Land wrangle dims light on Aswa hydropower dam

It has been a long-held regional dream to harness this energy, but controversies around land ownership where the transmission pylons are to be erected means the facilities—the last of which was commissioned in 2019—have largely remained idle. 

Since commissioning of the plant, Uganda Electricity Transmission Company Limited (UETCL)—the state-owned power transmitter—has not established a transmission line for the electricity generated. Saturday Monitor understands that this has forced the government to cough out billions of taxpayers’ money to pay the contractor of the plant in terms of deemed energy.
Deemed energy is understood to be energy that wasn’t delivered to a buyer by a seller, thanks to a buyer curtailment or reliability curtailment for oversupply situations. 

In October 2019, the contractor (ARPE Ltd) dry-commissioned the plant (in the absence of a power evacuation medium) in the presence of UETCL, Electricity Regulatory Authority (ERA), and Ministry of Energy officials. This was after the contractor completed building the last of the two facilities a month earlier.
According to the project’s Power Purchase Agreement (PPA), commissioning the plant without a medium to evacuate the generated power qualifies the government to pay money in deemed energy to the contractor until one is put in place.

In the agreement, the government would pay for deemed energy if the contractor is prevented from delivering energy to UETCL as a result of a breach by UETCL pursuant to the agreement, or a failure of the government to fulfil its obligation of the implementation agreement.

Three years before commissioning the plant, plans by UETCL to engage the landowners to acquire a corridor to build a transmission line to Lira sub-station hit a dead end. This was after the land owners demanded that they be compensated before the works commence. 
UETCL found itself unable to progress as fast as it had to in regard to establishing a transmission line. The parastatal company could not match the pace at which ARPE Ltd was building the generation plant. It didn’t help matters that UETCL’s financier—KFW Bank—delayed signing their tender documents for procurement.

Land wrangles
A recent contract signed between the government and the KFW Bank saw UETCL acquire a 40m euros (about Shs160 billion) loan to enable the energy transmitter kick off works on the transmission lines. 
Despite the development, UETCL recently suffered a fresh setback when its efforts to secure a 14km corridor inside Aswa Ranch to build the electricity pylons was bogged down by wrangles over land inside the ranch.
Saturday Monitor established that a private developer—Banuti Ranchers—has blocked UETCL from constructing an electricity transmission line inside Aswa Ranch. Consequently, UETCL says it has failed to seek a consensus with Banuti Ranchers to access the stretch of land to construct the first 45 electricity pylons from the power station.

Mr William Nkemba, UETCL’s manager for project implementation, said the energy transmitter has failed to evacuate electricity generated from Aswa Dam, thanks to the standoff. 
He further revealed that whereas up to 96 percent of project-affected persons (PAPs) have been compensated, UETCL has failed to establish the true owner of the land inside the ranch. 
Three different entities have staked claim to the land. He added that the Aswa Ranch conflict has sucked in Uganda Livestock Industries (ULI), National Animal Genetic Resources Centre & Data Bank (NAGRIC&DB and Banuti Ranchers.

“While the land is still under Uganda Land Commission (ULC) and NAGRIC&DB, the Banuti Ranchers—who possess a presidential directive for the lease of the entire area—are currently occupying the land and have denied us access to build the line through the fraction of the land they own,” Mr Nkemba told Saturday Monitor, adding, “The ownership is still being determined between three entities and this calls for a lot of negotiations and we have appealed to the parties that they should allow us to carry on with the works as they sort their disputes.”

Mr Edward Mutesa, the manager for land acquisition at UETCL, said although Banuti Ranchers served them with a copy of the presidential directive (which was verified to be genuine), they have no lease agreement, a deed or any other document from ULC.
“You have this person without a formal leave, called Banuti Ranchers owned by a person called Barnabas Tinkasimire Nuwamanya, who have blocked us,” Mr Mutesa said, adding: “When we wrote to the ULC to give us the records of the person with the proper lease, they never responded.”

Repeated attempts to speak to the management of the ranch over the allegations were futile by press time.
On a fact-finding visit to the dam last month, lawmakers on the parliamentary Committee on Environment and Natural Resources led by Dr Emmanuel Otala, questioned the grounds under which Banuti Ranchers acquired the huge chunk of land inside the ranch. 
The MPs also established that UETCL has since September 2021 been denied access to a 15-kilometre stretch of land inside Aswa Ranch to build a transmission line.

“We are generating a report, which will inform the government on the decisions to take,” Mr Fredrick Angura, a committee member, said, adding, “A decision has to be taken by the government to get the Banuti Ranchers to clear the construction of this transmission line quickly and we also need the substation to get up quickly. We are investigating how they got the land.”
Besides the failure to access a transmission corridor through the ranch, Mr Nkemba explained that the construction of the transmission line was delayed due to hindrances caused by Covid-19. 

“These hindrances relate to the manufacture and shipment of equipment from China,” he revealed, adding, “You know that in China, some of the ports clogged and deliveries from that time have been hard to secure.”
Mr Nkemba also said a worldwide shortage of semiconductor chips used at substations has made a bad situation worse.
The construction of the transmission line is being undertaken by Kaplan & Turbo, and is expected to last for 18 months until March 2023.

