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    November 22, 2011

Power Cuts Hurt Uganda Businesses

   Hilary Heuler | Kampala, Uganda
   Ugandan women chat in a shop lit by a paraffin lamp in the capital
   Kampala (file photo)
   Photo: Reuters
   Ugandan women chat in a shop lit by a paraffin lamp in the capital
   Kampala (file photo)

   Extended power cuts are on the rise in Uganda, with entire
   neighborhoods being plunged into darkness for days on end. Over the
   past month, an acute power deficit has led to extended electricity cuts
   across the country. Some homes, businesses and even hospitals are going
   without power for days at a time.
   In the past week, frustrated shopkeepers in central Kampala blockaded
   roads and burned tires in protest. Some said they had been without
   electricity for four days, and that the cuts were crippling their
   businesses.
   A woman who runs a printing business in the capital says she has lost a
   lot of money over the past several weeks.
   'Last week we had power for just two days. It's getting worse every
   day," she complained. "I am about to make redundant two members of
   staff, because there is no work. You lose customers, because every time
   they come in there's no power. So we've lost customers. We don't know
   where they do their printing.'
   But, she adds, it is not just a question of losing customers. She says
   that the darkened streets and noisy generators have also been
   attracting thieves, who steal merchandise and rob pedestrians.
   'When there's so much noise they break into shops," she notes. "People
   cannot do business after 6:00 p.m., because the thieves are taking
   advantage. They used to open at six in the morning, but now the
   shopkeepers, they open shops around eight, because they can no longer
   walk to their workplace early enough because of the risk in the
   darkness.'
   These extended power cuts are known as 'load-shedding," which means
   cutting power to parts of the grid when there is not enough electricity
   to go around. The current power deficit is more than 100 megawatts a
   day.
   Part of the problem is that several power plants have been shut down
   because the Ugandan government has failed to pay millions of dollars
   worth of bills. But recently damaged equipment has made the situation
   worse.
   Uganda's main energy distributor, Umeme, says the situation is not
   likely to improve in the near future.
   'A fault occurred which caused a fire that damaged equipment at the
   substation," said Umeme spokeswoman Florence Nsubuga. "The equipment
   that was damaged cannot be replaced easily. The works require extensive
   input, whereby just unbundling the equipment would take some time.'
   Uganda's energy problem goes even deeper. Even with functioning
   equipment, Umeme is unable to meet the country's needs. A government
   study earlier this year found that energy demand will most likely
   triple in the coming decade.
   In order to bridge this energy gap, the Ugandan government has been
   focusing on developing hydroelectricity. Two dam projects - the Karuma
   Dam and the Bujagali Dam - are slated to begin operation in the next
   few years.
   Kapil Kapoor, Uganda Country Manager for the World Bank, says this is
   where revenues from the country's newfound oil reserves will most
   likely be invested.
   'One of the biggest investments that they see happening in the next
   four or five years is the Karuma dam, which has possibly a capacity of
   six, seven hundred megawatts," explained Kapoor. "So what they would
   like to see is earnings for three or four years from oil all being
   parked into a fund, which will go to finance Karuma dam.'
   Kapoor says that all the royalties the Ugandan government has earned so
   far from foreign oil companies - around $400 million - have been
   earmarked for future investment in the energy sector.
   The Bujagali Dam is expected to be operational next year, supplying
   Uganda with up to 250 megawatts more power - enough to cover the
   current deficit. But until then, Ugandan businesses will be left
   struggling to make ends meet with the little power they have.