The energy sector in Uganda comprises the power, petroleum, new and renewable sources of energy and atomic energy sub-sectors. As one of the key sectors of the economy, energy provides a major contribution to the Treasury such as fuel taxes, Value Added Tax on electricity, levy on transmission bulk purchases of electricity, licence fees and royalties and foreign exchange earnings (power exports). Following liberalization, the power sub-sector is now attracting the largest private sector investments in the country. The sector is also one of the leading employers in the country.

Owen Falls dam Jinja.

Management of the Sector
The Ministry of Energy and Mineral Development (MEMD) is responsible for managing the sector, dealing specifically with energy policy formulation, implementation and monitoring. The power sub-sector covers electricity generation, transmission and distribution including rural electrification. In 1999, following approval by Cabinet of the Power Sector Reform and Privatisation Strategy and the enactment of the new electricity law (The Electricity Act, 1999), the Electricity Regulatory Authority (ERA) was established to regulate the industry. Thus, while the MEMB is responsible for policy, the ERA regulates the industry independently of the Ministry. The Uganda Electricity Board (UEB) lost its monopoly in the sector by this enactment. As part of the liberalization process, UEB was unbundled to create different business entities for generation, transmission and distribution known as Uganda Electricity Generation Company Limited (UEGCL), Uganda Electricity Transmission Company Limited (UETCL) and Uganda Electricity Distribution Company Limited (UEDCL) respectively. Plans are underway to lease out the generation and distribution businesses to private operators on long-term concession. Transmission will however remain a public function in the medium term. New generation capacities will be developed as Independent Power Producer (IPP) projects.

Latest developments in the sector
Access to power has nearly doubled in the last three years due to liberalisation of the power sector. The national access to electricity has risen to 9% in 2004 from 5% in 2001, which was an 80% increase in usage. The installed capacity in Uganda is about 300MW. Over 98% is generated by the hydro-electric plant at Owen Falls Dam. About 4.3% Ugandan house-holds are being connected to the grid system. In the rural areas, about 2% of households have access to electricity, of which less than half is provided through the national grid.

Oil project put off
Uganda’s hopes of finding oil have stalled after Heritage Oil and Gas, the company drilling for it in block three in the Semliki, encountered mechanical problems that forced it to abandon Turaco 2 (the second oil well). Although Heritage Oil made significant progress in drilling Turaco 1 when it encountered traces of oil in 2003, the company was forced to abandon the well in May 2004 after the drill string got stuck in the well, prompting them to bring a bigger rig for the second well. Heritage Oil officials cited instability, including earthquakes and sticky soils which made the drill string get stuck in the well. The company decided to abandon the well in favour of an optimized appraisal programme. Many zones with hydrocarbons, for both oil and gas, were however encountered which encouraged the company to acquire a new rig for a third well.

ESKOM take-over plans ready
Plans to take over the Uganda Electricity Distribution Company Limited (UEDCL) by the Commonwealth Development Cooperation (CDC) and Eskom are ready. Evaluation of UEDCL is complete and Eskom is expected to take over before the end of 2004.

Internal sources to fund Bujagali dam
The National Planning Authority (NPA) is working out a new strategy to finance the construction of two new power dams in Bujagali, setting aside the traditional project financing model by the World Bank. NPA mooted a Hydropower Bond Proposal in April 2004. It involves a 10-year trenched petroleum backed convertible hydro-power and energy development bond as a means of funding the electricity sector.

Biomass trade reaps US$20m annually
A new report has revealed that trading in biomass, especially charcoal, has become the main source of energy for rural industries with the consumption increasing at a rate of 6% per year. The reported, titled, “The Energy Policy for Uganda,” released by the Ministry of Energy and Mineral Development revealed that biomass contributes to the economy in terms of rural incomes, tax revenue and employment. The activity also saves foreign exchange, employs 20,000 people and generates sh36b (about $20m) annually. The report however, added that firewood had greatly contributed to degradation of forests.

Museveni invites US gold giant
In January 2004, President Yoweri Museveni invited one of the largest gold mining companies from America, Anglogold, to come to Uganda. Uganda Investment Authority officials say the company has agreed to send a technical team which would assess the investment opportunities available. Anglogold is listed on the Johannesburg and New York stock exchange markets. From 1999 to 2000, Uganda exported gold worth $ 33.9m. Between 2000 and 2001, gold exports contributed $51.38m while in 2001 to 2002, it was $56.89m. The latest export figures were not readily available.

Solar Power For All By 2010
Government is linking up with micro-finance institutions around the country to implement plans to spread solar power to Uganda’s 230 counties by 2010. Efforts are now underway to secure an estimated US$12.5m which financial institutions would lend to people to access solar energy. The loan would be repayable over two years at an annual interest of 18%.

