V ~RESTRICTED AF58 [ ILE COTP Recort No- AF- 58a Vditime 23 This report was prepared for use within the Bank and its affiliated organizations. They do not accept responsibility for its accuracy or completeness. The report may not be published nor may it be quoted as representing their views. uN .1 J'INAt1 I BANK rO. Vr..'i%R RT1 Ri uC I I%.JIN 4LIP Ljr v LOV Mrlv.jr1N I ITTM'TMIT I 'TA T I TI A tlT D t-L1 - NTV A,SSOC'ITkIION PROSPECTS FOR ECONOMIC DEVELOPMENT IN EAST AFRICA (in four volumes) VOLUME IV - UGANDA (in seven parts) PART SIX: ANNEX E - ELECTRIC POWER August 31, 1967 Africa Department EQUIVALENTS Curreneya L Uganda Shilling U. S. $0. 14 U.S. $1 = U. Sh 7. 14 6 1 - U.S. $2.80 L 1 - U. Sh,20. 00 Wei,,kt Throughout this report, unies.s otherwise stated, tons refers to long tons of 2240 lbs. COMPOSITION OF THE MISSION This report is based on the findings of a Mission to East Africa which did its field work in October, November and December 1966 and consisted of the following: John C. de Irilde, Chief of Mission (IBRD) Colin M. F. Bruce, Deputy Chief of Mission and Chief Economist - Kenya (IBRD) Kudlapur G. V. Krishna, Economist - Kenya (IBRD) C. G. Akhurst, Agricultural Adviser - Kenya (FAO) Maurice Fenn. AgrricuLtural Economist - Kenya (FAO) Per Tveite, Deputy Chief of Mission and Chief Economist - Tanzania (Consultant) Bruno E. Scheltema, Economist - Tanzania (IBRD) Archie Forbes, Agricultural Adviser - Tanzania (FAn) Jacques Kahane, Agricultural Economist - Tanzania (IBRD) Otto MaiSS, -eputy Chief of- Mision and Chief Economist - Uganda (IBRD) NTi-,cho- a s Carter, Econois- TjUnd,a (TIBRDPT)) David I,>. M. Haynes, Agricultural Adviser - Uganda (IBRD) lontague Yludelman, A- ricultural Economi st - Ugad (Consultant) H. David Davis, Adviser on Tourism (IBRD) Bernard .4TT. Decaux Advi-4ser on Industry (Consultant) -4 D u tii f* JJt~UCdUZA TVALy J UI±IULALUA LI) ~, UU1IOLU.L UCLLI U Jack Derrick, Adviser on Industry (Consultant) Ed w ard IV. V. Tayc-, AdAr- on` --np (ITPRD Aristides J. Macris, Adviser on Agricultural Training and Education T jFTQT) David McLellan, Adviser on General Education (Consultant) UyeLL El. itcLLhieUUL, iUVLDU1 ULI oLL1Ustria.LI anLL1a[1U C I.U) Gavin Wyatt, Adviser on Power (IBRD) The Mission's findings relate for the most part t,o the situation as of the end of 1966, although in some respects note has been taken of developments up Lo the middle of i907. TABLE OF CONTENTS Page No. Summary and Conclusions Introduction 1 Demand for Electricity 2 Existing Installations 2 Organization 4 Finances 5 Tariffs 6 Future Demand 7 Capital Program 9 Fulture Strateav 10 Tables 1 Uganda Electricity Board: Growth of Maximum Demand, Sales and Load Factor 2 Uganda Electricity Board: Actual and Estimated Sales, 1953-65 3 Uganda Electricity Board: Summary of Balance Sheets, 1954-1965 4 Uganda Electricity Board: Summary of Revenue Accounts, 1954-65 5 Estimated KTA1H Generated, 1966-75 6 List of Medium and Small Industries Likely to be Connected, 1967-69 7 Estimated Power Sales to Special-agreement Customers, 1966-75 8 Estimated M4aximum Power I)emands, 1966-75 9 Estimated Annual Capital Expenditures of Uganda Electricity Board, 1965-75 10 Estimated Sources and Application of Funds for Uganda Electricity Board, 1066-7 MAP ELECTRIC POIdER TN UGANDA STIUARY ANT] GONGTIJSTONS 1. Sales of energy in Uganda are expected to increase at an average rate of between 05 percent and 7½w percent per annum over the period 1966 through 1975. 2. Allowing for uprating of the completed Owen Falls Station from 150 MAT to 1R8 MW and also fnr an increase in the water available from a mean flow of 505 cubic meters per second (cumecs) to 630 cumecs, the Owen Falls Statinn will 'h fully cnmmitted and a new soiurc of nower will hp required by about 1972 or 1973. 3. A decision on where to obtain additional energy will need to be made by early 1968 at the latest, in order to allow an adequate time interval for financing and construction of the next major development. h. In order to explore the advantages of cooperation with Kenya in the provision of additional generating capacity in 1972 or 1973, an immediate attempt should be made to start discussions with the Kenya Government and power companies as recommended by the Uganda Electricity Board at their meeting of November 25, 1966. 