completion is expected in December 2009. REA is packaging the management of this network as a concession run by a cooperative, targeting over 1700 initial connections.

2.1.1.3 IDA/World Bank

Isingiro District Headquarters and Environ. Since 2001 the World Bank has supported the Rural Electrification Programme through the Energy for Rural Transformation (ERT) Project. A number of grid extension lines were identified as Government’s priority rural electrification projects (PREPs). Among the major load centres connected during the project implementation was the Isingiro District Headquarters.

The contract for electricity supply in the area covering Isingiro District headquarters was signed in March 2008. The scope of works included the construction of over 160km of high voltage networks and associated low voltage networks to electrify 35 trading centers, Mirama Hill Boarder Post (with Rwanda) and Isingiro District Headquarters. The works were completed and commissioned in June 2009 and the network packaged as a concession which is operated by Ferdsult Engineering Services Ltd. Under this project the Kyabirukwa – Mbarara power line was upgraded so that it can be able to evacuate electricity from the 10 MW proposed hydro power station at Kikagati on R. Kagera. 2.1.2 Electricity Supply to Economic and Social Rural Growth Centres

A number of grid extension projects serving various economic and social activities were progressed as

16 Annual Report 08/09 a means of boosting their economic production activities. These projects were implemented with funds under the Government’s Consolidated Fund, the Transmission Levy, grants from JICA & SIDA and the ERT loan from World Bank.

2.1.2.1 Consolidated Fund and the Transmission Levy a) Kagadi – Muhororo – Muzizi: This line has been constructed and commissioned in February, 2009 as Phase II of the Kibale Project. It provides electricity to the Muzizi Tea Factory. b) Kanungu – Rugyeyo – Kambuga: - This line forms phase two of the Kanungu project. The first section of the project (i.e. Kanungu – Rugyeyo) was fast tracked and commissioned in January 2009, to connect the Rugyeyo tea. The second section Kambuga – Rugyeyo is under construction and is expected to be completed in December 2009. c) Kyabugimbi – Buhweju (Bushenyi District): This line connects two tea factories. It was commissioned on 22nd April, 2009. d) Kamuli – Bukungu Fish Landing Site: the construction of the power line from Kamuli to Bukungu fish landing site commenced in June 2008. The works are near completion and due for commissioning by December, 2009. e) Connection to Gulu Youth Centre: The construction of the power line is near completion and is due for commissioning by January, 2010.

2.1.2.2 Sida Grant a) Namayemba – Namutere: It connects a number of trading centres in Bugiri District. This project was completed and commissioned in March 2009 and handed over to UMEME for operation. b) Rwamukora Tea Factory was served under Rugombe – Kyenjojo – Katooke project.

2.1.2.3 IDA/World Bank (ERT Project) a) Kyotera – Mutukula with a T-off to Kasensero Fish Landing Site: The line connects the Uganda/ Tanzania border town of Mutukula and the fish factory and the landing site at Kasensero on Lake Victoria. The contract for construction of the power line was signed in March 2008 and works were completed and the network commissioned in May 2009. This network was packaged as a private concession is managed by Ferdsult Engineering Services Ltd. b) Kikorongo-Bwera-Mpondwe in Kasese District and Kyambura-Katerera (Bunyaruguru) in Bushenyi District. The contract for power extension to Mpondwe in Kasese District and Katerera in Bushenyi District was signed in December 2007 and the works were completed and commissioned in April 2009. The network is managed by Kilemebe Investments Limited. c) Community or Private Enterprise Schemes:

Under SIDA Technical Assistance to REA, a subsidy policy was developed as a means of the Government support towards community initiated electricity projects. Under this policy, REA subsidises up to 100% of the cost of the Medium Voltage network and 70% of the associated low voltage network for electricity supply to the local community. The community contributes 30% of the cost of the low voltage network including connection.

Annex 1 shows 13 schemes which have either been constructed and commissioned or are under implementation on a cost-sharing basis between the Rural Electrification Fund (ERT component) and communities or private sector small and medium enterprises.

Annual Report 08/09 17 2.1.2.4 JICA II

a) Phase One

Two schemes have been implemented and commissioned under Phase I. These are: • Masaka-Bukakata with a T-off to Nabugabo Resort. The line provides power to the Bukakata Fish Factory, the fish landing sites of Bukakata and Lambu and the Nabugabo Beach and Tourist Resort. • Munteme-Kagadi scheme (Kibale/Hoima). The line serves 12 trading centres along the project area.

b) Phase Two

Two more schemes have been designed for Phase II and construction will begin in September, 2009 (JICA II). The two schemes are Nabitende – Namungalwe (Iganga) and Bugeso – Iwemba (Bugiri) in Eastern Uganda. Contracts for the two schemes in Eastern Uganda were signed in December, 2008. Procurement of materials is complete and construction will start in September, 2009. Commissioning is scheduled for February, 2010. 2.2 Independent Grids (Off Main Grid)

During the Financial Year, the REA supported the following independent grids:

2.2.1 Kalangala Town Council Mini Grid

In 2006 a 250KW generator was installed using the Government Consolidated Fund and the Transmission Levy to supply power to Kalangala District Headquarters, Kalangala Town, and the tourist facilities. These works were commissioned in September 2006 and the management and operation of the network leased to a private company, WSS, in November 2006.

The project experienced technical problems due to limited load on the generator and has not been in operation for sometime now. In February 2009, REA procured for design, construction, delivery and installation of a 10,000 litre metallic fuel tank at Kalangala power station and the works were completed in March 2009. The 10,000 litre tank would act as a backup storage of fuel during the times of fuel shortage hence ensuring availability of supply at all times.

In May, 2009 REA undertook the construction of 33KV lines from Kalangala Town to the water works, Ssese Beach Hotel and Mwena landing sites. These additional load centers were meant to boost the customer base of the operator, making their operations more economically viable.

2.2.2 Ngoma Mini Grid

In February 2006, REA procured services for Engineering, Procurement and Construction of a 60KVA generator and a distribution mini grid for Ngoma Town Council and environs. These works were commissioned in September 2006 and the management and operation of the network leased to Utility Service Ltd.

To date over 100 domestic consumers are benefiting from the electricity. This project boosted the growth of many businesses, mainly milk processing plants. As such, the demand has surpassed the installed capacity of the Generator.

18 Annual Report 08/09 2.2.3 Moroto, Adjumani and Moyo Mini Grids

In January 2008, REA procured a contractor for the supply and installation of three 750KVA diesel generators for Moroto, Adjumani and Moyo Districts respectively. All the three generators were delivered in November, 2008.

The Generator in Moyo was commissioned in May, 2009 replacing the faulty 220KVA while the generator in Moroto was commissioned in June 2009, replacing the faulty 340KVA generator. The generators were subsequently handed over to UEDCL to operate and manage.

Installation works for the generator in Adjumani District is complete and commissioning is expected is October, 2009, replacing the old 340KVA generator. Electricity is supplied for 5 hours from 6.00pm to 10.00pm daily.

2.2.4 Kisiizi Hydropower Mini-grid

REA facilitated the upgrade of the 60KW hydropower plant at Kisiizi to 300KW and the construction of the distribution network. The construction of the plant was completed in January 2009 and commercial operations expected to start in August 2009.

This distribution network extends over 13km of 11KV lines, supplying the Nyarushanje community, including the Rubabo County Headquarters, Kisiizi Hospital and several trading centres in Rukungiri District. The network will be operated by Kisiizi Electricity Company using a prepayment metering system, targeting the connection of 300 domestic customers and 50 commercial customers.

2.2.5 West Nile Rural Electrification Company (WENRECO)

WENRECo continued to supply Electricity to Arua and Nebbi towns for over 18hours daily until March 2009 when the company faced financial problems. Government intervened by providing an operational subsidy for a period of six months with effect from May 2009. The supply has now resumed.

