INTERGRATION OF ENERGY ACCESS IN RURAL DEVELOPMENT IN UGANDA Benon Bena and James Baanabe Ministry of Energy and Mineral Development Uganda EU Energy Initiative.

INTERGRATION OF ENERGY ACCESS IN RURAL DEVELOPMENT IN

UGANDA

Benon Bena and James Baanabe Ministry of Energy and Mineral Development

Uganda

EU Energy Initiative Workshop and Policy DialogueHotel VIP, Maputo, Mozambique

12-15 April 2005

CONTENT OF THE PRESENTATION

Background Policies on Energy and Poverty Energy for Rural Transformation Programme Selected Case Studies

Igloo fish processing plant situated near Majanji Landing Site on lake Victoria in Busia District.

Njeru – Kayunga – Bbale Rural Electrification Project Fish processing Plant at Bukakata Ssembabule Rural Electrification Scheme Kaweri Coffee Plantation Limited Solar Electrified Areas

Conclusion

BACKGROUND Uganda has a population of 26 million, 87%

rural, in scattered nature. Uganda has consistently registered high

economic performance over the last decade  Growth rate averaging 6% Annual increase in per capita income of 3.7% Reduction in people living below poverty line: 56%

in 1992 to 38% in 2004  BUT

Poverty remains wide spread in rural areas Per capita income $320 Inadequate infrastructure services Lack of integration with markets

Energy Situation In Uganda

Biomass represents 93% of the national energy balance

lowest per capita consumption of commercial energy in Africa

energy demand growing oil products imported (100%) renewable energies are

abundant but not largely disseminated

electricity load shedding and low electrification rate 9% constrain the economic and social development

6% 1%

93%

Biomass Oil Products

Electricity

Electricity Access Access at national level only 9% Rural access to national grid only

3% Self electrification (gen-sets, PV,

car batteries) about 1%

POLICIES ON ENERGY AND POVERTY

Energy Policy Poverty Eradication Action Plan

(PEAP) Power Sector Strategic Plan 1997,

1999 Rural Electrification Strategy and

Plan 2001

The Energy Policy for Uganda GOAL:

To meet the energy needs of Uganda’s population for social and economic development in an environmentally sustainable manner

OBJECTIVES: To establish the availability, potential and demand of

the various energy resources in the country To increase access to modern affordable and reliable

energy services as a contribution to poverty eradication (Pillar 1, 2 ,5 of the PEAP)

To improve energy governance and administration To stimulate economic development To manage energy-related environmental impacts

Poverty Eradication Action Plan

Five Pillars in the PEAP Economic management Production, competitiveness and

incomes Security, conflict-resolution and disaster-

management Governance Human Development

Power Sector Strategic Plan (1997,1999)

It spelt-out a new policy direction in the power sector and emphasized:

Need to make power sector financially viable.

Involvement private sector in electricity.

Increase of access to electricity.

Electricity Act, 1999 Broke the monopoly of power utility-UEB Created a Regulator (ERA). made RE an obligation Establishment of Rural Electrification

Fund (REF) Minister had to develop strategy & plan Special incentives for investments in RE

The Rural Electrification Strategy and Plan

It spelt out the mechanism of Rural Electrification and the targets:

Institutional framework for the Rural Electrification Fund.

Increase of rural electrification from 1% to 10% by 2012.

Combination of delivery modes : grid extension, off-grid systems, solar PVs and renewable energy projects.

The Rural Electrification Fund

Channel for extending “smart subsidies”. Main sources of funding

Government budget 5% levy from transmission bulk purchases from

generation companies Grants from bilateral and multilateral donors

Criteria for access based on: Financial and economic soundness of project Sound environmental impact statement Positive social return Equitable electricity distribution

ENERGY FOR RURAL TRANSFORMATION PROGRAMME (ERT)

It is a ten year programme developed by GOU with support from World Bank/GEF.

It is private sector led. Projects benefit from subsidies to buy

down capital costs. The overall goal is to increase electricity

access in rural areas from 1% to 10% by 2012.

It addresses several delivery mechanisms: Grid extension where feasible; Decentralized mini grids; Solar PVs; and Development of other renewable energy

resources.

OPERATIONAL FRAMEWORK OF ERT

ERT has strong linkage with key production and human resource sectors: Agriculture, Health, Telecommunication, Water and Education.

Target areas are: District Headquarters, Trading Centers, Agro Processing areas, Schools, Health Centers and Rural Water supply units.

Service delivery mechanism and Project Developers: Private Sector, NGO’s, Local Communities and local governments.    

Lessons Learnt on ERT

Private sector is reluctant to invest in RE projects. It perceive it as a high risk business- the thinking is have public leading is required

Time it takes for private sector from project initiation to implementation is long

Need to have subsides such as GEF financing to buy down capital cost which lowers the tariff.

Unlike GEF, PCF does not considerably lower the tariff.

Programmes being developed should address the problem of affordability and the high upfront costs.

Lessons Learnt on ERT Cont’d

Linkages with other social and economic sectors in developing RETs is a big stimuli of development

Need to employ a mix of service delivery methods: Grid extension where feasible; Decentralized mini grids; Solar PVs; and Development of other renewable energy resources.