5. Some consideration should be given to a review of tariffs having reganr to the need to obtaln ptimum 11usage of the n-vaiable facn-ilit+i ELECTRIC POW'R IN UGANDA Introduction 1. Public supplies of electricity throughout the whole of Uganda are provided by The Uganda Electricity Board (uEB). Prior to l9h8, public supplies of electricity in Uganda were provided by the East African Power and Lighting Company Limited (EAP&L) and were limited to the Jinja, Entebbe and Kampala areas. Toward the end of World W4ar II, the EAP&L, anticipating a rapid expansion of demand in the post-war period, obtained from their consultants a feasibility report on a proposed hydroelectric project on the Nile at Bujugali costing about £2 million with an initial installation of about 20 MW. Application was made to the Uganda Government for a generating license with a view to constructing the project. The Government of Uganda, having at that time accumulated consider- able reserves through the Marketing Boards created during and after the war, decided instead to take over the EAP&L's assets on the terms and conditions laid down in the Company's licenses. For this purpose The Uganda Electricity Board was established in 1948, and generous compensation was paid to the Company for acquisition of its assets. 2. The decision to take over the EAP&L's assets was influenced by the report of Mr. Charles Westlake who had been commissioned by the Uganda Government to report upon the development plans of the Company and the future of electricity supplies in Uganda. The Westlake report, which was completed in 19h7, contained very optimistic forecasts of demand, dismissed the Company's Bujugali project as inadequate, and recommended the taking over of the Company's assets and construction of a much larger project about three mniles further upstream at Owen Falls. The Government adopted the report's proposals and appointed Mr. Westlake as the UEB's first Chairman. 3. The initial Owen Falls installation was commissioned in January 1954 at which time the load on the system was 15 NW. By this time the optimistic nature of the demand estimates contained in the Westlake report could no longer be ignored, and the UEB commenced negotiations with the EAP&L for a bulk supply of 45 MW to Kenya on terms which were not very attractive to either of the contracting parties, but in the particular circumstances existing at that time, happened to suit them. The EAP&L was faced with the prospect of increasing its expensive diesel generation in Nairobi or raising a large amount of capital for a major hydroelectric project at Seven Forks. The cost of the bulk supply when delivered to Nairobi though 60 percent more than the Company's own hydro power was still cheaper than diesel generated power, and was a convenient means of filling the gap until the Company was ready to construct Seven Forks. On the other hand the UEB in 1956 with a capital investment of about £22 million had a gross revenue of only £1.1 million and was losing nearly £1 million a year, most of which was being caDitalized. h. On comnletion of negotiations, the 300 miles of double-circuit 132-kv line crossing a 9,000-foot mountain range, from Owen Falls to Nairobi was huilt in the very short. tim-e of eighteen months- The hulk supply to Nairobi was inaugurated on January 1, 1958. 5. Only since the beginning of 1965 with a maximum demand of 100 Mw (Lo of which was for the Kenya Bulk Supply) and sales of 523 millilon kwh (of which 191 million were to Kenya), has the UEB been able to show a surplus. -2- 6. The L Ui nothjier 1icesedLJZLL IU puj4pplier 01 e±UULI( tUy iL] Ugarida but the UEB has issued h6 private generating licenses totaling 1100 kw of plant, to individuals, firms and Governmient admninistrative centers beyond the reach of the UEB mains. Demand for Electricity 7. The growth of demand from 19h9 to 1966 is shown in Table 1 together with the annual load factors and the annual percentage increases. A considerable proportion of the increase in demand in Uganda over the past ten years has been due to the expansion of the transmission and distribution systems into new areas. For example, the total length of lines in service has increased from 629 miles in 1954 to 4,475 in 1966, and much of this development can be classi- fied as rural development. With the exception of the copper smelter, steel rolling mill, and textile factory at Jinja, none of the major loads forecast in the Westlake report materialized. Nevertheless, over the years, there has been a considerable development of minor industrial load, mainly in the Jinja and Kampala areas. Sales of energy by categories over the years 19h9 to 1966 are shown in Table 2. 8. The average annual increase of power demand for minor industries on standard tariffs between 1956 and 1966 was about 10 percent. In the same period total industrial power demand including major industries on special tariffs increased at an average annual rate of a little over 23 percent. 9. Residential demand over the period 195h-l959 increased at an average annual rate of about 13 percent, but since then it has stagnated mainly due to the uncertainties attendant on the transition to independence. However, in 1965 and 1966 there have been increases of 12 and 11.2 percent. 10. Sales to commercial consumers including hotels and clubs have increased at a fairly steady average annual rate of about 13 percent over the ten-year period 1956-1966. 