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UEGCL to Takeover Employees as Eskom Plans Exit :: Uganda Radionetwork
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UEGCL to Takeover Employees as Eskom Plans Exit

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Eskom Uganda Limited, a subsidiary of Eskom South Africa has been operating the two power stations under a 20-year concession. The two dams contribute 280 megawatts to the national grid and had been contributing a big portion of the electricity generation capacity before Bujagali and Isimba dams.
02 Nov 2022 18:53
Owen falls dam managed by Eskon

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The Uganda Electricity Generation Company Limited (UEGCL) plans to take over employees at Kiira and Nalubale power dams when Eskom Uganda exits in March 2023.

Eskom Uganda Limited, a subsidiary of Eskom South Africa has been operating the two power stations under a 20-year concession. The two dams contribute 280 megawatts to the national grid and had been contributing a big portion of the electricity generation capacity before Bujagali and Isimba dams.   

As Eskom exits, some of the assets will now be handed over to the Uganda Electricity Generation Company. UEGCL Chief Operations Officer, Eng. George Tusingwire Mutetweka says there is a transition plan that includes the absorption of local employees.

He explains that the concession envisaged a time like this and made a provision in the agreement of the key steps that need to be taken by both parties to smoothly transition from one party to the other. Key in the agreement is that the two dams, all the attendant facilities, and key investments made over the last 20 return safely to the government represented by UEGCL.      

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While there has been debate about the ageing Owen Falls dam, the Ministry of Energy has insisted that it should continue operating. So according to Eng. Mutetweka UEGCL will ensure that Kiira and Nalubale continue operating after Eskom. ‘So even as the transition is going on, as we are changing guard, the power plants have to continue operating 

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According to Eng Mutetweka, the Concession and Assignment Agreement has other agreements to it. These include the support agreement which was signed with the Ministry of Finance giving assurances to Eskom Uganda that the investment would be safe and recoverable. 

“In there, the key one is that... investments whose cost have not been recovered at the time of transfer, would be monetized and Eskom will have the right to have that money given back to them by the government,” revealed Mutetweka. This is the first time that a government official is revealing clauses of the agreement between the government and Eskom.

Some civil society groups especially the African Institute For Energy Governance (AFIEGO) had during the early years of the concession demanded that the Power Purchase Agreements with new players after Uganda Electricity Board should be made public. 

The planned buyout is beginning to generate debate with some industry players saying Eskom is likely to demand more than it has invested in running the two dams. Quoting anonymous sources, the New Vision Newspaper on Wednesday reported that Eskom was likely to exit with over 80 billion Shillings when its concession expires.

The report indicated that the government has budgeted 45.7 billion Shillings as the first instalment which should be paid by March 31, 2023.  But while Mutetweka confirms that Eskom has to be paid some money at the close of the concession, he said the Auditor General’s office was still conducting an audit and has not submitted a final figure of an amount to be paid to Eskom for assets whose costs will not have been recovered at the end of the concession.

“In terms of process, the government is ready to ensure that under the provisions of the support agreement, a buyout amount is provided for any investment that hasn’t been recovered under the tariff,” said Mutetweka

Eskom has other agreements like the power purchase agreement with Uganda Electricity Transmission Company and a generation license issued by the Uganda Electricity Regulatory Authority.

The Auditor General was reportedly asked by the Ministries of Energy and Finance to audit with a view of tracing investments whose costs have not been recovered through the tariff. 

“That processing is ongoing right now and reports are coming in. The other process is to budget the buyout amount which the government has already done. Once the audit is done that money will be paid” revealed Mutetweka at the sidelines of the Power forum 2022.

The agreement provides that the buyout money has to be paid within 30 days of the end of the concession. According to Mutetweka, a steering committee comprising officials from the Ministries of Finance, Justice, Energy, Justice, and UEGCL has been meeting to ensure a smooth transfer of the dams.

“But also within companies, we have set up a number of sub-committees that are handling aspects in legal, finance, and technical,” he said 

With the end of the concession, the management of Kiira and Nalubale dams will revert to  Uganda Electricity Generation Company (UEGCL), a 100 per cent parastatal. UEGCL is expected to take over Karuma as well as Isimba dams. 

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