SELECTED CASE STUDIES OF ENERGY INTERGRATION IN RURAL

DEV

Igloo fish processing plant in Majanji - Busia District.

SME’s on Njeru – Kayunga – Bbale Rural Electrification Scheme

Fish Processing Plant at Bukakata (Using a diesel generator)

Ssembabule Rural Electrification Scheme

Kaweri Coffee Plantation Limited in Mubende District

FISH PROCESSING PLANT IGLOO FOOD INDUSTRIES

This is a fish factory situated near Majanji Landing Site on lake Victoria in Busia District.

Provision of electricity to the site involved construction of a 10 km 33 kV line (three phase)

Production Capacity: 40 tonnes of fish/day

Number of people employed: 400

Majanji landing Site

Fresh fish for the factory is received at this landing site

Beneficiaries include about 74 fishermen

Ice Plant at Igloo Food Industries

The company uses electricity to produce ice, to chill the fish and for refrigeration of the cold rooms.

Ice Production: 60 tonnes/day.

The ice produced is used by fishermen to preserve the fish immediately it is caught.

Loading Fish for Export

Fish exports brings in foreign currency into the economy.

SME’S ON NJERU – KAYUNGA - BBALE – RURAL ELECTRIFICATION

PROJECT

The project completed in July 2000 included construction of a 92 km 33 kV line from Njeru to Bbale and provision of distribution transformers

Major load centers on the project include, A stone quarry belonging to Nile Mining Company. 13 maize mills Five coffee factories Two milk cooling plants Three secondary schools and six primary schools A health unit

Coffee Processing Unit A small coffee

processing unit connected to the grid.

There are four other coffee mills connected to the grid.

Maize Mill Kayunga – Bugerere Road

There are 13 such maize mills on the line

Bugerere Balunzi Diary Cooling Plant

It belongs to a Cooperative society located in Baale.

Capacity is 5000 litres a day. Serves about 120 farmers. Before the cooling plant was

installed, the milk was taken to Kayunga town 44KM away.

This greatly improved the milk quality reducing loses.

Bugerere modern farm cooling plant

Situated between Kayunga-Bbale.

It serves 20 farmers

It handles 1800 litres of milk per day

Bbale Health Centre

Main energy source used before electrification was kerosene and charcoal

The hospital is connected to the grid now

Electricity is used for: Lighting Sterilisation of hospital

equipment & medical supplies

Refrigeration of vaccines Powering equipment for

limited operation

Kanjuki S.S.S This is one of the

secondary schools connected to the grid.

Electricity is used for: lighting the class rooms which has made reading at night possible.

Lighting in dometries - which has improved quality of life of the students

School in take has increased to 800 students half of them reside at the school.

FISH PROCESSING PLANT AT BUKAKATA, MASAKA

It belongs to Fresh water fish exporters Ltd

The factory currently uses a 265 kV diesel generator.

It employs 250 people Factory capacity is 50

tonnes/day, however due to limited power, current production is 10 tonnes/day.

Bukakata landing site

The site is on Lake Victoria in Masaka District

Fresh fish is harvested here

It serves 20 fishermen.

Ice making plant-Bukakata Cont’d

The ice produced is used by fishermen to preserve the fish immediately it is caught

Company Fuel Service Station-Bukakata Cont’d

Fuel consumption by the plant is about 600 litres per day.

Proposed Scheme for Extending Grid Power to

Bukakata Proposed scheme will involve

construction of a 35 km 33 kV line from Masaka to Bukakata

Project cost has been estimated at Ug. Shs 1.5 billion.

From Bukakata the line would be extended to Kalangala Island (If funds are available)

RURAL ELECTRIFICATION

SCHEME IN SEMBABULE This involved

construction of a 17 km power line from Matete to Ssembabule town and provision of distribution transformers.

Electricity is used for: communication, car battery charging and in small enterprises in the town

Coffee Processing Plant in Ssemabule

Processes 150 bags per day

It serves about 100 farmers

Maize mill in Ssemabule One maize mill is

in operation in the town.

Previously the maize was grinded at a mill 10km away from Ssemabule

KAWERI COFFEE PLANTATION LIMITED

Government is providing 23 km of 33 kV line to the plantation.

18 km has so far been constructed and commissioned

Total project cost is US $ 10M.

When completed, the company will employ about 6000 people.

Wet Coffee Processing Plant – Kaweri Plantations

Ltd

The wet processing plant has a capacity of 500 kg/hour. This is for carrying out trials.

100 kVA Transformer A 100 kVA transformer

serving the wet processing plant, the residential quarters

3 transformers have been installed and powered.

The remaining 2 transformers and 5 km of the line will be provided in the near future.

Coffee Plantation Peak production

capacity of the plantations is expected to be 4000 tonnes of coffee per year.

CONCLUSION

Good policy frame addressing energy is key in increasing energy access.

Rural energy used in enterprises has added value to agricultural products, thus improving the farmers’ incomes.

Rural enterprises resulting from energy access have provided employment, hence reducing poverty levels.

People’s lives have improved through provision of energy for social services (health, education and water)

Private –public partnership with the public leading

Thank You for Your Attention !!!