11. The export to Kenya has remained steady at around 190 million kwh per annum since 1961 until 1966 when it rose to 203 million kwh. Existing Insta]lations 12. The caracity of hvdroelectric generating nlant,s inst.a11P dt t, n Falls is now 135 INW consisting of nine machines of 15 MGW each. It has been found that both the turbines and alternators of these machines are capable of sustainpe operation at 18 1MW, and the UEB is now contemplating the uprating of the existing machines to raise the station capacity to 162 T=M The foundations are com.pleted for a tenth machine identical to the existing machines which would complete the stat t iacine w o in 1966n a is due to be cmlioned in J 1968. The power station is installed in the base of the dam and operates on a head ol about 60n-j - fe-e utilizigKapn turbines. 13. Th-"e mean level of L ake Vi;ctoria Js about' 37-16 fet bvese-evl and varied between 3,713.5 and 3,719.2 in the period 1899 to 1961. Although thle uwen Fal±ls Damii, wihichi -is situated on the N0] iLeL± U atULJij JJU UbeLow Wth outlet from the Lake, was designed to artificially raise the level of the Lake to 3,723.5 feet, if required to provide additional storage for downstream1 -3- users, and Egypt contributed to the increased cost of the dam on this account, it has in fact never been used for this purpose. This is because no agreement has yet been reached on the question of compensation to owners of lakeside land, whose properties would be flooded. However, exceptionally high flows in the rivers feeding the Lake in the period 1962 to 1966 have raised the level of the Lake to 3,724 feet. The UEB maintains that this rise has not been influenced in any way by the construction of the dam since they have been operating the sluices in the dam in such a way as to allow the level of the Lake to follow its natural regime. In this resDect they have been complving with the provisions of the 1929 Nile WJaters Agreement except for a short period in 1965 when high dnischarges were continuouslv maintained to artificiallv lower the Lake level because of the threat to lakeside installations and the Owen Falls Dam itself. 14. The Lake, with an area of 26,100 square miles, is one of the largest natu.iral reservoir in the ijwnrld. and has a catchment area of 103;200 square miles containing mountain ranges up to 15,000 feet high. With such a vast long-term storage basin it would be unreasonable to relate power outputt to run-of-river conditions. For this reason a tentative agreement with other inte-restedparltr+ies Twas reacphed in 194 8, li whlch nry-nria tfor a flrm arage discharge for power purposes at Owen Falls Dam of 505 cubic meters per second (cumecs ). The balance between this average discharge of 505cumecs and the then estimated average flow of 676 cumecs (based on flow readings since 1899) woul d b e_ stred Jin the Lak and- relea nsed nn accrding"+n+I to o ih require meantsq of' down 1r- ,~~rWl A - -_ -~ T ~t - .,-A `_~ - - - - - -V -,-A--.IF, -r -- ~ -_~cn+ ~ Atr.r-1 stream users. This agreement has however never been confirmed or adopted. 15. The recent high discharges from the Lake have raised the mean flow from 1899 to 1965 from 676 cum.ecs to 7h6 cumecs and the UEB's consultants maintain that an allocation of 630 cumecs would be more appropriate as a mean flow on which. to base outputs 1for generating statns in the cst+neh of' the Nile between Lake Victoria and Lake Kioga, some 75 miles downstream. Ai 4L.V J .)J V.Ul~. Jc'AA~ il'U i S4 JV LJ - -1' . J1 s ~ U±.I 4 or LL ~ A.L Ai flow of '630 cumecs passiLng through thuile Olwen Fa-l ls Station, w,o-'d generate about 900 million kwh per annum instead of the 720 million kwh originally assumed. In fact, due to the present very high level of the Lake, it is probable that if the discharge is limited in future to the needs of power prod-uction at Owen Falls Darn, an annual output of well over 900 illion k-wh could be maintained for some years after the demand for energy reaches this figure. Da Ly or weekly 1±uctL±uatILJd-Lons in discharge due t Uo the ±luc±UUbUdiL power ideman do not present a problem to downstream users since there are two very large niatural af tery reservoiLrs in L.ake Kioga and Lake Ailbert, (buth i LIUda) which smooth out variations of this kind. 16. In order to justify the incorporation of additional plant in the design of the proposed Bujugaii Station, the UDE recently attempted to obtain an increase from 505 cumecs to 630 cumecs in the amount of water discharge tentatively allocated to power production in the 1948 agreement. The matter was referred to an international committee of water commissioners from the countries concerned, i.e., Uganda, Kenya, Tanzania, Sudan and Egypt, but it is understood that this committee has recommended an increase to 550 cumecs only. However, the Government of Uganda is pressing for an increase to 630 cumecs and since the 19h8 agreement has never been confirmed and the quantity of water passing the Owen Falls Dam is greatly in excess of this amount and, 'moreover, there is no other outlet to the Lake, the level of which is now being main- tained in accordance with its natural regime under the 1929 Nile W4aters Agree- ment, the question is to some extent an academic one. 17. Tn additi=on to Owen Falls the UEB has five thermal stations. The largest contains 10 diesel driven generators of 800 kw each, installed between 1950 and 1952 at Jinja rduring the ronstruction period of Owen Falls Power Station. The other four are isolated diesel driven power stations at Kikagati (1 7i0n klT. Kbnhae (5 w)n , Ari) (Cnn kw) ind Moroto) (n00 kw). 