UEGCL to Take Over Namanve Thermal Plant as Jacobsen Concession Expires

The Namanve Thermal Power Plant, a heavy fuel oil plant operated by Jacobsen Uganda Thermal Power Plant Limited will return to Uganda government after the concession of Jacobsen expires next month.

Julius Wandera, the Director of Corporate and Consumer Affairs at the Electricity Regulatory Authority says that the Concession (License, Power Purchase Agreement and Implementation Agreement) of Jacobsen Uganda Power Plant Company Limited is to expire in August 2020 and will be reverting to the government.

The 50 MW plant will be handed over to Uganda Electricity Generation Company Limited (UEGCL), a government agency that oversees the generation of electricity in the country. Simon Kasyate, the head of Communication and Corporate Affairs at UEGCL also confirmed the plan to take over the plant.

Thermal plants, the second one being Electromaxx in Tororo, are the most expensive electricity that the government buys with each unit at USD 18 cents (UGX666.04).

Uganda government purchased power from Jacobsen at 48.1 billion Shillings in 2019. This figure is expected to drop to 42 billion Shillings in 2020, according to ERA which adds that the decrease in power purchase cost is on the account of reduced generation of thermal capacity due to the new renewable commissioned.

Since 2014, Jacobsen’s concession has been received a one-year renewal basis upon each period expiry. But Jacobsen power is not often used. The plant is there as a fall back plant in case there is an emergence or a requirement for extra power.

Dickens Kamugisha, the executive director of the African Institute for Energy Governance (AFIEGO), said the right thing to do at the moment is to decommission the Jacobsen plant. He said thermal power has been extremely expensive for the country and is partly why Ugandans pay expensively to use electricity.

He said: We have been…urging government to review some of those agreements and see how they can pay off some of those liabilities so that we leave because thermal power is extremely expensive and it is affecting the number of consumers who can use electricity in Uganda even when they have provided free connections. You see how the Minister of Energy was crying that despite the existence of Rural Electrification Agency, the number of people connecting and using power is still very low and the biggest problem is the tariff. If there is a way we can de-commission all the service producers who are supplying expensive power, that should be the beginning and now that the contract of Jacobsen is expiring, then there is no reason whatsoever why we should be renewing that contract.”

In 2018, ERA said it had renewed the company’s license because it considered the energy needs of the country, including the need for emergency or reserve thermal power to meet the energy demands of the country, following the vandalism of five transmission towers between Nalubaale and Lugogo. This led to the collapse of the Owens Falls – Lugogo 132 kV transmission line and there was an expectation of power surges.

Jacobsen Electricity Company (Uganda) Limited, is a wholly-owned subsidiary of Jacobsen Elektro, an independent Norwegian power production company. The Namanve power plant was completed in 2008 at a cost of USD 92 million. Jacobsen was to handover the plant upon recovery of this money.