ugnet_: Eskom wins Ugandan power concession

[Wairagala Wakabi]

Eskom wins Ugandan power concession

Kampala, November 26, 2002

 

Eskom Enterprises Africa today won a 20-year concession to run two Ugandan hydro power dams owned by the Uganda Electricity Generation Company (UEGCL).

 

Dr Enos Banda, CEO of Eskom Enterprises, signed the operation and maintenance agreement with Uganda's Finance Minister Gerald Sendaula in Kampala this afternoon.

 

He said they would refurbish Kiira and Nalubaale dams, which generate about 400 mega watts and account for 98% of the east African country's total commercial power production.

 

In association with CDC Capital Ventures of UK, Eskom are the sole bidders for the Uganda Electricity Distribution Company, which along with UEGCL and the Uganda Electricity Transmission company were formed following the April 2001 unbundling of the former state power monopoly.

 

Prof. Peter Kasenene, Uganda's privatisation minister, said they were negotiating with Eskom and CDC for a 20-year concession for the distribution company.

 

"There are certain issues in their bid document which we are still negotiating but we are hopeful soon we shall reach agreement," he said.

 

For UEGCL, Eskom shall be paying Uganda a return on investment of not more than 10%. Kasenene said they had decided on such a low rate in order to keep power tariffs low.

 

Kasenene said Uganda wants increased output and a reduction in tariffs once management of the parastatal is in private hands.

 

Dr Banda said they had put in a bid for Electrogaz, the state-run power monopoly in Rwanda, and hoped to know the results soon.

 

He said Eskom believed in continental self sufficiency and increased African trade and investment co-operation in the spirit of the New Partnership for Development (Nepad).

 

At the start of next year, the group will release its vision for a continental power grid, which it hopes various African governments and private operators will support.

 

Ugandan officials said they were happy with Eskom�s bid terms for the two companies, saying they were better than they had hoped for.

 

Eskom reportedly offered to inject $41.7m in UEGCL as operation and maintenance costs, and seeks a 12% rate of return.  Eskom was also said to have quoted low insurance charges considering the high insurance rates in the post-September 11 era.

 

A number of international firms that had been pre-qualified for the bid did not actually bids but Uganda says this did not affect Eskom's offer since it did not know they were not bidding.

 

The Divestiture and Reform Implementation Committee (DRIC) - the apex privatisation body - mid September gave PU a go-ahead to commence negotiations with Eskom over the distribution firm.

 

Among the issues being negotiated are the amount of investments Eskom should inject in the company, the sharing of profits in the two companies once under Eskom, and settlement of debts carried over.

 

ends

W

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