18. The UTE was established under the Uganda Electricity Board Ordinance 1947, later amended in 1961 with assistance from t;he International Bank for Reconstruction _and Deve!on-ent. The~ nOrdinance gives- the TIPP in pe-rptu)nityi all the normal powers included in a license and in adclition authorizes the UEB to issue generating licenses to other users who are either able to generate at lower cost than the UEB can supply them (as for example where process steam is required) or who a-e so fa- from +th -neae+ TWI -m-ins +that+ the cost+ of the , K:;~ U- , , J m. - ii c .z.ci _ _AL*UJ . cih . ne_ _ -h necessary extension would be prohibitive. 19. The UEB is an autonomous corporation established by the Government for the purpose of proViLdLn e±lectricity su'pplies Lothroug u the coILUIJnury on a commercial basis. The Board consists of a full-time Chairman and not less than fiv, r,or mor tha -ih mebes -l -of-_-4--.-1- wl-, are appointed by the IT,,in4ster of Ii VU, L'JIi 11101 ult1J t=±Lt11u fliteIIIueJ. 1 JI U 0±- Vj10 litAI CXK~ ciFJ-)U&LJ U~U U1i~ IL-LI _L U _± Commerce and Industry. At the present time the Deputy Chairman is also a full- LI1me member o[ f tLhe Board UwhIo was for many years Uthe UL 'M ULAccounJ bLJ U. Other members are part time only. 20. The Board has enjoyed a high degree of real autonomy since its 1 _ 1 ' l 1 T1 1_ 1__ _, -% n _ - I 1_ 4| 4 - estadulisfl[rent. fi f15S of course been cdreful to enLsure that its powc- a generally in line with the Government's policies, but only insofar as these do not conflict with the principle that it should be guided by normal coummercial practices in the performance of its functions. Although the Minister has powers under the Ordinance to direct the UE in matters of public interest, he has never yet used them, nor has the Government at any time put pressure on the UEB to carry out sub-economic developments in rural areas. Although the Govern- ment would like to see lower tariffs in force in the rural areas it has refrained from using its powers to bring this about. 21. The permanent employees of the UEB number about 1,350 of whom about twen- ty are expatriates on contract employment and 96 are of Asiatic origin. Most of those of Asiatic origin were born in Uganda and are Uganda nationals. It is expected that all but about three or four of the senior expatriates will be replaced by Uganda nationals within the next two years. The total number of per- sons now employed, though small in relation to the size of the undertaking and the numbers employed in the past, is adequate. In fact, the reduction in numbers has increased the efficiency of the organization in recent years. Some of this reduction has been made possible by the introduction of electronic data pro- cessing machines in the accounts department. 22. The Board has a small training school at Jinja and sends students to local colleges and universities, as well as overseas for special training. 23. The Board determines the staff salary scales and terms of service. In practice the general level of salaries for senior staff is comparable with salaries of Government officials and considerably higher than average commercial - 5 - salaries. In the lower grades the UEB pays appreciably more than either Government or industrv. The Roard kpynriences little difficulty in ohtnining and retaining staff of the quality, and in the numbers, required. 2h. The Board employs consulting engineers on all major generation and transmission projects and also pays for permanent representatives of the consultants to be available in the UEB office at all times, to give advice on day-to-day- engineering pro'ble ms. 25. The Board- con-r n - n- - a - - - sion lines up to 132 kv and at present is carrying out all new works, involving an expendit-ure olf about rl millioT4n a year. In past when Lhe vo,e OL work has exceeded the department's capabilities, contracting firms have been employed on major items in the progr---. Finances 26. Sumirna;ries eof thle UEn balance sh1eets and revenue accounts frurl 1_L9h to 1965 are given in Tables 3 and 4 respectively. It will be noticed tha-t the amount of equity is insignificant. The preponderance of loan capital pre3ents serious financial problems with regard to its redemption, and the Government and UEB are now faced with the need to redeem a foreign loan of L9.1 million in 1969 and another of E4 million in 1973, in addition to providing the capital for expansion of the