The prolonged drought in Uganda has led to low water levels of Lake Victoria, which in turn has caused a fall in electricity supply. This has forced Umeme to resort to rationing of electricity supply. This rationing of power supply has affected manufacturers, communication, agricultural activities, service providers, and water supplies. This has left government, businesses, and individuals to come up with coping strategies to address the problem.
Uganda, like other East African countries, is experiencing prolonged poor rainfall, resulting in inadequate water inflows into hydropower reservoirs. This has reduced electricity generation capacity at Kiira and Owen Falls dams. To counteract this, power has been rationed and in some instances emergency diesel-powered generators have been installed.
The Uganda government pursued a lengthy reform process of the power sector which began in 1999, involving privatization that eventually saw the unbundling of Uganda Electricity Board (UEB) monopoly into three separate entities: Uganda Electricity Generation Company Limited (UEGCL), Uganda Electricity Transmission Company Limited (UETCL), and Uganda Electricity Distribution Company Limited (UEDCL) to improve on efficiency. Later, UEDCL was leased to "Umeme," a Swahili word for electricity. In addition, the government established the Electricity Regulatory Authority (ERA) to coordinate, supervise, and monitor the electricity sector. The unbundling was also aimed at enabling private companies to invest in the generation, transmission, and distribution levels of the business. With the current power blackout experienced in the country, one wonders whether privatization was a better option for efficiency.
Persistent power blackouts will make Uganda an unfavorable investment destination. Investors’ decisions to settle into a country are based on three things: access to markets, availability of labor, and inputs. Electricity is such an important input that lack of it may affect businesses from coming into the country. The aim of this article is to explore the impact of drought on power blackout and how it is affecting businesses.
The information in this article is derived from mass media in the country and review of secondary documents. The researchers conducted a study in Kampala, the capital city where a day was spent on Nasser and Nkrumah roads, the main centres of printing for the country whose small businesses depend on electricity. It is estimated there are more than 300 shops with an average of eight people per shop, 150 offices, and around 200 printing places operating on the two main roads. A total number of 4,150 people operate small-scale businesses in shared premises rented expensively and who cannot afford to accommodate noisy generators (the alternative source of energy). For the whole day, there was no electricity from morning up to 7 p.m., and the usual busy and noisy area was quiet. The mood of the people was that of desperation. This means people either work on particular days or half days, depending on the availability of electricity. The implication is that business people will find it difficult to pay for rent because they hardly make any sales. Another area visited was Katwe in the outskirts of Kampala, the center of jua kali in Uganda. The area is the stronghold for fabricating beds, chairs, vehicle spares, and other items. Katwe greatly depends on electricity for production. Depriving Katwe of electricity renders its population redundant and a threat to their livelihood.
Further observations were made with business people in Mbarara (one of the fastest growing towns in the country) who run secretarial bureaus, Internet cafes, and artisans who use electricity as a major input. These business people are equally affected by power load shedding.
A prolonged power shortage happened at a time when the country was holding presidential and parliamentary elections on Feb. 23, 2006. During the campaigns, many expressed concern about the location of the construction of Kiira Dam near the older Owen Falls Dam. That helped cause the fall of water levels brought on by the power shortage the country is experiencing. Others believe Owen Falls Dam is inefficient due to the age of its turbines and a design default.
Others have blamed load shedding on Uganda’s backwardness, inexperience, and overall lack of long-term planning on part of the government because the fall in Lake Victoria water levels has not happened overnight.
To counteract the above, the Electricity Regulatory Authority issued a press release and blamed electricity shortfall on natural catastrophes like persistent drought conditions plus the increase in demand due to high economic and social development.
This article does not in any way try to make justification of such statements. The fact is the prolonged drought of the Lake Victoria region could be responsible for the tremendously reduced water levels of the lake. The lake is fed by a number of streams from Kenya, Tanzania (Kagera basin), Rwanda, and Uganda; and these countries are experiencing drought. These streams cannot supply the normal volumes which is affecting the water level of the lake. Above all, there is increased demand of electricity consumption (see Table 1 for details).
The interesting part from the table is that the generation supply has declined by 30 percent from the January 2003 levels to the projected levels for June 2006. Both the evening peak and daytime demand have increased by 37 percent and 6 percent respectively.
The constant load shedding is hurting businesses countrywide since most of the activities depend on electricity, which is unreliable and costly. The current load-shedding schedule will definitely lead to closure of businesses and retrenchment of staff. It is prudent that companies will not risk keeping staff on payroll yet they are generating low revenues.
During the 1990s, many entrepreneurs established Internet cafe facilities in major towns in Uganda. With the increasing numbers, the charges had dropped to UGX 20 per minute from the original UGX 100 per minute. The charges were likely to continue dropping with the introduction of many cafes (and some on major roads from the city). However, with the now fluctuating power supply and the use of generators, some cafe charges have gone to the original UGX 100 per minute. On top of contributing to increased charges, generators have disastrous environmental effects because of their toxic emissions and are a threat to the machines.
