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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A recent report from the Auditor General has disclosed that the prolonged completion and commissioning of the 600MW Karuma Hydropower Project in Kiryandongo District may result in an accrual interest claim of sh113.933 billion for delayed payments by the government. The audit report, covering the Financial Year ending on June 30, 2023, highlights significant setbacks in the project’s timeline and budget, raising concerns about its overall impact on the national economy.

The original plan for the Karuma Dam aimed for completion within 60 months. However, the actual implementation has stretched to 114 months, marking a substantial delay of 54 months. Initiated in 2013, the construction of the Karuma Hydroelectric Station, the largest power-generating facility in the country, was initially estimated at USD 1.7 billion (approximately 6.323 trillion Shillings). Nevertheless, due to various implementation challenges, the project’s cost has surged to a staggering 8.183 trillion Shillings.

The implementation challenges cited in the audit report include not only delayed payments leading to an accrual of interest claims but also the protracted acquisition of reservoir land and sluggish progress in the Resettlement Action Plan (RAP). These factors have contributed to the project’s extended timeline and increased financial burden on the government.

Despite the overall physical progress of the project reaching 99.9 percent, the report highlights additional delays in the implementation of the Community Development Action Plan (CDAP) projects. These projects, encompassing the construction of essential infrastructure such as schools, hospitals, mosques, churches, and compensation for those affected by construction activities, have faced hindrances, with management attributing the delays to the unavailability of funds, despite being budgeted for.

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The initial target for the completion of the Karuma project was 2018, but the numerous delays and extensions pushed the expected completion date further. The State Minister for Energy, Sidronious Okasaai Opolot, acknowledged the setbacks, citing vandalism and other unforeseen challenges. Currently, four out of the six units are operational, with the fourth unit pending completion by November and the sixth unit 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 target by 2040, fostering sustainable economic growth. Once operational, the plant is expected to contribute significantly to the country’s installed electricity capacity, projecting a capacity of at least 2000 MW.

Uganda’s electricity landscape also includes other ongoing projects, such as the 183MW Isimba Hydro Power Project, the 83MW Achwa Hydroelectric Power project, and the 3.5MW Nyagak Power Plant. The government aims to achieve universal access to electricity by 2030, connecting an additional 1.5 million households to the grid and increasing the electrification rate from 28% to 50%.

As of December 2022, Uganda’s installed electricity capacity stands at 1,402 megawatts, with demand at 843 MW, leaving a surplus of 559 MW. The government’s commitment to its energy policy, as outlined in the recently launched Energy Policy 2023, aims to escalate electricity access for households, industrial parks, commercial enterprises, and public institutions, aligning with Uganda’s Vision 2040 for socio-economic transformation.

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