undertaking to meet the growing demand. Mlainly because of lack of revenue, sinking fund provisions in the past have been inadequate, and in 1969 only L2.7 million will be available leavlng a balance of L6.4 million to be found. The Board has promised to pay the Government L2.5 million from revenue over the three years 1967 through 1969, but this still leaves L3.9 mil- lion to be refinanced. With the Bank's consent the UEB has recently obtained a 14 million loan from Exporters Refinance Corporation (ERC), half of which will be used to redeem some of.the 1969 debentures. The remainder will be used for general development, releasing equivalent funds from revenue to redeem the bal- ance of debentures due in 1969. This loan will be repayable over the 7-year period 1967-1973 and in effect relieves the Government of the necessity o: lending Th million to the UEB in 1969 for redemption of the 1969 debentures. A similar problem exists with regard to redemption of the E4 million in 1973 toward repayment of which the sinking fund will have provided only £1.3 million. It is not possible to forecast how the Government will deal with this question, but a possible solution may be for the UEB to increase tariffs. 27. Most of the financial difficulties now being experienced by the UEB are the result of past errors. Over-optimistic estimates of future demand, unnecessarily large initial installations and lavish design of Owen Falls Power station as well as over-extended mains have all contributed to the high cost of power, and failure to face up to the realities of the situation and raise tariffs instead of capitalizing losses and expenditures properly attributable to revenue account have added to the difficulties of the present management, to whom credit is due for the very marked improvement in recent years. 28. The policy of the present management is to finance as much capital development as possible out of revenue even to the extent of 100 percent of all development other than major generating projects. In the same vein, the possibility of deferring exnenditure on future maior generating prolects in Uganda by cooperation with Kenya is being actively pursued. Thus the Board, at its meeting on N\Toverbhr 25_ 1966, npssed a resolution urging that the possibilities of such cooperation with Kenya be studied by a committee of interested parties under a Chairman to be nominated by' the World Bank. -6- Tariffs 29. In general the standard tariffs of Uganda are higher than those of Kenya or Tanzania, but the relatively low rates charged for the high load factor demands of the seven large consumers on special tariffs and the bulk supply to Kenya (which together account for 50 percent of units sold) bring the overall average yield per kwh sold to a much lower figure than either of the other two East African countries. 30. In systems based on thermal generation an improvement in system load factor will result in economies in production for any generating station already built. This is not true, however, for systems based on hydroelectric generation requiring major storage dams. In such systems the cost of production is almost entirely fixed by the cost of providing the storage. It follows therefore that whereas in thermal based systems the tariff structure should contain inducements to operate at a high load factor, this may not be desirable in systems based on hydroelectric storage, once the project has been ccnstructed. In fact such inducements can lead to undesirable consequences, particularly as in the case of Uganda where the whole system at present contains only one generating station. For example, the Owen Falls Station is designed and equipped to operate at 60 percent load factor, and is limited by the availability of Twater to an annual outnut. of ahont 900 million kwh For reasons given el'se- where in this report, the UEB has entered into agreements to sell large blocks of power on tariffs wAhich contain powerful incentives to operate at very high load factors with the result that the system load factor for several years ase een llTAP over 60 nperoetri= ince te station is alreadv oillt_ and the costs of production are therefore fixed, these inducements merely result in a reduction in the total revenue which cran he obta.inedr from the limited output of about 900 million kwh, with no corresponding reduction in costs. As a result the UTB in order to make ends meet has heen ohli] ged t.o raise the level of rat.es on standard tariffs to make up the deficiency. The present management of the UEB is nowT +trying tn rnotify this u.nsatiscfatotry7 sta:tefn af qffa i-rs bhy r;aising the level of special tariffs to large consumers, as opportunity arises through the expiry of exis ting agreements. However, since +he K'enya Bulk Supply tariff (which contains no rate revision clause) has another 40 years to run and being a si mpl ,ilowatt demand tariffiencouravges t.he i eny,a c0mpanCis to operate it at near 100 percent