However, the construction works at Nyagak mini hydro [power plant have stalled and Government, in partnership with WENRECO, are sourcing funds for the construction to resume. The physical progress of the 3.5 MW Nyagak mini hydropower project is as below:-

• Power House: The power house main structural concrete works, including the tailrace structure, are complete. The pending works include electrical and mechanical installations, yard paving , fencing and painting.

• Penstock: All penstock pipes were delivered at site and penstock excavation is complete. Half the number of the pipes have been installed.

• Tunnel: Most of the tunnel section has been excavated using the open cut excavation from the hill top as there was no rock face exposed to allow for tunnel drilling. At least 20% of the material has been excavated.

• Headrace Conduit: The completed units at the headrace are approximately 43% of the total length of about 500 metres. • Dam, Intake and Spillway: The dam excavation has been substantially completed. However, there is

insignificant amount of concrete works done so far. This activity lies in the critical path of the project. • Electro-Mechanical Equipment: All the electro-mechanical equipment is on site awaiting completion of the powerhouse structure to be assembled and installed.

Annual Report 08/09 19 2.3 Renewable Energy Generation Projects

As part of the strategy to enhance rural electricity services, the programme supports the generation of power from small renewable energy sources like small hydros and bagasse. Government has supported some of these projects through provision of capital subsidies (e.g Kakira Cogeneration Project), part funding for feasibility studies and business plans, the use of the refinancing facility under ERT I for debt financing, interconnections to the grid and comfort mechanisms through Implementation Agreements. The table below shows the projects in the pipeline at various stages of development..

Hydro Project Sponsor Progress Bugoye - 13MW Tronder Energy Construction is in the final stages of completion. Commissioning of the 13MW project is expected in October 2009. Mpanga – 18MW Africa Energy Systems Ltd All the electromechanical equipment has been delivered at site and the plant house is near completion.

The civil works contractor has mobilized and works on the dam, canal, tunnel and the intake are going on simultaneously.

REA is to constructing a double circuit interconnection line of approximately 47 km one of which will be a dedicated evacuation feeder and a 33kV/132kV primary sub-station at Rugonjo (in collaboration with UETCL) for evacuating the generated power The project is expected to be commissioned at the end of February, 2011. Ishasha - 6.5MW Eco Power Construction commenced in September 2008 and works are progressing on schedule. Expected Completion is February 2011 Buseruka - 9MW Hydromax Construction is underway and the expected date of completion is June, 2011. Kikagati- 10MW China Shan Sheng Commencement of works still awaits clearance from the Tanzanian Government. REA facilitated the construction of the 33KV power line that will evacuate the 10MW onto the main Grid. The network was commissioned in June 2009.

20 Annual Report 08/09 2.4 Photovoltaic Systems 2.4.1 Progress on the ERT Solar PV Component

2.4.1.1 Sales Performance Based Grant and Business Development

Implementation of solar PV sales based performance grants and the business development scheme, administered by PSFU, continued up to end of ERT I on February 2009. During the financial year 2007/08, 13 more companies were approved to participate in the sales based performance grants scheme bringing the total number of approved companies to 31. A total of 1,513 solar PV systems were installed in the period up to February 2009, while a total of 249 solar PV systems were installed under PVTMA for the period March to June 2009. Overall, 1,759 solar PV systems were installed during the financial year to bring the total number of installed solar PV systems since the start of ERT to 7,566.

Two solar companies namely Konserve Consult Ltd and Power and Communications Systems Ltd received business development support from PSFU to, respectively, undertake capacity building and market awareness campaigns in the districts of Masindi, Hoima and Kibaale.

2.4.1.2 Solar PV systems to Support Provision of Social Services

Under the ERT project, provisions were made to support solar PV energy packages for better social services like health, education and water supply. The activity is implemented through the relevant government ministries. i) Water Supply Component: This component focuses on provision of water supply for small towns and rural grow centres and targets 15 water supply schemes in West Nile (Arua, Nebbi, Moyo, Adjumani and Yumbe), North East (Kotido, Moroto and Katakwi), Western region (Kabarole, Kyenjojo) and Kalangala District. Installation works of the solar PV energy packages for all the 15 schemes was completed. The systems were successfully tested and were all pumping water. Performance monitoring continued until commissioning and handing over to the respective local authorities was done in October 2008. i) Final inspections for LOT 1 schemes in west Nile region (Nyapea, Nyadri, Ciforo, Laropi, Yumbe and Pakelle) were conducted. ii) Final inspections for LOT 2A schemes in Northern Eastern region (Matany, Katakwi and Nakiperimolu) were conducted. iii) Final inspections for LOT 2B schemes in Western Region (Rwebisengo, Rugombe, and Kyenjojo) were conducted. iv) Final Inspection for LOT 2C schemes in western region (Muhorro and Mahyolo excluding Kalangala) were conducted. Additional solar panels have been retrieved with difficulty and relocated to Kalangala for installation and fixing.

• Education Component: This component targets to provide solar PV packages to 129 post primary institutions in 10 districts. Progress was slow at the beginning due to capacity constraints at the Ministry of Education and Sports. This situation was alleviated by the active participation of the Ministry of Energy and Mineral Development and the Rural Electrification Agency. By the end of the financial year 2007/08, the bidding process for the procurement of a firm for the supply, installation and maintenance of 448 solar packages for 129 institutions in 10 districts was completed and an evaluation report produced. The contract for procurement, installation, and maintenance of solar packages in the educational institutions was signed on the 3rd September 2008. The shipment of Solar PVs equipment commenced on 31st December, 2008. A total of 123 Secondary Schools in 10 districts will benefit from ERT Phase I. The consultant for the Monitoring and Evaluation is on board and has already presented the Inception and a draft reports. MoES plans to recruit an Energy Officer to boost capacity at

Annual Report 08/09 21 the ministry. MoES also prepared and submitted the ERT Phase II procurement plan to MEMD and World Bank.

ii) Health Component: This component aims at providing solar packages to 146 Health centres including staff houses in 6 districts of Arua, Yumbe, Nebbi, Kotido, Pallisa and Kumi. Standard solar energy packages were developed and designed for various sizes of medical buildings and staff houses for HCII, III and IV including detailed technical specifications and bills of quantities (BoQs). 8HCIVs, 68HCIIIs and 79HCIIs received solar PV energy packages totaling 117.14 kWp of installed capacity. This Comprised of:

• 79 Solar DC vaccine fridges for HCIII and HCIV.

• 261 Staff houses received stand alone solar PV energy packages for lighting and operation of radio and TV/VCR.

• 220 Medical buildings received stand alone solar PV energy packages for lighting and capacity to operate a microscope.

• 8 HCIV received centralized solar PV Diesel Generator Hybrid energy systems to provide lighting and capacity to operate microscope and ultrasound scanner.

Monitoring and Evaluation framework for the ERT Health Component was developed including specific output and impact indicators. Some capacity was developed at the MOH head offices in the design and specification of professional institutional solar energy systems for health facilities. Tailor made user manual was prepared for the ERT Programme solar energy packages for HCII, III and IV. Capacity was developed at the MoH to oversee the implementation of the standard energy packages in HCs using private companies to supply, install and provide maintenance services.

2.4.1.3 The solar PV Targeted Market Approach

The solar PV Targeted Market Approach (PVTMA), which is a new mechanism implemented by the Rural Electrification Agency (REA) focuses on providing consumer subsidies and promoting consumer credit for solar PV in order spread the upfront cost of solar PV which is a main constraint to acquiring solar PV. The project was approved by the Rural Electrification Board. Implementation of the first phase of PVTMA programme commenced alongside ERTI until February 2009 when ERTI came to a close. Although ERT II was not immediately declared effective, the PVTMA activities continued in the interim period through end of financial year under review. The 2nd Phase of PVTMA will continue for the period 2009-2013. The project targets to facilitate the installation of at least 20,000 systems by 2013. When ERTI ended on 28th February 2009, BUDS-ERT stopped providing performance-based grants to PV companies and hence stopped carrying out end-user audits of PV installations. The PVTMA program continued operations in the interim period (closure of ERTI and beginning of ERTII) and thus end-user audits were necessary as a basis for disbursement of consumer subsidies. To this effect, in order to ensure smooth continuity and seamless transition, REA contracted PSFU to provide services of end-user auditing and verification of PV installations using the already existing structures at PSFU as REA put in a place internal mechanisms to take over the exercise.