No infrastructure
At the time of securing the 40m euros loan in September 2021, unlike any other projects, the government had already released funds that enabled UETCL to compensate 94 percent of the PAPs.
However, due to delays in construction of the 132kV transmission line to evacuate power from the dam, the government, in January allocated Shs30b to Uganda Electricity Distribution Company Limited (UEDCL) to construct a 33kV distribution line as an interim solution. To expedite the process, UEDCL hired Segken Power Africa and International Energy Technik (IET) in a joint venture to build the 33kV Achwa-Layibi and 33kV Achwa-Kitgum lines to evacuate power to Gulu and Kitgum towns, respectively. 

The new evacuation lines cost UEDCL Shs15.3b, with the 33kV Achwa-Layibi line taking Shs6.6b, and the 33kV Achwa-Kitgum line costing Shs8.7b.
“If you look at our financial year report for 2020/2021, we had 17 percent evacuation loss with regards to these mini-hydro plants and the hydropower plants,” UEDCL spokesperson Jonan Kiiza said of the impact of the delay, adding, “Specifically here in Aswa Dam, we have had an additional obligation of evacuating the power plant.”

The Auditor General’s latest report also notes that the required infrastructure is yet to be erected, despite power purchase and other implementation agreements committing the government to evacuating power from generation plants to the distribution lines. The power producers have, therefore, been capitalising on clauses that require the government to pay for the power even when it has not been evacuated.

The Auditor General’s report particularly shines the spotlight on this deemed energy. 
ARPE has since 2019 been billing the government for the unconsumed but paid-for power. Despite going unconsumed since it was never sent to the national grid, the electricity generated from the dam—which was developed by independent power producers (IPPs) with which UETCL has running power purchase agreements—was deemed to have been consumed. 

It is established that all the PPAs, which the government has in the past entered into, are described as a “take or pay” clause that binds the government to pay for all power generated by the IPPs. This is regardless of if such power was not evacuated from the generation plants.
Uganda has over the last 16 years paid at least Shs1.4 trillion to 13 private power generation firms for power that was never consumed. For the financial year ended June 30, 2021, the government spent up to Shs87.7b in paying the deemed energy costs in regard to 13 power purchase agreements (PPAs), according to the Auditor General. 

Mr Nkemba told Saturday Monitor that such terms of agreement have since been revised by the government. 
“UETCL has a directive by the government that from now on—while signing PPAs (agreements)—we stick to energy deals,” he said, adding, “What we consume is what we pay, but not what we cannot consume…going forward, this has already come into play and that is what we are following.”
In April, ERA released a new tariff structure, which put the average cost of domestic tariffs at $21 cents per kilowatt hour. 

The same category of consumers can also benefit from the lifeline tariff, which stands at 7.6 cents per kilowatt hour. They can as well benefit from the cooking tariff, which stands at $11.64 per kilowatt hour.
Commercial consumers are required to pay $16.4 cents per kilowatt hour; $12.4 cents for medium scale industries; $10 and $9.7 cents for Block One and Block Two consumers in the large industries category; $85 as well as $7.7 cents in the extra-large industries category; and $10.5 cents for street lighting.

President Museveni has since June 2016 pushed for a reduction in the cost of power to at least five cents for the manufacturers and six cents for domestic consumers. To his consternation, Auditor General John Muwanga indicates that this cannot happen. According to his latest report, payments for deemed energy and other losses are financed through the electricity tariff system. What this essentially means is that the cost is passed on the final consumer.

While the effectiveness of the loan contracts between KFW and the government started in September 202—with the contract duration of each project lasting 18 months (until March 2023)—UETCL has asked for a loan extension for fears that the projects may finish beyond the deadline.
“We have already requested the Ministry of Finance to have the loan extended. We have mentioned to the MPs that we do face a few impediments that are likely to affect the delivery of the project, but as we stand today, we are hopeful that they shall be overcome,” Mr Nkemba said.

Background

About the plant
The hydropower facilities are in a cascade of five power stations set to be developed by the project owner, ARPE Ltd, along Achwa River in Angagura Sub-county, Pader District. They boast of an annual 281 GWh output. 
The construction works are estimated at $78.8m (about Shs292b). 

The funding is by loans from African Development Bank ($14.3m or Shs53b) and Delta ($64.4m or Shs239b).
The plant, once operational, was planned to provide electricity to 35,000 Ugandans, and annually reduce greenhouse gas emissions by more than 109 tonnes.
Although it is yet to begin building the electricity pylons that run through a stretch of 83km, UETCL has kicked off the construction of both Agago (Angagura Sub-county, Pader District) and Gulu (Koro Sub-county, Omoro District) substations.

The overall progress of both substations in terms of construction is at 14 percent, with engineering designs at 71 percent and procurement (manufacturing of equipment such as circuit breakers, switches, voltage transformers and power transformers) 20 percent.
For the transmission line, UETCL says the overall progress is at 31 percent, while the engineering design is at 67 percent, procurement at 4.3 percent and construction at 4.9 percent.