load factor, it would now be necessary to ACl;~~~~~~~~~~~~~- P, +; 1,A) ----- ;-4 1-l 4 1fw Y -1 > Tl-,-A Uz | L, U V iVL.2|3U.J O,y a J UD 1 |L 'cA 1-l lU1 approu11 J JJ WJ U_3 iDI U UtJihIUf in order to obtain the optimum economic use of the Owen Falls Station. To ach-ieve suchl a result 4t 4 wouldA seem 4hat utur changes in trif stucur flU1iJ~ V ~ C UUVI £ E U±L J.. LI V LUU± U LAIdc LI _LU L,UI 5z UId-al ttee _Ln Udia -LII. surucL. ure should be in the direction of flatter and higher power tariffs and lower residen- tial and commercial rates, unless it is possible to eliminate the bulk supply agreement in the course of a much wider agreement with Kenya on cooperation in Ulle dUeveJlopmen[t o0f generatinlg, I reoUrUc Us 9±, wLnc e 195U0,te stLlanudard( tLlar-I I 11ha Ubeer, nIJUIn sed 2 t ±0 ep- tember 1953, decreased 5 percent in January 1955, once again increased in April i n o r U_ , 1 - -__ ---- T -- __ r n u_ nO 0 - . _ _ - 1959 Uy 1 3.4 perceuti a hen again in July 1961, by 10 pe rcent I. ioual netU cumulative increase thus amounted to 58.8 percent. 32. Of the seven large power consumers now on special tariffs some are yielding a return of less than 6 cents per kwh sold , but the new tariffs now being negotiated are designed to yield a minimum of 6 cents per kwh sold. 33. Much criticism has been directed at the bulk supply agreement with Kenya and it is true that the rate of I13.5s (US$37.10) per kw of demand at which this power is sold to Kenya is too low in relation to the cost of produc- tion in Uganda. On the other hand, the cost per kwh delivered in Nairobi, includ- ing transmission and losses is 60 percent higher than the cost of locally gener- ated hydro power. The UEB would now like to revise the tariff but the agreement contains no rate revision clause. Some minor changes were negotiated in 1963 which were to the benefit of both parties, and particularly to the UEB which obtained a reduction in load factor and in the amount of power to be provided after 1967. As the agreement now stands the UEB is committed to supplying the Kenya company's requirements up to an amount of 45 MW until the commissioning date of the first 20 M4W machine at Seven Forks, which is expected to be in earlv 1968. Thereafter Uganda is only committed to supply 30 MW to the Kenya company at the Tororo sub-station on the borders of Uganda until the vear 2007. The revised agreement also provides that if Uganda has spare capacity available, Kenva may bliv sni]l units over and above the 30 MW bulk supnnlv. The IJB gained a slight increase in the yield on the bulk supply from the supply of these snill units which are now being billed at 9 rents nper kwh. Unless this agree- ment is cancelled by mutual agreement during the course of a general agreement bhew+.eTen the t.wn ounin+.tries to nooenirae+.o in fiutuvre devwlopnnment. nf geonerantingn resources, there is little prospect of the UEB obtaining any further improvement in the conitins Fbture rEm.and 3n. Estimates onf' --+-re energy reurmnvi+s -or +hie yaro 1967=75 a,r shown in Table 5. These may be divided into three sections: sales on standard +ar-l-fs; sale I on s p ec1i al1 ag r e e m ~ent+s, -an --lk sup' to , 'PI'-a The . esti.at Li, L±4 00 4 )J 04~.X. 5 1 -5ILJLi) 0LJ'0 Li I0..Ct i'.. *LilJya. ± .'0 Cr0 LMiMil.L of sales on standard tariffs and for the bulk supply are in accordance with the TTEB's ow - - _4;- laes. TIn 4the case ofl sale on - pca -gemns - 4- ----- T=5 es'i UIL,.U 0 %VLJU 14 Cr UL11 L. UC * Li Uu1C L-.Lr J 0. r LLJ DyQF _CrL..L.. M61.-,± Cr IIrJQ05v U11 C ULIU) r U.L mates have been modified in the light of discussions with the UEB management, the consumers themselves and other information obtained by the Mission. 3ff The annual Jncrease fore-at fPor sales on standard +-r ffs oe h ; . ~~~LilC 0.L LJU LLJ'..' Cr0.QCr 44.C'00Li4 .4 O L r Li Ii LiiUC,LI \.A Li...4 40 '1V'0 i.. period 1967 to 1975 falls from 18.5 percent in 1967 to 7.8 percent in 1975 and averages abo ut L 5 0 over . ) percent over t1he Whle period. Th lie Caverage -v- Cr4. e pr ceding 10 years was a little over 10 percent, but would have been much higher [Ju Lo1 belC UiJLeIbda±ib±b auttenb1iUdnti on the transitiLOn tUo InJdU-nIcJAUIJLt WhichLU resulted in an actual drop in sales on the residential tariff in 1961 and 196 2. USl on bhs 'arVff uid rno recover unt"i 1965 w-en a 12 percent increase over the previous year brought them above the previous record of 1960. Sales on the small industry and comm-ercal tariffL werU a_u a:llUUtU by tIhe exoUUs uo expatriates but only to the extent of causing a temporary reduction in the annual rate of increase. The estimates of sales on all these stancdard tarilis are 1/ In this report, Tanzanian cents are used. There are 7.14 Tanzanian cents to the US cent. - 8 - reasonable and might well be exceeded. A list of small- to medium-sized industrial projects known to be in hand or under consideration is given in Table 6. 