Uganda Government pays Bujagali contractor 2Billion as commissioning bonus

16-April-2012

The government has paid Bujagali Energy Limited, the consortium constructing Bujagali power plant, about Shs2 billion ($796, 008) as an early-commissioning bonus.

The payment is for the successful completion of reliability tests and the unit-by-unit commissioning of the power plant’s five units - each of 50 megawatts (MW).

“Yes there is an allowance for that it is part of our contract with Uganda Electricity Transmission Company Limited,” Mr Bill Growth, the project’s resident construction manager, told Daily Monitor on Saturday.

Bujagali’s commissioning, earlier slated for last November, was first pushed to December and later to February 2012 after leaks permeated the first unit.

Following the repeated postponements, government reportedly ‘dangled’ a cash incentive for the company to complete the works early in order to address an acute energy deficit that was facing the country.

However, Mr Growth said the bonus was part of the contract.

The commissioning of 100MW at the plant has seen a reduction in power cuts with Umeme, the power vendor, cutting its load shedding schedule from 12 to two hours a day.

However, there are fears that within one year, the 250MW that will be generated by the plant at full capacity will not be sufficient to meet demand, which is currently growing at 10 per cent (45MW) annually.

The power generated from Bujagali is currently ‘replacing’ Aggreko Kiira and Aggreko Mutundwe, which has been contributing 100MW to the national grid.

The two thermal power plants were decommissioned early this year with the government arguing that they were no longer sustainable and viable.

For example, between 2006 and 2011, the government had spent at least Shs1.5 trillion on subsidies so as to protect electricity consumers from higher electricity tariffs.

The Electricity Regulatory Authority has, however, since increased tariffs by 36 and 68 per cent, saying it is the only way through which the government can build a sustainable energy sector.

By Nelson Wesonga: The Monitor Newspaper