Through a subsidy disbursement agreement with Post Bank Uganda, a total of US$50,000 was disbursed to Post Bank to provide consumer subsidies alongside credit to solar PV customers. Support was provided to Post Bank Uganda to roll out solar loan product to five Post bank branches of Masaka, Mbarara, Mbale, Soroti and Masindi. During the period under review, a total of 191 households received consumer subsidies and credit to acquire solar home systems. In addition, another subsidy disbursement agreement was executed with FINCA Uganda Limited on 18th November 2008 for the latter to provide consumer subsidies to solar PV customers who borrow to finance their solar installations. A total of UShs.48,754,475 was disbursed to FINCA and by the end of the financial year 2008/2009, a total of 137 solar PV systems were subsidized.

The first 4 SACCOs identified in Bushenyi district to participate in the pilot PVTMA activities under the microfinance institution initiative model signed tripartite agreements with REA and Incafex Solar systems. These are Kyamuhunga, Mitooma, Mutara and Bugongi. A training/orientation workshop was also held for the personnel of the 4 SACCOs

22 Annual Report 08/09 in September at Ishaka Crane Resort Hotel. Other SACCOs have also come on board to participate in the PVTMA programme. These include Bagezza, Kamaba, Abetereine, Kalibamukya, Katweombekye and Kigarama. More financial institutions will be brought on board as we scale up the PVTMA activities during ERTII.

2.4.2 GTZ PREEEP activities in rural electrification with solar PV.

GTZ PREEEP sub-contracted Konserve Consult Ltd. to channel support to local solar dealers in Northern Uganda as well as Masaka and Mbarara districts. GTZ PREEEP does not offer a direct subsidy on household size solar PV systems, but rather offers support for marketing activities as well as business and technical trainings. Linkages between micro-finance institutions and solar dealers are facilitated. For the period under review, GTZ PREEEP supported 4 MFIs (Packwach Nam, Moyo SACCO, Koboko and Alotkot SACCO) as well as 8 solar dealers (Arua: Matrix, Metro; Lira: Krishi Enterprises, Ngomson; Masaka: Naco Solar; Ibanda: Zai Electricals, Mona Biz Centre, Luweero: CK Electronics). Furthermore, GTZ signed PPP contracts with a number of Kampala-based solar dealers to open branches in rural areas, among them UltraTec (U) Ltd, Solar Energy Uganda and Incafex Solar Systems. As a result of these efforts, a total of 661 solar home systems were installed for the FY2008/2009.

In addition, PREEEP supported a number of social institutions in Uganda with access to solar energy (health centres, boarding schools, vocational training centres, orphanages). This was done through extension of subsidy to these institutions. GTZ operations are currently focused on Northern Uganda, but institutions in other district can also receive support. To qualify for this subsidy, the following conditions need to be fulfilled. These are listed below;

• The institution should be located in Northern Uganda, especially in the West Nile region (Moyo, Adjumani, Arua, Nebbi, Yumbe, Koboko, Maracha and Terego) and Lango region (Amolatar, Apac, Dokolo, Lira, Oyam) or another district where PREEEP is already active (Bukwa, Bushenyi, Jinja, Kabale, Kamuli, Kanungu, Kayunga, Masaka, Masindi, Mbale, Mukono, Rakai, Tororo or Wakiso).

• The institution could be a boarding school, a health centre, a vocational training centre or an orphanage.

• The institution should be located not less than 5 km from the nearest grid and should also not be in an area earmarked for grid extension in the next 10 years. If the grid is nearby and the costs for grid connection are low, PREEEP can also support grid connection.

• The institution should be willing to contribute a percentage of 20% of the overall cost of the proposed system and will be responsible for operation and maintenance.

For this activity targets are defined for a three year phase of June 2008 until May 2010 as 160 institutions. However, for the FY 2008/2009 a total of 3 institutions were supported as listed below. Name of District Sub-county Installation date Installing company Institution Kawongo Health Centre III (staff Kayunga 10/21/2008 Girasolar quarters only, counted half) ? Namusaala Health Centre II (staff Kayunga 10/21/2008 Girasolar quarters only, counted half) ? Kibibi Health Centre Jinja Budondo 2/12/2009 Energy Systems II

Annual Report 08/09 23 2.4.3 Overall Solar PV Connections

There have been several initiatives in the dissemination of solar PV systems in Uganda. The UNDP funded Uganda Photovoltaic Pilot Project for Rural Electrification (UPPPRE) which closed in 2003 supported 3150 connections. This initiative targeted the removal of barriers to commercial PV dissemination. After UPPPRE, came the BUDS- ERT approach through which 7,566 connections have so far been made. The BUDS-ERT approach focuses on providing performance based grants for SHS and institutional systems. Other ERT Components namely; Ministry of Water and Environment, Ministry of Education and Sports and Ministry of Health also installed solar energy packages under ERT totaling to 942 PV systems making a total of 8,508 installations under ERT. Parallel to the ERT is the GTZ project. Before and during these interventions, some commercial sales have been made by private solar companies without assistance form Government whose contributions can only be estimated. The solar PV connections therefore are as follows:

i) Before UPPPRE (estimated) 1,000 ii) Under UPPPRE 3,150 iii) Parallel to UPPPRE 1,000 iv) Under ERT 8,508 v) Parallel to ERT 4,500

Total 18,158

Given the set up of settlement in the rural areas where the homesteads are scattered, grid access will remain a big challenge. Solar PV connections have a potential for acceleration and even overtaking grid connections.

2.4.4 Geothermal Development

The Ministry of Energy, through the Department of Geological Survey and Mines continued to support exploration of geothermal potential in the Rift Valley Region. During the Financiall Year, drilling of shallow boreholes to a depth of 200-300m for temperature gradient measurement in Katwe, Buranga and Kibiro was completed and the gradient measured (30-36˚C/km) is slightly above the global average of 30˚C/km, which suggests deep reservoirs in Katwe and Kibiro or geothermal reservoirs offset from the drilled areas. There is therefore a need to carry out additional studies to locate the geothermal reservoirs and drilling targets in the two areas. The fourth area, Panyimur in Nebbi district, has indications of a geothermal prospect following the results of the petroleum drilling programme that has encountered high temperature gradients (Maximum 80˚C/km) in the area close and east of the surface manifestations (hot springs). This area needs to be investigated.

24 Annual Report 08/09 3. Capacity Building

his chapter covers capacity building undertaken by the Rural Electrification Agency during 2008/2009 Tfinancial year. 3.1 Sida Technical Assistance

REA continued to receive institutional capacity building under Sida technical assistance which has now progressed to Phase II. The scope of the technical assistance was to develop REA and equip its staff with skills, competence, systems and tools required to efficiently carry out the obligations of the Agency both in the short and long term.

The defined scope of activities covered the following areas:- • Policies and institutional framework (mainly a continuation of Phase I). • The Cooperative Model/User-based Operation, management and control of RE Schemes.

3.1.1 Policies and Institutional framework

The components of this activity included:-

Subsidy Policy. The consultant (Grontmij) submitted a final draft policy which has been reviewed.

Business Plan 2008 – 2011. The consultant submitted the last draft of the development of a new Business Plan for the period 2008 – 2011.

Operationalisation of Rural Electrification database. The consultant submitted the “Monitoring and Evaluation” final draft manual.

