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Uganda’s power outages spark scrutiny, criticism

- - Friday, October 14, 2011

KAMPALA, Uganda — For nearly a month now, large sections of this East African capital city have been plunged into darkness for 24-hour stretches, causing untold losses in retail, manufacturing and foreign investment.

The cause of the blackouts is relatively simple: Two of the country's power suppliers — Aggreko PLC and Jacobsen Uganda Power Plant Co. Ltd. — have cut service because the national government has failed to pay its longstanding $73 million electric bill.

The ordeal is just the latest outcome of Uganda's fiscal mismanagement, which threatens to sink a country that Western leaders applauded a decade ago for its embrace of neo-liberal economic policies, analysts say.

Part of Uganda's economic problem is linked to factors beyond the government's control, such as Europe's financial crisis and soaring fuel prices. The European Union accounts for nearly 20 percent of Ugandan exports; meanwhile, gasoline price have risen 60 percent since January.

But analysts say the government's fiscal neglect and extravagance have worsened the crisis: Longtime President Yoweri Museveni, who vowed to make economic growth and delivery of services the hallmark of his re-election in February, spent $744 million for Russian fighter jets in April.

Mr. Museveni, who has been in power since 1986, also reportedly spent about $500 million in public funds to finance his re-election bid — and another $1.5 million on his swearing-in ceremony.

"A main source of the crisis is nonproductive spending," said John Ddumba Ssentamu, acting principal at the College of Business and Management Sciences at Makerere University in Kampala.

The Ugandan parliament, which is dominated by presidential loyalists, passed a $5.3 billion supplementary budget in March to offset some losses. But amid weak export earnings and little belt-tightening since then, covering the costs of basic services, like electricity, remains a challenge.

And it remains to be seen if elected and appointed leaders are up to the challenge.

An eight-member committee that was set up to look into the country's power problems has discovered that the Ministry of Energy illegally impaneled its electricity regulatory board, Uganda People News reported Thursday.

According to one of the committee's members, the ministry set up the Uganda Electricity Regulatory Authority without adhering to the Energy Regulatory Act, which requires the appointment of members with experience in the energy field.

The committee member said most of the regulatory board's members are bankers, according to the Uganda People News report.

Meanwhile, Uganda's government is working with the World Bank to invest $8.6 million in power projects and encourage private sector investment.

The Uganda Energy Credit Capitalization Co. will manage the funds, which will be used to construct small hydroelectric dams, solar plants and other renewable energy to provide electricity to rural areas.

Only 12 percent of Ugandans are hooked up to the national grid, according to government estimates.

Having passed a new budget, the government last week started paying its debts to electric power providers, which should make Ugandan nights a little brighter in the short term, though probably not in the long term.

The country's demand for electricity is outstripping its supply by about 50 megawatts a year, according to officials with the Uganda Electricity Transmission Co., whose role is to dispatch available electricity to suppliers.

Nonetheless, the move is in keeping with the president's understanding of development, based on remarks he made in April.

"You cannot modernize unless you have electricity," Mr. Museveni said at the time.