Once the computers are installed for Internet cafe use, the other major input is electricity. With the current load shedding, the business community that uses electricity as a major input could easily register 15 gainful days in a month against constant high rental charges. This means they are unable to meet their costs, their bottom line has dwindled, and they are finding it difficult to continue operating. The resultant use of generators to those who can afford them has increased the costs per day between UGX 60,000 to 70,000 for small-scale businesses. This means an average monthly cost of UGX 1,800,000 to 2,100,000. Our culture has been to work from 8 a.m. to 5 p.m. Even if power was there in the night, there will be no customers. Such costs with no returns have negative impact on businesses.
It is not only the information technology industry that has been affected but also others such as the hotel industry. The cost of using generators by the hotels is much higher than the above stated amount. Although the government has waived taxes on diesel and generators used for commercial purposes, the relative cost of operating a business using a generator still remains higher compared to the use of hydropower.
The drought is not only hurting the electricity sector. The agriculture sector is taking its share as millions of people depend on agriculture for economic activity and livelihood. The prolonged drought is trapping many farmers in the vicious cycle of poverty and hunger that should be tackled on a long-term basis. For a country like Uganda, a disaster-like drought brings much suffering. Nevertheless, while some believe higher powers are behind the deadly drought, agricultural experts and environmentalists say man himself is largely to blame because of years of neglect, mismanagement of land, and other vital resources. Destruction of forests; the HIV/AIDS pandemic; high levels of corruption, poverty, floods, and landslides; lack of rural investment; lack of market information; wars and conflicts in some districts; and bad roads are all factors that make Uganda vulnerable to such calamities.
Another sector being affected by prolonged drought is the National Water and Sewerage Corporation (NWSC), a body that is in charge of water supply to major urban centers in Uganda. In order to keep water in supply, the corporation needs a 24-hour power supply. Officials are arguing that NWSC should be put on priority so Umeme gives a direct line of 24-hour electricity like Mulago Hospital, the major referral hospital in the centre of Kampala. The argument is that the priority areas like the hospitals will also face a problem if there is water shortage. The managing director of NWSC was quoted by Nabayunga in 2006 to say, "We have big pumps that cannot be assisted by even the big generators to pump water, so without the 24-hour supply of electricity, we will not be able to pump water from the lake and distribute it." He went on to say that one hour lost without electricity results in three hours of water shortage, so the more hours lost without electricity will lead to more hours without water supply. Even if this was done for the main water supply at Ggaba that supplies water to more than 1,208,544 people, the population of Kampala, other installations country-wide, are not on dedicated supply lines. As a consequence, these are included on the load-shedding schedule. This is the situation facing a country of which open water bodies constitute 15 percent.
There are recent reports that Lake Victoria water levels are rising, and there will be enough water to generate hydroelectric power. But this will be for a short time as we are approaching a major dry spell during the months from July to September. So there is nothing to celebrate about depending on natural phenomena.
To alleviate the power problems in either short- or medium-term, a number of coping strategies are being put in place by government, businesses, and individuals.
At the government level, these include:
Introduction of a more expensive local thermal generation that uses a large component of diesel fuel to generate, and hence increases, the revenue requirements to sustain the energy sector as a short-term measure. The comparative cost of thermal vs. hydroelectricity supply is several times higher.
Fast tracking of both Bujagali and Karuma hydropower projects whose development of 250MW and 200MW respectively is scheduled to be undertaken in parallel and electricity generation is to start in 2009 to 2010
Exempting all large-scale enterprises including hoteliers who use industrial generators of 75kv and above from taxes to enable them to run heavy commercial generators.
Inviting the private sector to invest in power generation.
Setting the new tariffs that reflect the present situation in the sector and also factors in the mitigation measures now undertaken to sustain the sector through a thorough consultation process with the general public.
Promotion of solar and other renewable energy resource bases like wind, biomass, geothermal, and to reduce the demand on the existing hydropower. In the 2005-06 fiscal year, the government waived taxes on solar equipment to encourage utilization.
At business level, some of the coping strategies are:
Purchase of generators
Extending working hours from 5-11 p.m. and beyond
Introduction of night shifts for some big organizations
Food processors should aim at prolonged shelf-line products
With the increasing load-shedding, the pattern of shopping should certainly change as you are not sure when power will or won’t be out. You should not shop big quantities of food and other perishable edibles which you would keep for a week because they are likely to go bad before they are cooked. You should make frequent shopping or even change to items that do not spoil. You need to think of changing your shopping pattern by buying dried food items and canned foods. For example consider purchasing UHT milk which has long shelf life.
The present power shortage crisis being experienced in the country is due to prolonged drought that has hit the region in the last six months. This has lead to unreliable and costly electricity which has adversely affected our business competitiveness. Nevertheless, some coping strategies have been applied by government, businesses, and individuals.
Charles Tushabomwe-Kazooba is a lecturer in the Department of Management Science Faculty of Development Studies, Mbarara University of Science and Technology, Uganda. He is a graduate of University of Birmingham 1988 with an MBA and is also a chartered certified accountant.
Imelda Kemeza is a lecturer in the Department of Educational Foundations and Psychology, Faculty of Science, Mbarara University of Science and Technology, Uganda. She graduated with a master’s degree from Makerere University in 2003 (e-mail: firstname.lastname@example.org).
"Appeared in DRJ's Winter 2007 Issue"