3.1. 2 The Cooperative Model/User-based Operation, management and control of RE Schemes

The components of this activity included:- Completing the setting up of the Bundibugyo Electricity Cooperative Society (BECS) and transforming the cooperative study report into a standard manual. Building the cooperative model in Pader – Abim electricity project following the footsteps of Bundibugyo. The Cooperative is called PACMECS. More work on the Nyalit and Lubongo schemes to establish their feasibility and development of the business plan.

3.2 Staff Training Programme

A staff training programme was incorporated in the 2008/09 Budget and Work Plan and accordingly implemented during the financial year. The following training courses and workshops were undertaken by various members of staff. Report on Staff Training for the Financial Year 2008/2009

Annual Report 08/09 25 Voucher Beneficiary Institute Course Period

91731 Mr. Sakwa Eric - Institute of Internal Workshop – Modern 31st July – 1st August (IA) Auditors Techniques & Strategies 2008 for Combating Fraud Ms. Diana Balihikya – Risk at Work Place

(Assistant Accountant) 91839 Ms. Evelyne Nyakana – Human Resource Effective Records 26th – 27th August 2008 (Registry Clerk) Agency Ltd Management 91855 Mr. Richard Muhangi – Continental Tendering, Contracting 08th – 26th September (GIS/ICT Officer) Management and Procurement for 2008 Consultancy Development Projects 91932 Mr. Charles Sabiiti - Institute Certified Annual Seminar – 22nd – 24th October ( MF& A) Public Accountants Keeping Afloat in a 2008 of Uganda Competitive Business Environment 92021 Mr. Godfrey Arusha Donor Conference 10th – 11th November Turyahikayo – (ED) on Regional strategy 2008 Mr. Bena Benon – on Scaling up Access (PVTMA Officer) to Modern Energy Services 92068 Andrew Muguwa – Erlangen , Germany PSSTMSINCAL Training 10th – 12th December (SPE ) 2008 Phillip Ggayi – (SPE) 92157 Mr. Richard Muhangi – Marcus Evans – Certified Information 2nd – 3rd February 2009 (GIS/ICT Officer) Nairobi Kenya Systems Auditor (CISA) 92216 Mr. Sakwa Eric - (IA) The Institute of Tools & Techniques 24th – 27th February Internal Auditors - Training 2009 Uganda 92225 Ms. Diana Balihikya – Continental Financial Management 02nd – 20th March 2009 (Assistant Accountant) Management of Donor Funded Training Projects 92275 Ms. Nantume Deborah Cairo Egypt Renewable Energy & 01ST – 12TH March 2009 – (SCE) Energy Efficiency 92371 Mr. Charles Sabiiti - Marcus Evans – The Annual Executive 5th – 6th may 2009 ( MF& A) Nairobi Kenya Conference “ Finance Director’s Forum” 92388 Mr. Godfrey Hamburg & Hanover The 4th Germany Africa 20th – 22nd April 2009 Turyahikayo – (ED) , Germany Forum 92394 Bena Benon Senegal Study Tour on Solar PV 15TH – 21ST April 2009 Mini - Grids 92458 Ms. Annette Katuramu The Chartered IPSA & CIPS Pan – 26th 7& 27th May 2009 – ( Procurement Institute of African Conference Officer) Purchasing & Supply 92473 Mr. Godfrey Maputo African Electrification 9th – 12th June 2009 Turyahikayo – (ED) Mozambique Initiative Practitioners’ Workshop

26 Annual Report 08/09 4. Short To Medium Term Plans 4.1 Projects continued from 2008/09

Projects that started in 2008/09 and were not completed will be continued in 2009/10. These projects have been detailed in part 2 of this Annual Report.

4.2 Projects Planned for 2009/10

Schemes planned for implementation in 2009/10 are long standing priority Government electrification schemes that are implemented under two lots including schemes under UMEME and schemes outside the UMEME concession footprint .

4.2.1 Schemes within UMEME Concession Footprint:

Upon preliminary surveys conducted by REA, UMEME Ltd is requested to provide quotations for construction of grid-extension projects within their one (1) km footprint. Once the quotations are verified and accepted by REA, UMEME issues invoices against which payments are made from the Rural Electrification Fund. The following table shows schemes implemented by Umeme during the financial year:

Table I: Schemes under UMEME footprint and Environs

Item Scheme Location UMEME Cost 1 Barodong Apac 59,142,214.00 2 Kabwoge - Kapeeka Nakaseke 74,100,465.00 3 Kiryanongo - Kiwoko Nakaseke 89,232,339.00 4 Butiikwa - Kiwoko Nakaseke 156,717,814.00 5 Ibaare Bushenyi 210,721,561.00 6 Nyamitanga Bushenyi 159,087,369.00 7 Buwesa Health Centre Butaleja 167,402,604.00 8 Pajimo Barracks Kitgum 402,846,584.98 9 Upper Centre Apac Apac 59,995,555.00 10 Wanyange Trading Centre Jinja 57,686,743.00 11 Nakabango Trading Centre Jinja 112,899,045.00 12 Akar Village Apac Apac 53,351,385.00 13 Namaganda TC Kamuli 84,833,788.00 14 Karera Technical School & Environs Bushenyi 508,070,155.00 15 Kibingo Girls and Environs Bushenyi 228,369,951.00 16 Semuto - Kikyusa Nakaseke 426,774,556.00 17 Kichwamba - Kabogo, Bunyaruguru Kasese 118,582,114.00 18 Mbulamuti - Bugondha Kamuli 209,199,929.00 19 Kitwe Trading Centre Bushenyi 76,049,406.00 20 Miranda Kagina Rukungiri 207,494,193.00 21 Bugodi Mayuge 369,289,927.00 22 Akere Village Apac 82,873,017.00 23 Kisanyusa Kiwoko Nakaseke 108,064,276.00 24 Agulu Village Nakaseke 78,843,006.00

Annual Report 08/09 27 25 Rwabuza Bushenyi 100,776,715.85 26 Mirere Bushenyi 177,296,217.00 27 Rwensera, Kinena & Kabworo Kibale 378,754,415.29 28 Sipi Sec Sch Kapchorwa 54,658,034.00 29 Chema Trading Centre Kapchorwa 73,152,128.05 30 Agro-processing Centre for Women Kapchorwa 400,000,000.00 31 Agweng Lira 103,094,081.00 32 Bukoto Kibubanimba - Kikamulo Nakaseke 560,000,000.00 33 Bulangira Mbale 120,000,000.00 34 Rumbugu Rukungiri 707,226,871.00 35 Buyambi Parish Mityana 116,342,420.00 Total 6,892,928,879.17

4.2.2 Schemes outside UMEME Concession Footprint

For schemes largely outside the UMEME footprint, REA procures services of competent construction companies to implement the required grid-extension projects on turnkey basis in line with Public Procurement and Disposal of Public Assets Authority (PPDA) procurement guidelines. The following table gives the list of such schemes done during the financial year.

