UGANDA, Tororo | Real Muloodi News | Tycoon Patrick Bitature is purportedly in talks with Government of Uganda to sell his thermal Electromax Power Plant in Tororo District, in an effort to bail himself out of a USD$30 million debt owed to South African money lender, Vantage Capital.
Industry insiders claim that Mr Bitature, who was on the verge of financial collapse last year owing to his highly publicized court dispute with Vantage Capital over the repayment of a USD$30 million debt, approached the government for a bail out, but was unsuccessful.
However, in a subsequent meeting with with President Museveni, Bitature floated the idea of the government acquiring the plant, after having already invested in it to supplement low power generation over the last decade.
According to reports, after the meeting President Museveni instructed the Ministries of Energy and Finance to further discussions with Bitature on the deal.
When reached, Mr Bitature declined to comment, however officials from the Ministries of Finance and energy confirmed that talks are in progress.
The Auditor General began an audit of the Electromax Power Plant mid-December, in preparation for the potential government acquisition.
The power plant is owned and operated by independent power producer Electro-Maxx Limited, a subsidiary of Patrick Bitature’s Simba Group.
In 2012, the 50MW plant began operating under a build-own-operate model, as the nation struggled with low hydroelectricity supply in the face of surging demand.
Bitature’s Tororo-based power plant, and the Jacobsen Elktro thermal plant in Namanve, augmented the insufficient hydro output from the Nalubaale and Kira dams. However, this came at a substantial cost to Government, which was forced to spend millions of dollars in electricity subsidies to keep prices low for end consumers.
Irene Bateebe, the Permanent Secretary for the Ministry of Energy, confirmed the audit is still being conducted as part of the due diligence procedure.
“It is the Auditor General’s findings that will inform and determine the next step, including the price,” she said.
If aquired, the plant would be added to the stable of the Uganda Electricity Generation Company Limited (UEGCL).
Early in 2022, UEGCL assumed control of the Namanve thermal power station from Jacobsen Elktro when the 13-year construction, operation, and transfer contract ran out.
Although Electromax Power Plant only sometimes distributes energy to the national grid due to a surplus from hydro generating, the government, through Uganda Electricity Transmission Company Limited (UETCL), maintains a standing power purchase agreement (PPA) with Electromax.
Uganda’s total generation capacity from all sources is 1,365.7 MW, compared to an average peak demand of 800 MW.
Once the troubled Karuma is put into service later in the year, the generation capacity is anticipated to rise to 2,000 MW.
To operate in the Arua District, where it undertook to create 8.2 MW to electrify West Nile, UETCL revised Eletromax’s PPA in 2019.
However, the cash-strapped business has received criticism over the months for allegedly performing sub-par work.
Around 2005, when electricity output decreased by more than 50%, heavy fuel oils or thermal plants began to gain traction in Uganda’s power sector.
As a result of the costly thermal electricity, the government handed out enormous subsidies of Sh1.1 trillion between 2006 and June 2011 to keep end-user rates in control.
However, the implementation of subsidies was at odds with the goals outlined in the Uganda power sector reform and privatisation strategy, which included, among other things, the need to make the power industry financially sustainable and capable of operating without government subsidies.
The government’s contributions to subsidies were terminated in May 2012 after it was discovered that a total of USh1.99 trillion had been spent on subsidies, of which 36% represented compensation for losses reported by Umeme, 24% represented profits on investments reported but unsubstantiated, and the remainder represented electricity produced by emergency diesel thermal power generators from 2005 to January 2012.
The elimination of subsidies was also intended to hasten long-term investment in priority projects like the 600 MW Karuma and 183 MW Isimba dam projects, transmission infrastructure, and other projects involving electricity infrastructure.
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