The consumers of electricity bear the high tariffs largely because some senior ministers and their associates scheme to make power production expensive so as to make some extra bucks for themselves.
New facts gathered by me show that while high power tariffs have, in the past, been attributed to low generation capacity and the high cost of thermal energy, these factors were silently encouraged by the state agents for personal financial gains.
My investigation shows that the power tariffs remained high-- Shs385 per unit for domestic consumers and Shs299 at off peak hours and Shs405 peak hours for industrial users—because of thermal generation.
Energy sector officials said thermal generation which in 2005 was seen as an emergency response, consumes 80 percent of all the money allocated to the energy sector yet it only produces only 50 per cent of the energy used.
The officials said confidentially that the government still funds the thermal generators because, senior ministers, benefited from the money poured into it.
The politicians reportedly commandeer lucrative energy contracts to firms where they are main stakeholders directly or through associates, usually offshore firms.
While generation of thermal energy was generically expensive, in our case, sources say, it has been pushed higher in order to accommodate the financial interests of the politicians and their cronies.
For instance, a senior minister reportedly supplies fuel to all thermal power plants in the country, raising questions whether such a minister would support a policy of facing out thermal energy.
Moreover, the minister, supplies the fuel even after the deal was given to Shell Uganda, a renowned fuel dealer.
“If Shell won the contract, why again middlemen?” said an energy bureaucrat, “The politicians gain from the increased costs of thermal generation.”
In order, to continually fatten their accounts through the country’s energy crisis, senior ministers reportedly influenced Cabinet to adopt the policy of thermal production.
Hidden in the policy was their interest to use it to get huge deals. Although thermal generation was adopted as an emergency response to the constant power outages that the country faced in 2005, sources say it has turned out to be good business for those in the know.
The government subsidises power generation in the country and because of the high costs of thermal generation, our sources say 80 percent of the money pumped into the energy sector, goes to thermal generation, which ironically only generates 50 per cent of the electricity consumed in the country.
Last financial year, the government allocated Shs212billion to pay subsidies to the energy, according to ERA officials. These subsidies mainly covered lease fee [cost of hiring equipment] and topping up in energy fees to reduce the cost which the final consumer would bear.
By extending the period of thermal power generation, sources say the taxpayer / consumer lost in terms of subsidies paid while the tariff remained high.
In fact, an expert told me that the money paid out in subsidies, would have financed the cost of building Karuma Power plant which collapsed after Norpak, which won the contract pulled out.
The cost of Karuma was estimated at US $ 2billion.
“Its six years already but we are still running generators and subsidizing them yet we claim there is no money for Karuma project,” a senior energy official, “The standard explanation is that thermal power plants was an emergency but an emergency can’t be from 2005 to date; there can’t be ongoing emergencies.”
Although the money put into thermal generation would have built Karuma power dam, industry sources say the government was reluctant to take the approach because it would deprive politicians of the lucrative deals.
Instead, sources say, the government was reasoning that with the discovery of oil, thermal generation would become cheap but experts say the local oil would also be sold at market price thus making no little difference.
Having seen the huge financial gains in thermal generation, several politicians have reportedly been registering firms and putting the ERA on pressure to license them.
Some get the licenses and later trade them at handsome fees to genuine firms engaged in power generation.
Some licensed firms like Invespro which was licensed two years ago, have failed to generate power with reports suggesting that two senior ministers were associated with it.
Invespro, an offshire firm, reportedly wants to sell its license but the two ministers were disagreeing on who to sell to. This, business disagreement, has reportedly boiled into a political fight between the two who are all confidants of the president.
UMEME in loses
While political schemers took the money, national electricity distributor, Umeme, faced challenges collecting revenue.
Part of Umeme’s loses, according to sources, was failure by the politically connected industries and businesses, to pay up.
Apparently, most of the student hostels around universities in Kampala were owned by politicians who do not pay up their bills and Umeme is constrained to debt collect. For instance, when Umeme sometime back found a fish gear producing firm using power illegally, ERA was called in to arbitrate but to ensure that ERA and Umeme arrive at a decision acceptable to the industry stealing power, a state minister reportedly sat in the sidelines of the meeting for the whole day just to ensure the ERA officials “behave.”
Many businesses owned by connected people reportedly use power illegally or have outstanding bills but Umeme was intimidated into not cutting off their power supply.
Already, a rift between Energy minister Hillary Onek and the officials at the Electricity Regulatory Authority has been linked to accusations of sabotage and counter sabotage of individual interests.
Mr Onek accuses suspended ERA top officials: Dr Frank Sebbowa and Johnson Kwesigabo of disregarding his policy directives aimed at generation of more energy hence push down tariffs.
But the officials say the minister suspended them because they were against arbitrary tariff rise and licensing of politically connected firms which had no capacity to generate power.
However, a draft report of the investigation team set by Mr Onek, a copy of I have obtained, concludes that “…this committee finds that Dr Sebbowa and Mr Kwesigabo failed in their duties under the Electricity Act and the Human Resources manual.”
It accuses the duo of reported failure to audit and amend licenses of firms which reportedly inflated costs of power generation.
The minister wanted a two week’s audit of Tronder Energi Bugoye power plant in Kasese and Jacobsen Uganda Power Company operating in Namanve in Mukono District.
Both are Norwegian owned firms.
Mr Onek is accused of trying to use ERA to frustrate Norwegian firms engaged in power generation.
The minister reportedly has issues with these firms after he disagreed with one of them—Norplan- over the intellectual rights compensation of US $3.3million [about Shs6.6billion] from government after the botched Karuma power plant.
Mr Onek’s firm Pakwach Power Plant had merged with Norplan to form Norpak with the mission to develop Karuma power plant. However, the deal fell through over financial complications. Sources say Mr Onek needed part of the money but they disagreed of the sharing after the Norwegians declined to make unclear payments. The matter is before court now.
Because of that hitch, sources say Mr Onek has blacklisted all Norwegian firms so as to send a message to them that he had the clout to affect their business interests hence his call for license review for Tronder Bugoye and Jacobsen.
Mr Onek declined to comment on this and switched off his phone when this newspaper contacted him on Friday.
But Dr Sebbowa and Mr Kwesigabo say their suspension which could lead to their termination, was part of a larger scheme by Mr. Onek to get them out of ERA for menacing interests.
First they argue that the constitution of the probe team chaired by Richard Santos Apire, business partner of the minister in Pakwach Power Plant Ltd, was a sign of the plot to fix them unfairly.
But Mr Onek said “it’s false and we have asked our lawyers to respond” to allegations that he was Mr Apire’s business buddy.
The suspended ERA officials were also suspicious that the presence of Dr Mohamad Serujongi, who earlier was appointed by Mr Onek as secretary to the botched electricity sector restructuring committee.
“To have Mr Apire as the chairman of the investigating panel and Mr Kabiito, the secretary to the panel yet he is also a lawyer defending the suspension our suspension on Onek’s behalf only confirms witch-hunt,” reads a letter.
Mr Onek and Apire are also accused of ignoring to ask the acting ERA boss Benon Mutambi to produce his PhD which was funded by ERA.
Apparently, Mr Mutambi picked US $42.000 [about Shs85.0000] from ERA for his PhD research in 2008 but has never showed the paper neither accounted for the money.
I have got copies of payment vouchers for Mr Mutambi.
Mutambi, Serunjongi and Apire previously worked in Bank of Uganda raising suspicion of collusion to kick out Sebbowa and Kwesigabo.