Table II: Schemes Outside UMEME footprint

Item Scheme Name Location Total Estimated Cost 1 Kitgum - Padibe – Lukung Kitgum 2,297,646,067.20 2 Budusu/Bunawale Butaleja 864,133,841.42 3 Mutaka Kaoline Mines Bushenyi 150,000,000.00 4 Murro Masindi 200,000,000.00 5 Isagara Masindi 150,000,000.00 6 Nyabyeya Masindi 200,000,000.00 7 Tembo - Bulonge – Kiyunga Iganga 2,000,000,000.00 8 Kaboli - Agule – Kameka Pallisa 1,000,000,000.00 9 Kwapa Sub-county including Asinge Tororo 500,000,000.00 10 Khamoto Mbale 500,000,000.00 11 Mooni Mbale 1,600,000,000.00 12 Nkonkonjeru - Kiwayi – Kisoga Mukono 1,000,000,000.00 13 Kiburara & Environs, Kabarole Kabarole 1,500,000,000.00 14 Lyama & Kakoli Subcounties, Bukedea Bukedea 1,056,101,892.67 15 Namwaalo Village & Environs. Mbale 380,205,502.07 16 Buhunga/Rukungiri and Ruhinda/Kashenshero Rukungiri 3,848,631,248.56 17 Buyanja -Nyabitete/Nyakiju. Rukungiri 1,508,466,895.37 18 Kyamugambira & Nyaruzinga Environs (PBID- Bushenyi 508,570,019.62 project) 19 Bugongi – Kyabuyonga Environs. Bushenyi 413,442,119.98 20 Paidha Grid-Extension Schemes Paidha 143,285,534.75 21 Migyera-Nakitoma Nakasongola 1,524,579,207.21

28 Annual Report 08/09 22 Bujwaha & Bulyango Environs Hoima 667,647,740.87 23 Itojo Sub-county Headquarters Ntungamo 1,337,747,594.22 24 Mpaama – Nakyera Ntungamo 1,749,413,192.31 25 Kabuhome TC and Environs Ntungamo 753,047,475.29 26 Matinza Kisoro 372,959,481.70 27 Murora TC Kisoro 986,857,260.15 28 Nakulyaku-Nabwigulu. Kamuli 451,034,084.93 29 Namutumba-Bugobi, Namutamba 2,231,695,428.10 Total 29,895,464,586.42

4.3 Proposed Grid Extension Projects for Implementation by the Norwegian Government.

The Government of Uganda, through the Rural Electrification Agency, submitted a project proposal to the Norwegian Government for implementation. To date, the Norwegian Government has provided funding to the Government of Uganda to carryout feasibility studies to assess the economic, financial and technical viabilities of the proposed projects. The Norwegian government, basing itself on this study, shall decide on the projects for funding. The projets are: i) Lira – Adwari - Abim - Kotido and Environs (360 km of HV Route Length) including Apala - Aloi - Abako - Bata - Dokolo and the following tee-offs: Adwari – Patongo, Dokolo – Kaberamaido, Spur Agwata, Spur Kwera, Spur Ataparaolam, Spur Amache, Spur Lotukj , Spur Amache, Spur Aremo, Spur Kailong, Spur Kacheri, Spur Watakau, Spur Kalokurok ii) Parak Mission – Awere and Environs (90 km of HV Route Length) including the following tee-offs:Odek – Corner Kilak, Spur Lokwir, Spur Lakwatomer, Rackoko – Awere – Arum. iii) Gulu – Adjumani – Moyo and Environs (300 km of HV Route Length) including the following tee-offs:Awer – Amuru, Atiak – Bibia, Pakele – Ofua, Adjumani – Obongi, Adjumani – Ogujepe, Dzaipi – Arinyapi, Laropi – Dufile – Arra. iv) Mubende – Kyenjojo and Environs (100 km of HV Route Length) including the following Tee offs:- Kyegegwa – Bujubuli, Spur Kibaliga, Spur Kasule, Spur Hapuyo, Spur Butunduzi, Spur Nyamikoma. v) Kabale – Kisoro (comprising of Hamurwa, Busanza & Kanungu) and Environs (190 km of HV Route Length) including the following Tee offs:- Spur Kagarama, Humurwa – Kanungu, Spur Bunagana, Spur Nyarusiza, Spur Matinza, Spur Kagunga, Spur Mission, Spur Nyakabaya, Spur Nyakabungo, Spur Rwondo, Spur Muko - Kacerere – Bufundi. vi) Rakai- Kabingo, Lumbugu – Lyantonde, Lyantonde – Kaliiro – Buyaga - Ssembabule and Ssembabule – Ntusi – Lwemiyaga and Environs (280 km of HV Route Length) including the following Tee offs:- Spur Bijjaba, Spur Kitamba, Spur Nyamiyongo, Spur Katunguru, Spur Kashojo, Spur Mugabbi.

4.4 Rural Electrification Projects and Activities Approved for Implementation During the ERT Phase II

In November 2001, the World Bank approved the Energy for Rural Transformation (ERT) program as a three-phase Adaptable Program Loan (APL). The purpose of the ERT program is to develop Uganda’s energy and information/ communication technologies (ICT) sectors, so that they make a significant contribution to bringing about rural transformation, i.e., these sectors facilitate a significant improvement in the productivity of enterprises as well as the quality of life of households. The objectives of Phase I were to put in place a functioning, conducive environment and related capacity for commercially-oriented, sustainable service delivery of rural/renewable energy and ICTs. Phase II will accelerate investments and increase the regional coverage by shifting from the Phase I case-by-case approach to processing sub-projects through the institutional framework.

Annual Report 08/09 29 Accelerated access to rural electrification is a key indicator during the ERT Phase II and as such, the Rural Electrification Agency acting as the major rural electrification implementing body submitted grid extension projects and renewable energy projects for funding during the 3 year ERT Phase II. A break down of the approved budget for implementation of Rural Electrification projects totaling to USD 42,632,745 (Forty Two million six hundred thirty two thousand seven hundred forty five) is shown in the table below. These activities will be implemented during the three years of ERT Phase II that commence in the 2009/2010 financial year.

Projects to be implemented during the ERT Phase II

Training Item Project Amount in USD In USD 1 Soroti-Katakwi 3,052,583 100,000 300,000 2 Ayer- Kamudini and Bobi Minakulu 2,144,280 100,000 3 Ibanda-Kazo-Rushere 3,872,160 100,000 4 Paicho-Patiko-Palaro 5,617,174 100,000 5 Opeta-Acokora 905,200 60,200 6 Ruhiira Millenium Villages Project 3,043,682 98,000 7 Ntenjeru 216,000 8 Amatte Gaitu 1,712,000 100,000 9 Waki and Buliisa 2,078,880 10 Buseruka 455,280 11 Minigrid Development 5,600,000 12 New Electricity Distribution Networks 3,235,306 13 Community Projects 2,000,000 14 Agriculture projects 3,000,000 15 Support to Financial Institutions - PVTMA 200,000 16 PVTMA 4,242,000 300,000 200,000 Subtotal 41,174,545 1,158,200 300,000

4.5 Projects Submitted for Funding to the Japanese Government for JICA Phase III

The Government of Uganda shall continue its partnership with the Japanese Government in the development of rural electrification infrastructure as a means of alleviating poetry and promoting rural economic growth. As such, the Agency submitted the following grid extension projects for funding by the Japanese government through the Japanese International Development Agency (JICA) Phase III. This programme will follow the success of the JICA

II. The projects submitted for implementation during JICA III are listed in the table below.

Project Scope District 1 Bale - Galilaya and Kayunga - Busaana Kayunga

2 Bikira - Namirembe and Masaka - Nyabyajjwe Masaka

3 Kiganda - Mubende Mubende & Mityana

4 Mayuge - Namaingo, Lumino - Namaingo - Bumeru, Mayuge, Iganga, Luuka

30 Annual Report 08/09 5 Lutolo - Lufudu, Iganga - Namukudembe - Bulango & Lumino and Luuka - Nakabugu

6 Kitagata - Kasana, Kitagata - Karisizo - Rukungiri Bushenyi

and Kitagata - Kitembe - Katwe - Kabwohe

7 Hoima – Kibugubya – Mbarara – Kinyara via Hoima Nyantonzi

4.6 Grid Extension Projects Proposed to the African Development Bank for Funding.

The Government in its bid to realize substantial national wide access to modern energy through electricity has through Rural Electrification Agency submitted grid extension projects for funding. Preliminary studies have been conducted the following projects submitted to the African Development Bank for funding. However, no confirmation has been received yet from ADB.

