Rural Uganda sees the light, but it’s not yet bright enough

By Benon Herbert Oluka
In 2001, the government launched the rural electrification programme with the aim of connecting more Ugandans to the national grid. Nearly 15 years later, The Observer undertakes an audit of the programme in a three-part series of articles.

In Part I of this series, BENON HERBERT OLUKA visits some of the communities benefitting from the rural electrification project, questions the authorities on why they failed to meet their initial targets and gathers expert views on where the authorities could have got it wrong in their implementation of the ambitious project: -

The northern district of Amuru, hitherto recovering from the devastating 20-year war between government soldiers and Lord’s Resistance Army (LRA) rebels, is about 350 kilometres from Jinja, the country’s hub for hydro-electricity generation.

Ensconced at the border with South Sudan, Amuru is yet to attract some of the modern basic social amenities of modern life that many other parts of Uganda have enjoyed for decades. Yet, like any other part of Uganda, Amuru and other far-flung communities require amenities such as electricity to transform their ways of life.

“Rural communities have a genuine and justifiable need for electricity,” says researcher Zachary Ezor in his report titled “Power to the people: Rural electrification in Uganda.

“These communities want to use electricity in relatively small quantities in order to: pump water, transport commodities, engage in income-generating activities, practice modernised health care, and increase available light to extend work and leisure hours. Unfortunately, the road to achieving electrification is complex and costly.”

HIGH COSTS, LOW REVENUE

Some of those complexities, as pointed out in Ezor’s research, include the high costs of implementing and maintaining generation as well as transmission and distribution facilities in rural areas, yet revenue collection is low since countryside households only consume small amounts of electricity. These account for part of the reluctance and inability by private business to take electricity to rural areas.

In early 2014, however, residents of Amuru received their first taste of grid electricity when the government stepped in to extend power lines to a district that is still trying to shake off the effects of a long war.

For Amuru residents who have so far managed to connect to the grid, such as local small business owner Joseph Onegiu, the extension of power to their locality has boosted their businesses significantly.

In an interview with The Observer at Amuru trading centre, Onegiu narrates that prior to the arrival of grid electricity, he had run his salon on solar energy for five years. With his relatively lengthy experience of using the sun-generated electricity, the 40-year-old Onegiu concludes that solar is cheap and reliable. However, he has since found that electricity has its own advantages that have won him over.

“I prefer electricity to solar because solar is difficult to supervise. In the morning, you need to take the solar plate out and in the evening you must bring it back inside. When it rains, there is no power; so, we are affected so much during the rainy season,” he explains.

According to Onegiu, because of the presence of grid electricity, he and his two business partners now also recharge (for a fee) and undertake repairs of mobile phones. They also generally operate for longer hours than ever before.

“When we were using solar, we used to spend few hours at work but now with electricity, we can work even at night. When there is good business, we are able to go even beyond midnight,” he says, before disclosing – without going into the specifics – that their financial fortunes have since changed dramatically for the better.

The area LCI chairperson, Justin Oloya, says grid electricity has boosted many small-scale and medium-scale business prospects in Amuru district.

“Having electricity has changed the life of people in my area,” he says. “The first thing is that business is now going on very well during day and night. Secondly, we now have grinding machines – some rice, some posho – which operate very well because of this electricity.”

Linking Amuru to the national electricity grid is expected to pave the way for the setting up and operationalisation of northern Uganda’s first large-scale factory, a 2,500+ tonne cane per day sugar complex owned by the Madhvani Group of Companies. The Group also plans to use bagasse (sugar cane fibre) to generate 10 megawatts (MW) of electricity, which it will supply to the national grid.

According to Mayur Madhvani, a director at the Madhvani Group-owned Kakira Sugar Works, the development of a sugar estate in Amuru would create employment for 7,000-8,000 individuals and additionally give a livelihood to about 7,000 out-grower farmers and their families. The project has, however, dithered due to wrangles over land.

GROWING COVERAGE, RISING CHALLENGES

The grid electricity that has reached Amuru is one of the results of the rural electrification programme, an initiative launched by the government in 2001. The aim of the programme was to increase access to electricity in rural Uganda to 10 per cent by 2010 (later extended to 2012 due to implementation delays), 22 per cent by 2022 and 100 per cent by 2040.

In 2001, when the government launched the first part of its Rural Electrification Strategy and Plan (RESP) (2001-2010), the programme’s implementation handbook, only one per cent (or 80,000 people) of Uganda’s rural population had access to electricity.

In its strategic plan, the government said rural electrification constitutes a critical part of its long-range programme to eradicate rural poverty and to foster opportunities for rural Ugandans in every part of the country to prosper.

“Providing widespread rural-area access to electricity – (a) stimulates rural employment diversification, and draws value-adding enterprises to rural areas in order to improve farmers’ terms of trade and income levels; (b) enhances food security for the entire population; (c) creates the opportunity for rural citizens to join with the urban population in enjoying electrification’s many modernisations and lifestyle benefits; and, (d) contributes significantly to enabling rural people to participate more broadly and fully in national economic and social development and in harvesting its fruits,” the government notes in its plan.

However, by the end of the first 10-year-phase, access to electricity in rural areas had risen to only five or six per cent – missing the government’s own target by about half – and provided some of the project’s critics with ammunition to shoot it down.

A mobile money agent in Amuru continues to use solar energy despite hydro-power electric lines hovering overhead

In 2012, a local non-governmental energy resource consumption watchdog called the Africa Institute for Energy Governance (AFIEGO) commissioned a study to assess the implementation of Uganda’s rural electrification project. The report identified 12 challenges to the implementation of the project.

