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Delays in Karuma Hydro Power Project Could Incur a Cost of Sh113 Billion

Karuma Hydro Power Project Delays Could Incur a Government Loss of UGX 113 Billion
Karuma Hydro Power Project Delays Could Incur a Government Loss of UGX 113 Billion

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It has been revealed in a recent report by the Auditor General that the extended timeline for the completion and commissioning of the 600MW Karuma Hydropower Project in Kiryandongo District will lead to an accrual interest claim of sh113.933 billion on delayed payments by the government.

The audit report, covering the Financial Year ending on 30 June 2023, discloses that the original plan for the Karuma Dam was a 60-month completion timeframe. However, the actual duration of implementation has stretched to 114 months, marking a significant delay of 54 months.

Commencing construction in 2013, the Karuma Hydroelectric Station, the country’s largest power-generating installation, was initially estimated at USD 1.7 billion, approximately 6.323 trillion Shillings. However, due to various implementation challenges, the project cost has soared to 8.183 trillion Shillings.

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Among the challenges outlined in the audit report are interest claims amounting to USD 30 million (about 113.933 billion Shillings) on delayed payments, slow acquisition of reservoir land, and sluggish progress of the Resettlement Action Plan (RAP).

While the overall physical progress of the project now stands at 99.9 percent, further delays are evident in the implementation of the Community Development Action Plan (CDAP) projects. These include the construction of the Seed school, hospital, mosque, church, and compensation for those affected by blasting during construction.

The Auditor General reported, “Management explained that full implementation of the Community Development Action Plan was hindered by the unavailability of funds despite being budgeted for.”

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Initially targeted for completion in 2018, the Karuma project has faced unprecedented delays and extensions. The State Minister for Energy, Sidronious Okasaai Opolot, stated that as of now, four out of the six units are operational and synchronized to the national grid. The fourth unit is pending completion by the end of November, and the sixth unit is expected to be ready by September 2024.

The Karuma Power plant, situated along the River Nile, is part of the Ministry of Energy and Mineral Development’s efforts to achieve Uganda’s 52,000MW generation capacity by 2040 for sustainable economic growth. The completion of Karuma is projected to boost the country’s installed electricity capacity to at least 2000 MW.

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Despite the setbacks, the government maintains its commitment to achieving universal access to electricity by 2030. Plans are underway to connect an additional 1.5 million households to the grid and increase the electrification rate from 28% to 50%.

As of December 2022, Uganda has an installed electricity capacity of 1,402 megawatts, with a demand of 843 MW, leaving a surplus of 559 MW. The recently launched Energy Policy 2023 aims to further scale up access to electricity for households, refugee and host communities, industrial parks, commercial enterprises, and public institutions, aligning with Uganda’s Vision 2040.