Project District MV Length a Apac-Chegere- Alemi Apac 43 b Kitgum-Palabek-Kai, Kitgum 230 Kitgum-Madi, Opei-Padibe and Kitgum c Katakwi-Moroto-Katikekile- Katakwi, Moroto, Sironko 370 Nakapiripit-Sironko Nakapiripit d Kapchora-Bukwa-Suam Kapchorwa and Bukwa 70 e Mayuge-Bwondha Landing Mayuge 60 site Kasambira-Bugulumya- Kamuli 35 Bukuuta f Myanzi-Kiganda Mityana/Mubende 30 g Mityana-Lusalira Mityana/Mubende 40 h Kasali-Kifuta-Bukala, Rakai 75 Kifuta-Kabira-Lwaggulwe- Mitondo-Lubumba i Kakumiro-Kakindo-Birembo Hoima, Kibaale, Kiboga 160 Technical-Nalwego-Hoima/ Nkonko j Ibanda-Rutoma and Ibanda 75 Kamwenge-Rukunyu HC k Muhanga-Kyempene- Kabale and Rukungiri 115 Kanungu via Kisiizi l Ruhoko-Nyaruhika Ibanda 25

Annual Report 08/09 31 5.0 Financial Performance For The Year 2008/2009

The Rural Electrification Fund was set up following the enactment of the Electricity Act 1999. Pursuant to Section 65 (1) and (4) of the Act, the Statutory Instrument 2001 No. 75 that provided for establishment of the Rural Electrification Board to oversee management of the fund was issued. Under the same instrument, the Rural Electrification Agency was also established as a Secretariat of the Board among other functions. The monies of the fund consist of money appropriated by Parliament, any surplus moneys made from operations of the Electricity Regulatory Authority, a levy of 5% on transmission bulk purchase of electricity from generation stations and donations, gifts, grants and loans acceptable to the Minister responsible for finance. During the financial year under review, the fund received monies from IDA Credit No. 3588-UG, GEF Grant No. TF050371-UG Government of Uganda through treasury releases and the levy on transmission bulk purchases. A summary of the Agency’s financial performance is reflected in the tables below showing receipts and application of the funds.

5.1 Highlights of Financial Performance

5.1.1 Receipt of Funds

Receipts 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 Cumulative To 30.6.2009 Funder (Shs) (Shs) (Shs) (Shs) (Shs) (Shs) (Shs) IDA 3,973,605,898 2,496,763,406 10,415,187,848 7,175,803,198 22,036,922,788 20,211,010,950 66,309,294,088 GEF 704,370,776 680,430,345 5,085,943,287 3,150,146,298 2,679,023,318 3,567,361,828 15,867,275,852 SIDA 0 0 978,873,620 1,291,157,629 7,577,982,383 6,194,998,189 16,043,011,821 GOU-Treasury 175,652,856 0 13,834,937,376 2,555,564,432 1,684,000,000 11,876,913,700 30,127,068,364 GOU-Levy 2,007,946,742 1,126,185,975 11,742,211,782 11,305,486,814 8,510,416,261 19,787,839,605 54,480,087,179 JICA 12,482,436,750 12,482,436,750 Total Receipts 6,861,576,272 4,303,379,726 42,057,153,913 25,478,158,371 42,488,344,750 74,120,561,022 195,309,174,054

During the financial year, the Fund received Shs. 74,120,561,022 representing an increase of 75% over the previous financial year’s receipts of Shs. 42,488,344,750. Receipts from IDA –Credit accounted for 27% of the total amount received during the year while receipts from the Government of Uganda in respect of both the Transmission levy and Treasury releases contributed 43%. GEF, SIDA and JICA grants constituted 5%, 8% and 17% of the fund receipts respectively.

5.1.2. Application of Rural Electrification Funds

Expenditure 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 Cumulative To 30.6.2009 Category (Shs) (Shs) (Shs) (Shs) (Shs) (Shs) (Shs) Rural Electrification 2,190,160,038 793,812,747 23,753,678,729 13,161,710,190 27,510,004,157 57,271,346,842 124,680,712,703 Projects Rural Electrification 1,162,872,835 1,428,940,312 2,147,810,757 6,507,827,395 10,006,410,566 9,143,593,234 30,397,455,098 Programs Undertaken by Ministries Operations of Rural 1,029,529,676 3,311,441,919 6,050,891,506 4,827,718,637 4,700,084,829 5,475,007,966 25,394,674,533 Electrification Board and Agency

Total Expenditure 4,382,562,549 5,534,194,978 31,952,380,992 24,497,256,222 42,216,499,552 71,889,948,042 180,472,842,334

32 Annual Report 08/09 A total of Shs. 195,309,174,054 was received in the Fund on cumulative basis since operations of the Fund became effective to end of the financial year. Of this cumulative total amount, receipts from IDA-Credit accounted for 34% while receipts from GEF, GOU/Transmission Levy, SIDA and JICA represented 8%, 43%, 8% and 7% respectively.

5.1.2. Application of Rural Electrification Funds

Total expenditure incurred during the year was Shs. 71,889,948,042 of which 81% is attributed to the construction of rural electrification projects while rural electrification support programs undertaken by the participating ministries and operations of REA/REB accounted for 13% and 6% of the total expenditure respectively. The expenditure on REA/REB operations arose mainly from project costs incurred on activities related to facilitating rural electrification growth, establishment of a comprehensive data base for rural electrification and promotion of the institutional sustainability of the Rural Electrification Agency. The key tasks undertaken during the year included:- i) Completion and commissioning of several projects under ERT Phase I ii) Review of feasibility studies and business plans for projects sponsored by the private sector. iii) Implementation of rural electrification projects funded by Government of Uganda through Treasury releases and the Transmission Levy. iv) Selection and packaging of community projects. v) Implementation of the Solar Photovoltaic Target Market Approach.

Total expenditure of Shs. 180,472,842,334 was incurred from the Fund on cumulative basis since commencement of the Fund’s operations to end of the financial year. Of this cumulative total, the construction of rural electrification projects constituted 69% while expenditure on the rural electrification programs undertaken by the participating ministries and operations of REB/REA accounted for 17% and 14% respectively.

5.2 Rural Electrification Projects

The expenditure was incurred in connection with construction power lines and is analyzed according to the funding source as follows:-

Cumulative To PROJECTS 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 30.6.2009 Funder (Shs) (Shs) (Shs) (Shs) (Shs) (Shs) (Shs) IDA 992,839,038 65,531,742 247,680,000 1,757,065,254 9,769,236,196 21,850,038,027 34,682,390,257 GEF 0 0 4,394,864,664 792,166,664 1,043,806,541 581,158,733 6,811,996,602 SIDA 0 0 0 0 6,300,855,101 6,938,698,761 13,239,553,862 GOU-Treasury 175,652,856 0 9,491,173,188 2,555,564,432 7,363,972,155 19,586,362,631 GOU-Levy 1,021,668,144 728,281,005 9,619,960,877 8,056,913,840 10,396,106,319 9,007,696,916 38,830,627,101 JICA 11,529,782,250 11,529,782,250 Total 2,190,160,038 793,812,747 23,753,678,729 13,161,710,190 27,510,004,157 57,271,346,842 124,680,712,703 Payments

Annual Report 08/09 33 5.3 RE Support Programs – Ministries

The design of the ERT project incorporated several Ministries which are responsible for planning and implementation of their own energy service requirements. The expenditure is analyzed according to the funding sources as follows:-

Particiapting Cumulative To 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 Ministries 30.6.2009 Funder (Shs) (Shs) (Shs) (Shs) (Shs) (Shs) (Shs) IDA 595,947,956 1,428,940,312 1,825,761,723 5,257,402,138 7,964,999,810 5,168,544,445 22,241,596,384 GEF 566,924,879 0 155,978,828 1,040,503,482 1,819,280,117 3,708,372,592 7,291,059,898 SIDA 0 0 0 0 0 0 GOU-Treasury 0 0 0 0 0 GOU-Levy 0 166,070,206 209,921,775 222,130,639 266,676,197 864,798,817 JICA Total 1,162,872,835 1,428,940,312 2,147,810,757 6,507,827,395 10,006,410,566 9,143,593,234 30,397,455,098 Payments

5.4 Operations (REA and REB)

The reporting financial year was effectively the sixth year of operation of the Rural Electrification Agency and completion of the ERT Phase I Project. The desire by Government to intensify rural electrification coverage necessitated commitment of more financial resources to strengthen organizational structure and processes to facilitate rural connectivity to electricity. To this end, the Agency continued to build capacity through provision of technical support to projects in terms of selection and appraisal of project proposals for award of subsidies. The Agency also packaged several community projects and implemented in a timely manner GOU funded rural electrification schemes.