36. Estimated sales to Kenya are based on the amendments to the Bulk Supply Agreement negotiated in 1963 (see paragraph 33). Spill units have not been included in the estimates as the quantity is small and is difficult to predict. The 200 million kwh per annum included in the total units sold represent a steady offtake of 31 ID- at a load factor of 73.7 percent. 37. Estimated sales on special agreements for the period 1967 to 1975 are given in Table 7. There is some difficulty in forecasting these sales from 1969 onwards as the proposals for expansion of the textile and steel industries have not been fully developed. 38. The Nyanza Textiles agreement with UEB expired in January last year, since when they have been charged a flat rate of 6 cents per kwh pending agreement on a new tariff which UEB estimated will yield a minimum return of 6 cents per kwh, The yield of 6 cents per kwh represents an increase of 36 percent in electricity charges to the consumer who is now considering the economics of changing over from the existing electrode boilers to oil fired boilers for process steam raising. Alternatively, he may only utilize oil fired boilers for the extension contemplated in 1970. The effect of both the alternatives is shown in Table 7. 39. In the case of the steel industry the existing rolling mill has a furnace for melting scrap iron but supplies are proving inadequate and the market for the mill's products is expanding. The mill owners are contemplating the addition of a small furnace with a load of about 10 NW which would produce what they refer to as "artificial scrap" from the iron ore available at Tororo. The project would cost about £500,000 and the Goverrment is not contemplating participation in this venture because it has in mind a much larger project for development of the Tororo iron ore deposits at a later date. No finance for the smaller project has yet been obtained nor has the process to be used been finally determined, though this is said to present no problem. There is therefore some donuht as to whether this load will materialize, but it has been assumed in the estimates that it will be commissioned in 1968. 40. The effect on total sales would be much the same if either Nyanza Textiles changes over to oil for steam raising, or if the steel furnace does not come on. In Table 5 the total sales shown in the column headed "with textile steam load" assumes that neither of these eventualities will occur. The seron1d column headed "without textile steam load" shows the effect of either one or thle other occurring. 14L * plsa fa j'I. A proposal to const.ruct a fcrtilizer fa ctory which IJ oulad have an electrical demand on the UEB of 60 NW has not been included in the estimates. The promoters of the project originally stated that a pricc in excess of 2 cents per kwh would be unacceptable but later increased this to 3 cents. .J)UL 4.±V -I.U± 11 ~ lt U Ui UUJ , TT U 441i' 4 ±11111±eV~ ia vy ouch' a 'lowv ratue could not- be offered lby Wthe IOU wihutincurring very Iev losses and this has been accepted by the Government who have consequently cons idUeredU subsidizing tlhie rat e. Foreign,L inance may ue availabvle for t01hi-e project, but the Mission doubts whether such a project would be justified in - 9 - Uganda, particularly since a more attractive fertilizer project is already in an advanced stage of negotiation for Mombasa in Kenya. The natural advantages of the Mombasa site are such that it is unlikely that the Uganda project could compete other than in the relatively restricted market of Uganda. This l1oad has therefore not been included in the estimates. 42. The maximum demands estimated to correspond with the estimated energv sal es given in Tab]_e 5 are shown in Table 8. Gani ta,l Program h|3. The main details of the capital program of the TTEB for the years 1966 through 1975 are shown in Table 9. The latest available actual expenditulre L;7) ) l di LJt1iJ iiUVJlJ jUl Ctl pUDeD 01 iUJlilPdl ALVIJ . L2 1The present nominal capacity of the nine machines in Owen all- totals 135 MW, but the known capability is 162 IMW and the UEB is considering uprating thlenominaln - -- c-apaci 4t1h figure. A tenth machlne Js alrady sche-du1-1 for commissioning in 1968 which will raise the total uprated capability to 180 MW and 4the-P;- -i, capability 4to 162 tnj 'OP -- -eeec -4o Tablel- A shows tha-t no acldltlonal %AJL U11i _J.A lIII1 LP LJ -JO. U L± U,) U/i AJ iiv.i l.V.LV~VJLI~U U/ 1.L/1J LU ,~AlS W l / -C.U IL' iLLJ U4 L/C. capacity is then required to meet the maximum demand before the end of 1973 andA poss4b]y11 not before- 4th1e -d of 1 . However, I.reference 4Lo Table 5 'shows that additional capacity may be required to meet the energy requirements by the enjdL of. 172 , uniless bhie .Lalke can be mainta iLnLeJ d at a high enouglel iv Ln tLie intervening years to provide the additional kwh required up to 1975. 