The challenges include high upfront costs, inadequate financing for the rural electrification project, insufficient power supply, geographical inaccessibility of many areas and limited human capacity. Others are political interference, inadequate infrastructure, power theft, uncertain consumer base, limited consumer awareness, apathy and low incomes in rural areas.

“At present, Uganda’s development partners are providing significant funding towards rural electrification. This is not effective and sustainable,” concludes the report.

“In addition, the unit cost of energy for rural electrification is high, coupled with low demand thus needing continuous tariff subsidies. This requires heavy investment by government. The investment through public- private partnerships between the government and private developers can help deliver socially-desirable but not financially viable schemes.”

In fairness to the Rural Electrification Agency (REA), some of the challenges were not of their making. An analysis by the Economic Policy Research Centre (EPRC) says the rollout of the rural electrification programme was also not helped by the reduction in the water levels on Lake Victoria due to a drought, which forced the government to subsidise by as much as Shs 92 billion per year the private companies that were generating about 150MW of thermal electricity.

“The energy deficits could have affected the rolling out of the electrification programmes, thus affecting growth in customer numbers. In particular, the rural electrification programme was greatly affected by the acute power shortages because most of the financial resources were directed towards electricity subsidies to buy down the high tariffs arising out of the expensive thermal power generation,” says a June 2012 report co-authored by economists Joseph Mwanje, Ezra Munyambonera and Lawrence Bategeka.

Despite all those challenges, and the inevitable diversion of billions of shillings to subsidise thermal electricity generation, the government has still spent substantial amounts of money on rural electrification. In the first 10-year phase of the project, which started in 2001, the government spent Shs 1.3 trillion.

So, what did the authorities get so wrong that even with the injection of such money, they were unable to circumvent some of the challenges and make a better return on the investment than the way-off-target five or six per cent rural access to electricity?

DREAMS AND REALITY

By the admission of the Godfrey Turyahikayo, the executive director of REA, the rural electrification project failed to meet its initial target because of failure to develop an effective strategy of turning the dreams into reality.

“The 10 per cent was presumptuous, with a number of assumptions,” says Turyahikayo in an interview with The Observer. “One of them [presumptions] was that the people in the villages had the capacity to pay for connections but… when you look at their incomes, it came to pass that very few people in rural areas could have that kind of disposable income, and therefore the assumption that there was ready ability to pay did not work.”

Joseph Onegiu working at his barber shop. He is a beneficiary of the electrification

According to Turyahikayo, the total dependence on prospective rural consumers to pay all connection costs led to slow progress meeting the target. It is the reason, he adds, why the government started offering connection subsidies to prospective consumers midway the implementation of the project.

“We started experimenting with giving subsidies and found that we would get faster connections,” he says. “In order, therefore, to sort out that issue of getting our numbers, government has now taken on meeting the connection costs almost entirely.

That was a lesson learnt that the ability to pay in rural areas had been heavily assumed and therefore we needed to do something to get the numbers we want. We are optimistic that with the measures we have put in place, we should be able to get even more than what we have projected.”

Turyahikayo’s analysis, however, tells only part of the story, according to lawrence Bategeka, formerly of the EPRC. Now an independent economist, Bategeka argues that the problems that Uganda’s rural electrification plan faced in its first implementation phase extend beyond poor conceptualisation of how to connect people to the grid.

Expounding on his views, Bategeka explained that because Uganda’s societies are generally spread out rather than clustered, it makes the provision of electricity in rural communities an expensive venture if the government is to reach all the people.

“Our people are so scattered, so spread out,” he said. “If you are going to take electricity to them, I don’t know how many kilometres of wires you are going to need. By the time you even reach 20 per cent, you have made investments that are not worth it. No private company can recoup that type of investment.”

Bategeka believes the implementers of the rural electrification project should concentrate on up-and-coming urban centres and forget about the villages. When the urban/trading centres are lit up, according to Bategeka, people with the capacity to consume the service will migrate there and in the process develop a viable consumer market.

To Turyhikayo, however, that assessment only looks at the project from an economic point of view, which overlooks its other objectives, such as meeting the government’s goal of ensuring equitable access to electricity across all parts of the country.

“One of the objectives was to ensure that there is equitable distribution in as many parts of the country as possible, particularly enabling administrative headquarters to access services and be able to manage administration easily,” explains the REA boss. “So it is not just consumption but also, ‘how does government provide services to the people in an optimal manner?’”

Turyahikayo says despite the failure to meet the 10 per cent target, for instance, REA will by the end of this year meet its objective of connecting all district headquarters to the national electricity grid as a way of “making a very big improvement in terms of government outreach” in the countryside.

“So, electricity should be looked at more as a catalyst for development other than following development,” he says.

REA officials have also complained of substantial political interference, which has seen senior political figures in government pressure the agency to divert from its original plans and thread electricity lines to their constituencies without any contingency plans for the additional costs. In its own annual report for 2008, REA offered details on the problem, saying it was digging into its limited financial coffers.

“There is a lot of pressure from leaders and communities to have electricity extended to their areas. Focus is particularly on grid-extension, whether it makes financial/economic sense or not. Yet, much of the demands could be met by other means, like solar electrification (Solar PV systems),” says the report.

Turyahikayo says REA officials have learnt from the challenges that the agency faced in the first phase of the rural electrification project and are using the lessons to run a more efficient operation in its second 10-year implementation phase.

That phase, expected to cost at least $950 million (about Shs 2.4 trillion), started in 2013 with the target of extending electricity access to 22 per cent of rural Ugandans to use in their homes, businesses or institutions. But even as REA implements this phase, residual challenges from the first phase continue to slow down the project.