The operational expenditure is analyzed according to the funding sources as follows:-

REA/REB Cumulative To 2003/2004 2004/2005 2005/2006 2006/2007 2007/2008 2008/2009 Operations 30.6.2009 Funder (Shs) (Shs) (Shs) (Shs) (Shs) (Shs) (Shs) IDA 938,691,499 2,158,622,897 2,636,784,239 1,439,571,600 1,345,698,740 659,968,098 9,179,337,073 GEF 0 580,430,345 735,416,712 69,327,562 236,590,263 109,929,759 1,731,694,641 SIDA 0 0 978,873,620 1,291,157,629 550,914,697 150,236,683 2,971,182,629 GOU-Treasury 0 0 0 0 0 0 GOU-Levy 90,838,177 572,388,677 1,699,816,935 2,027,661,846 2,566,881,129 3,602,218,926 10,559,805,690 JICA 952,654,500 952,654,500 Total 1,029,529,676 3,311,441,919 6,050,891,506 4,827,718,637 4,700,084,829 5,475,007,966 25,394,674,533 Payments

34 Annual Report 08/09 6.0 Implementation Constraints And Proposed Solutions.

Rural electrification is also impacted by social and political issues. One aspect is the local community-level problems associated with the right of way for electricity lines as they traverse the countryside. The other aspect is the politics surrounding electricity, whereby political leaders want their constituencies prioritized for service, thus exerting undue pressure on the responsible institutions inspite of the limited resources. These issues form the basis of the issues which have been encountered during the period of reporting. The very issues are highlighted below.

1. Limited Government budget: Appropriations from the Consolidated Fund have been inadequate and inconsistent. It is instructive that adequate funds be committed from the Consolidated Fund to support the Rural Electrification Programme so as to give confidence to development partners about Government’s seriousness about rural electrification and also take care of on-going pressures for electricity services all over the country. Otherwise, the ambitious targets we have set will never be met.

2. Issues of wayleaves and land compensation: The programme has continued to meet some resistance on wayleaves. Compensation claims are coming from communities even when nothing of economic value has been tampered with. While the Rural Electrification Agency normally requests local authorities to help sensitize the population in those areas to allow the passage of lines due to the importance of electricity, the results have not been positive as the Agency has received lawyers’ petitions to sue or contractors are blocked from erecting poles. Unfortunately, it is usually the local elite who are responsible for this anti-development action.

As a rule, Government has to compensate those individuals whose property (crops, plantations, buildings, etc) is materially affected. However, those individuals not falling in this category should not demand compensation because the line does not compromise the use of the land. Most importantly, it should be noted that if limited resources are wasted on compensation, there will be very little to build the infrastructure, thus negatively impacting on how far Government can achieve its rural access targets.

3. Connection rates: Rural electrification is capital intensive. Yet, when a scheme is constructed, connection rates remain very low. Experience shows that in areas where schemes have been constructed, only about 10% of the originally projected consumers get connected after two years. In order to cure this problem, REA introduced the concept of community contributions for the low voltage network (as already detailed). However, the community leadership in most cases has not been able to mobilize the communities to make the necessary contributions once REA has communicated the costs of these schemes to them.

4. Pressure for electrification: As already indicated above, there is a lot of pressure from leaders and communities to have electricity extended to their areas. Focus is particularly on grid-extension, whether it makes financial/economic sense or not. Yet, much of the demands could be met by other means, like solar electrification (Solar PV Systems). With the publication of the recently finished Rural Electrification Master Plan, we have rationalized our planning perspective. However, the bottom line is that these pressures can only be addressed if there are reasonable financial resources to extend either grid or off-grid power.

5. Inadequate local private sector capacity in the power industry: One of the challenges the programme has experienced is that of inadequate local capacity to invest (especially in renewable energy projects) and undertake construction of infrastructure. This has resulted into the bulk of renewable energy projects supported by the programme being undertaken by foreign developers, limited credible bids for construction works and limited bids for operating built networks and delayed project development processes. 6. Inadequate productive uses of electricity.

Annual Report 08/09 35 Low productive uses of electricity reduce the financial viability of rural electrification initiatives. Because end users are not using the electricity productively, there appears a low demand factor and revenue accruing to the end users remains low. Ultimately, this reduces the economic benefits of the rural electrification.

36 Annual Report 08/09 7.0 Conclusion

The 2008/2009 Financial Year marked major milestones in the implementation of the Rural Electrification Programme. In particular, the Energy for Rural Transformation Project came to a successful close and all the projects were commissioned and handed over to operators. Projects financed under Sida II was also coming to a close while two projects out of four financed under JICA II had been commissioned. The Indicative Rural Electrification Master Plan was also concluded and was to be the planning tool for future projects. The Rural Electric Cooperative model was also introduced as part of the public-private partnership arrangements in network operations.

The Financial Year also saw the conclusion of the planning and negotiations with the World Bank for ERT Phase Two, which was expected to achieve effectiveness by end of 2009. More proposals were made to other development partners including JICA, NORAD and African Development Bank. The diversity of interest in rural electrification from development partners is a positive indicator for the Rural Electrification Programme. While connection rates on rural networks continued to grow slowly, there was an overall improvement of over 2,000 connections above the previous year. This improvement was, however, not big enough to realize the required scale up. More needs to be done in the coming plans to realize many more connections. Mechanisms being worked out include connection subsidies under the Out-put Based Aid programme under the ERT Project. Connection subsidies and consumer credits were already in operation under the PVTMA. Consumer credits may also be considered in the near future to ease the burden of connection and house wiring.

Another major challenge was that of wayleaves. Not only does it consume valuable resources which would otherwise finance additional infrastructure to provide services, it also drags the implementation of projects as threats of litigation are invoked and quite an amount of time is spent on seeking consent for use of people’s land. More enhanced levels of sensitization, including the involvement of local leaders, will be needed to ease the issue.

Notwithstanding the above challenges, there is evidence that the lessons learnt and the experience gained by the various institutions involved in the Rural Electrification Programme, especially the Rural Electrification Agency, to- date are being used to put in place the right mechanisms for a successful Rural Electrification Programme.

Annual Report 08/09 37 8.0 Audited Reports

38 Annual Report 08/09 Annual Report 08/09 39

40 Annual Report 08/09

Annual Report 08/09 41

42 Annual Report 08/09 Annexes ANNEX -1--- Community Schemes Implemented On Cost Sharing Basis Between The Community And Rea.