45. Assuming it will take approximately four years from the date of plaacing on tracts to the commIsiIoning Of any maJo r hydr-elecric pruJeu tI sucI as Bujugali on the Nile, it would seem that a decision on the next major develop- ment will be required at the end of this year or early in 1968. This wotild allow one year for appraisal and negotiations on finance before placing contracts at the end of 1960 or early in 1969. 46. In its desire to avoid incurring any further capital expenditure earlier than is absolutely necessary, the UEB has resolved to utilize the period up to the end of the current year in an endeavor to cooperate with Kenya over further exchanges of power and the joint development of future generating resources. They consider the simplest way of achieving this would be the creation of a joint authority for all major generation and transmission in the twc, countries which would involve the taking over of the existing major hydroelectric stations in Kenya and Uganda and also the 132-kv bulk supply transmission lines and sub-stations. Such a step would require no initial cash outlay other than the acquisition of the nominal nongovernment shareholding of the Kenya Pcower Company and The Tana River Development Company, amounting in all to £142. Both these companies are financed entirely by debentures and are required. by their articles of association and licenses to sell power at ascertained cost. 47. It is probable that cooperation in the form suggested by the UEB, or even in some looser form, would be of material economic advantage to both countries. It would with relatively minor expenditure enable the existing bulk supply lines to be put into reverse thus permitting the optimum use of thermal and hydro plant in both countries, and by pooling the standby requirement- would increase the firm capability of the two systems, thus deferring further capital - 10 - expenditure on generating facilities for some time. By virtually doubling the annual increment of detmand it would accelerate the loading up of the next major generation project thereby improving its cost/benefit ratio and reducing the cost per k-wh generated;. in the earlv years after commissioning. It would also justify enlargement of the list of future projects under consideration for HpveopnmPnt in t.h- .n-rlv 1970's to include some attractive pronosals, both on the Tana River in Kenya, and the Nile in Uganda, which have hitherto been excluded on account of their sizze. )h8. In the absence of any indication as to whether cooperation with Kenya can be achieved, expenditure on Bujugali has been shown in the program as cm i i . This repr-esent t--e wo-rst_- case from a oi-nt- of view of capital expenditure. If cooperation with Kenya is achieved and the next project selected for development is one of th later stages of Seven voyLr- it is probable that Uganda's share of the expenditure would be less than a half of t1at shown in Tabl 1_e 9 for Bu£JJ uga6l . Moeoer p of t £1.5 million required for 132-kv lines in the Kampala/Tororo areas would probably not be required if a bulk supply is obtained from Kenya. 49. '---en14it 4ure on H1. T. andA T . rL.. d is-tribj1utio nJ -_ covers m-inor extens-i--, at voltages of 11 kv and under, to small communities and individual consumers WI LALLJ ~I ~1UU U LLb LLIJU~ U ULIC t.X WLJI V~ I~ UWUII. UJ.fli *V UIL Li .LUU U11411_ ~ JU- witinL a short distance o f thi'e ex'tenisive network of H..dstribtinlie which have been laid in recent years. There are no major projects envisaged -for 4the e-lectrificatior of remote commmurities whi-ch- could- b-e c-lassified as 1 U1,le _1L U _L ii ±1. ULUL '-4 1L Z Ii ~ U_1llllUiL UL~C VV±LK11 141UIN U ~ _LO. ± L_L1 . sub-economic rural electrification schemes. 50. Table 10 shows the estimated sources and application of funds required to carry out the program outlineu in Table w. iL Lll be noteu lhat tle UEB is moving into a new phase in which it is expected that gross inccme from the operating account -will greatly exceed the interest on loans chargeable to revenue. This is fortunate in view of the need now to face up to the inadequacy of sinking fund payments in the past. Repayment out of revenue of the t-wo loans totaling £13.1 million, mentioned in parag~ ~~~t -~ -{___ - - -3lr - - \-&) - Z ~ -. ? '°^ 7 ~= --)9 / rl vI r} ' P \ s - /~=- I9( p '7 st.ES.Ju'' ''Ss 5r~e ( ; M D le it ) So~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~rot* zo,9 'X( ot / % z' t/ ~)rS0X ,* Kltgum P Z rX1!<> ° s / - ?,V 1-~~~~~~~~~~~~~~~~~~~t.. Q 9 M1a0O, S K- 09- I g8 z eb bveML* t Nsmule \ 0 SFc/50tj <<$ °° 20 X g/~) o°°°°°oO4 o / \ r bove - 112 , MbobooeoMS z o N G ° <<:SLr~~~~~\f .;°r? ° KlsogtJl i _BZ°9 ;) 1o i cd~~~~~Z:f _ Proposed Power Stat.ions I ~~~~~~~~~~~~~~~~~~~._ O~r A A SO OiO A K DA ~ ootolDo Cathment rea Lke Vit., i-wK al \ oho ~ ~ ~ ~ ~ *_ >D Ds Klo ouR Ni ------~~~~~~~~~~~~~~~~ Cacmn2ra-wn8al-uc:s.Fls li,i\. 5 O O 51) t ] ; \ * ° q ~ j c clc ° ° 5O C C D Ubo ce MARCtI~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ 196 IIBRD-1966