Government Policy in the Sector
The need for a National Energy Policy exists not only as a Constitutional requirement but also for the facilitation of government’s major programmes such as the Poverty Eradication Action Policy (PEAP), Plan for Modernisation of Agriculture (PMA), decentralization and the liberalised economic environment. The energy policy objectives for Uganda were formulated in the context of the existing economic, social and environmental policies, the nature and linkages of the energy sector with other sectors and international and regional linkages of the sector.
The energy policy recognizes linkages between the energy sector and the other sectors of the economy. In particular, policies on the economy, environment, water resources, agriculture, forestry, industry, health, transport, education, decentralization and land use were taken into consideration.
The energy policy also contributes to the NEPAD initiative by supporting faster development of Uganda’s hydro-power resources through private sector investments, development of interconnections, cross-border infrastructure to facilitate energy trade and sharing of information. It also provides for the exploration and development of petroleum resources and the use of renewable energy resources.

The Role of renewable energy
Uganda is richly endowed with a variety of renewable energy resources which include plentiful woody and non-woody biomass, solar, wind, geothermal and hydrological resources. Presently, with the exception of biomass, only a meager fraction of the country’s renewable energy potential is exploited. It is estimated that other renewable sources of energy, excluding large hydropower, contribute less than 2% of Uganda’s total energy consumption.

Biomass
Biomass (firewood, charcoal and crop residues) plays a very significant role in Uganda’s energy supply. It constitutes over 90% of total energy consumption in the country. It provides almost all the energy used to meet basic needs of cooking and water heating in rural and must urban households, institutions and commercial buildings. Biomass is the main source of energy for rural industries. Trading in biomass energy, especially charcoal contributes to the economy in terms of rural incomes, tax revenue and employment. It saves foreign exchange, employs 20,000 people and generates sh36b (US$20m) per year in rural incomes. Charcoal consumption increases at a rate close to that of urban population (6% per annum). Biomass (bagasse from sugar processing industry) is also used to produce electricity and steam (cogeneration).

Solar energy
Uganda is endowed with plenty of sunshine giving solar radiation of about 4-5 kWh/m2/day. This level of insulation is quite favourable for all solar technology applications. Solar energy applications in Uganda include solar photovoltaic (PV), water heating, cooling and crop drying. PV systems are generally required for applications where modest power needs exist mainly in areas that are not served by the grid. They provide power for lighting, telecommunications, vaccine and blood refrigeration. In some areas, it is used for playing radio and television. This technology is also useful for providing energy services to very inaccessible areas such as on islands and mountainous areas where the national grid cannot be expected to extend its services in the near future.

Wind energy
The average wind speed in Uganda is about 3 metres per second. In flatter areas especially around L. Victoria and the Karamoja region as well as tops of hilly areas, the speed may go as high as 6 metres per second and above. The wind regime is good enough to support wind technology applications in the country. A programme for predicting the weather is being initiated under assistance from the African Development Bank and several private sector initiatives.

Geothermal energy
Although geothermal exploitation has not been established in Uganda, there is evidence of the existence of the resource. Potential geothermal resources are estimated at about 450MW in the Ugandan Rift Valley System. Apart from basic studies on the geological and geo-chemical characteristics of several thermal anomalies, no detailed studies have been carried out to establish the economic resource potential.

Challenges facing the energy sector
There is still insufficient awareness among energy endusers about the energy conservation possibilities and practices. This not only results into waste of energy, especially hydro-electricity power but also hampers investment in demand side management measures. The energy sector also lacks incentives, especially financing mechanisms to invest in modern and efficient technologies and practices. There is also lack of mass transit system, resulting in increased traffic congestion during peak hours and energy consumption per passenger. The situation is compounded by the lack of specialized manpower to run and supervise the sector.

Conclusion
That Ugandans continue to consume highly priced hydroelectric power is an open secret. Those who do not feel the pinch are the wealthiest class who are few compared to the majority proletariat. Uganda should be in a position to extend electricity to rural areas cheaply since it has both renewable and non-renewable resources. Uganda has had hydro as its main source of electric energy. With the increasing number of users and the need to industrialise, Uganda continues to look at building huge dams as a solution. Much as the plans to extend electricity to rural areas are good, government’s choices seem to be limited. Even with the rise of several lobby organisations with calls for viable alternatives, the Ugandan government seems not to concede. What the country therefore needs is a political will to have alternative energy resources in use. Such alternatives would supplement what Uganda is able to supply and above all, make rural electrification and poverty eradication a reality.