Scope of Works (Km)

No. Scheme Location 33KV3ф 33KV 1ф 11K V3ф LV 1ф LV 3ф Transformers 1 Electricity supply Banda 0.85 Banda, 50KVA to Mukutogundu Community Village 2 Electricity supply to Bushenyi 0.9 4.7 1.8 Rwabutura, 2x Rwabutura Itendero 100KVA 3 Electricity Supply to Busia 0.01 0.3 0.5 100KVA Buteba Health Clinic 4 Electricity supply Busia 0.015 0.6 0.43 Busitema to Busitema Health 200KVA Centre 5 Electricity supply to Kamwenge 0.15 0.5 Buremba, Buremba Junction Road 50KVA Trading center 6 Electricity supply to Mbarara 0.42 0.1 50KVA Theodore Kaahwa Sabakaki trading center 7 Electricity supply Mpigi 2.7 Nakirebe to Nakirebe village, 100KVA Masaka road 8 Electricity Supply Mukono 0.12 Namanve to Vero Foods at 315KVA Namanve 9 Electricity supply to Rukungiri 0.15 0.75 0.57 0.3 2x 50KVA Lucia health centre Kagamba 10 Electricity supply Sembabule 0.04 0.5 3.05 to Bituntu trading center 11 Electricity supply to Sembabule Katyanza Trading center 12 Grid extension to Tororo 0.02 0.5 0.15 Siwa 50KVA Tororo District: Siwa Tororo 0.55 0.4 0.95 Kalait 50KVA kalit Tororo 0.07 0.7 0.35 Pajwesa Pajweda 200KVA

Annual Report 08/09 43 13 Electricity supply to Wakiso 1.9 0.14 0.15 kiira 50KVA Kiira Community

ANNEX 2: SMALL SCHEMES IMPLEMENTED THROUGH UMEME AND FINANCED BY REA IN FY 2009/10

No. Scheme Name Location Amount Electricity supply to 1 Bombo 89,232,339 Kiryanongo Kiwooko Electricity supply to 2 Bombo 74,100,465 Kabogwe kapeka Electricity supply to Be iwe 3 Lira 58,148,776 trading center Electricity Power supply to 4 Mityana 116,342,420 Buyambi Parish Electricity supply to 5 Nakaseke 156,717,814 Butiikwa Kiwoko Electricity supply to 6 Kamwenge Road 234,019,814 Nyantsimbo Electricity supply to Katete 7 Mbarara-Kabale Road 852,436,932 Mbarara Electricity Supply to Vero 8 Mukono 49,909,688 Foods at Namanve Electricity supply to 9 Mukono 57,167,684 Kahunga Investment limited Electricity supply to 10 Jinja 46,294,913 Nakabango Electricity supply to Kiira 11 Wakiso 76,704,055 Community Electricity supply to 12 Mulamuti Kamuli 209,199,929 Bugodha Electricty supply to 13 Mukutogundu Community Banda 89,080,605 Village Electricity supply to 14 Kamwenge Road 57,682,530 Buremba Junction Electricity supply to Police Mparo Trading Center 15 121,000,036 Training School Hoima Electricity supply to Lugoba 16 Kigoogwa 35,152,115 schools Grid extension to Tororo 17 Tororo 36,696,028 district, SIWA Grid extension to Tororo 18 Tororo 66,762,744.14 district, Kalit Grid extension to Tororo 19 Tororo 57,426,758.16 district, Pajweda Electricity supply to 20 Kabale 10,630,040 Nyakitabire Village Electricity supply to Itendero 21 Intendero Mbarara road 18,080,909 High School

44 Annual Report 08/09 Electricity supply to 22 Nakirebe village, Masaka Mpigi 139,524,580 road Electricity supply to 23 Theodore Kaahwa Sabakaki Mbarara 29,069,602 trading center Electricity supply to Ruyonza Kiruhura, Lyantonde- 24 39,055,762 Trading Center Mbarara road Electricity supply to 25 Rukungiri 227,195,525 Nyakibale-Kanyinya Electricity Supply to Buteba 26 Busia 35,045,373 Health Clinic Electricity supply to 27 Busia 42,674,719 Busitema Health Centre Electricity supply to Kabalye 28 Masindi 256,820,995 police training school Electricity supply to 29 Bushenyi 108,864,830 Kichwamba Electricity supply to Kalera 30 technical school and Kabwohe Kibingo 29,729,126 Environs Electricity supply to 31 Luweero 474,391,057 Semuto-Kikyuusa Electricity supply to Katojo 32 Mbarara-Kabale Road 198,385,389 Industrial estate Electricity Supply to Kazire 33 Mbarara-Kabale Road 62,093,929 Health Products Ltd Electricity supply to 34 Bushenyi 338,676,847 Rwabutura Itendero Electricity supply to Lucia 35 Rukungiri 78,895,598 health centre Kagamba Electricity supply to 36 Apac Town Council 59,142,214 Barodong Village Electricity supply to Buwesa 37 Butalejja 167,402,605 Health Centre Electricity supply to Ibaare 38 Ishaka Kitagata Road 210,721,561 Trading Center Electricity supply to Kabundi 39 Sembabule 75,920,016.03 trading center Electyricity supply to 40 Sembabule 128,385,902.55 Bituntu trading center Electricity supply to 41 Sembabule 66,818,315 Katyanza Trading center Electricity supply to 42 Jinja 57,686,743 Wanyange Trading center Electricity Supply to 43 Jinja 112,899,045 Nyakabango Trading centre Electricity supply to 44 Kamuli 124,700,019 Nabukone Trading center Electricty supply to Bugiri 45 Entebbe 174,970,853 Bukasa

Annual Report 08/09 45 Electricity supply to Bobi 46 Gulu 88,140,798.92 Community polytechnic Electricty supply to Mafubira 47 Jinja 44,106,110 Hill Community Electricity supply to Bico 48 Kaberebere Isingiro 23,686,172 petro station Electricity supply to 49 Kamuli 101,368,355 Nyamaganda Health Center Electricty supply to Kakira, 50 Kidhuna TC and Izaniro Kamuli District 490,648,731 community farm Electricity Supply to 51 Kanungu Road 105,976,703.94 Kasoloza- Rucence Electricity supply to 52 Kihurura 129,233,790 Bwesharire farm Electricity supply to Kisamba 53 Kikonda Bamunanika 42,877,950 Mugerwas Cofee Factory Electricity supply to 54 Cranefish Limited and Kiyule Entebbe 157,194,617 Environs Electricity supply to Nakoosi 55 Mukono 135,648,695 Village Electricity supply to Kironda 56 Nyimbwa Subcounty 43,476,606 Agro Industries Electricity supply to Kabingo 57 Rukungiri 1,783,900 Coffee processors Electricity supply to Katobo- 58 Rukungiri 230,844,558 Nyabukuku-Rukungiri Electricity supply to Uganda 59 Petroleum Institute, Kigumba, Masindi 80,804,452 kigumba Electricity supply to Victoria 60 Gulu 55,440,862 seeds Ltd Electricity supply to 61 Rukungiri 56,984,085 Rwenyangi-Rwentuha TC Electricity supply to Agulu 62 Apac 66,816,106 Village Electricity Supply to 63 Masindi 52,853,741 Kiryanga Village Electricity Supply to Hill Side 64 65,090,020 Collage at Ndibulungi Electricity Supply to Kitwe 65 Bushenyi 76,049,406 Trading Centre, Electricity Supply to Bugodi 66 Iganga 369,289,927 Trading Centre, Electricity Supply to Kibingo 67 Bushenyi 228,369,951 Girls and Environs, Electricity Supply to 68 Rukungiri 207,494,193 Miranda-Kagina, Electricity Supply to Akere 69 Apac 82,873,017 Village,

46 Annual Report 08/09 Electricity Supply to 70 Nakaseke 108,787,859 Kisanyusa-Kiwoko, Electricity Supply to 71 Bushenyi 75,180,100 Rwabuza Trading Centre, Electricity Supply to Chema 72 Kapchorwa, 63,113,421 Trading Centre, Electricity Supply to 73 Bushenyi 142,397,745 Micerere Trading Centre, Electricity Supply to 74 Rukungiri 827,147,336 Rumbugu, Electricity Supply to 75 Rwensera, Kinene and Kibale 355,681,432 Kabworo Villages, Electricity Supply to Pajimo 76 Kitgum 402,846,585 Barracks Electricity Supply to Akalo 77 Apac 52,768,691 Village Electricity supply to Upper 78 Apac 59,995,555 center, Apac

Annual Report 08/09 47 48 Annual Report 08/09