UETCL CEO Karamagi Highlights the Significance Regional Electricity Industry on the sidelines of the Kampala Eastern Africa Power Pool Meeting

Over 11electricity utilities all members of the Eastern African Power Pool converged in Uganda’s Capital Kampala to deliberate on matters pertinent to the present and future state of the regional electricity industry and common power market.

The EAPP currently has thirteen (13) member countries that signed the Inter-Governmental Memorandum of Understanding (IGMOU) and fourteen utilities that signed the Inter Utility Memorandum of Understanding (IUMOU).

The pool comprises the following countries: Burundi, Djibouti, Democratic Republic of Congo (DRC), Rwanda, Egypt, Ethiopia, Kenya, Sudan, Tanzania, Uganda, and Libya.

South Sudan and Somalia joined recently and there’s a possibility that Eritrea may join.

Uganda’s Honorable Minister for energy and mineral development chairs the Council of Ministers which is the supreme governing body that delivers strategic guidance and oversight to the Steering Committee. The Steering Committee which comprises Chief executives of the power utilities of the member countries is chaired by the CEO of UETCL.

We did catch up with Joshua Karamagi the CEO of UETCL to gain more insight on the objective of the event and how the country is set to benefit from this arrangement.

Can you give us an overview of this EAPP meeting in perspective?

The Eastern Africa Power Pool (EAPP) convened the 29th Steering Committee meeting on 20th July 2023 chaired by myself and the 17th Council of Ministers Meeting on 21st July 2023 under the chairpersonship of Ms. Ruth Nankabirwa Sentamu, theHonorable Minister of Energy and Mineral Development of Uganda. The agenda of both meetings focused on key issues related to the regional power pool.

The Council of Ministers which is the supreme governing body deliberated on the draft bilateral power Trading Framework Agreement, which upon consent is aimed at facilitating cross-border energy trade among member countries. The Council also discussed the proposed addendum to the Inter-Governmental Memorandum of Understanding (IGMOU) and approved the recommendation of the steering committee to introduce an independent market operator.

All this was geared at ensuring that initial electricity trading activities commence before end of 2024. The meeting was a success and this showcases the commitment of the political leadership of EAPP towards fostering regional power collaboration and promoting sustainable energy development in the region.

Why is it now, more than ever important for African countries to collaborate towards a common power pool or market?

Trading through the common power pool or market enables members to benefit from lower costs. The main objective of the Pool is to promote competition in the generation segment in a larger interconnected system. The market will operate through the merit order practice that the cheapest power plants are dispatched first hence ensuring the most competitive and economic power. The power pool will also enable member countries to achieve energy security and reliability.

I realize EAPP was established in 2005 but the common market is yet to happen what do you see as the critical barriers to the integration?

The EAPP region is presently experiencing a few challenges which must be adequately addressed if the envisioned fully integrated regional power market is to be realized. It is not only insufficient power generation that was standing in the way of this integration but also absence of interconnectors to wheel power across borders as well. The good thing however is that substantive investment has been attracted in the power generation segment over the years and construction is advanced. This leaves us with one major challenge, the need for investment in high voltage power lines to ensure the region is fully interconnected.

With the challenges highlighted above, do you envision a fully integrated Eastern African Power pool in the near future?

Well, we are part of the process trying to actualize this vision of a fully integrated power market. The first win for us is that we have countries and utilities as members of the EAPP. Secondly, about 65% of the member countries are currently interconnected. Case in point, Uganda is already interconnected with Rwanda and Kenya, while Kenya is interconnected with Ethiopia, which is interconnected with Sudan and Sudan is interconnected with Egypt. So, you can see the integration is already taking shape. Lastly, for the countries which are not yet interconnected, we continue to hold consultative meetings to ensure that the required infrastructure is put in place and a number of feasibility studies are ongoing geared at this. For the case of Uganda, we are undertaking feasible studies for the Uganda-Tanzania, Uganda-South Sudan and Uganda DRC interconnection projects.

How does integrating Eastern Africa Power grids contribute to reducing electricity tariffs?

How this helps is that member countries of EAPP will have access to reliable electricity at reduced prices. The whole process of the regional integration looks at each country getting the cheapest energy, and the implication is that countries should be able to defer investments in certain generation because there is cheaper energy coming from neighbors. That deferred capital investment can be used to invest elsewhere.

What will be the outcome if the EAPP market doesn’t happen?

The market will happen trust me, because like I told you earlier, about 70% of the member countries are already integrated and power exchange is already happening in these countries. Otherwise without the Market, there may be a lot of inefficiencies in the development and operation of the electricity business because utilities and Countries would miss out on the benefits that accrue from economies of scale when countries operate as a pool. The power demand in most member countries is insufficient to justify bigger power plants that can exploit economies of scale. Power pools therefore increase market size in addition to improving the economy of scale and economics of mega power projects. Interconnection of physical power infrastructure can therefore reduce the market, volume and other related risks which may enhance the credit rating of the region for project financing purposes thereby making the development of a country’s or sub region’s capital-intensive power projects more attractive to lenders.

Any concluding remarks on this matter?

The aspiration of the EAPP to create a fully functional, integrated and competitive power market is not an event but rather a journey that takes time and hard work to realize. The biggest obstacles to the full integration and functioning of the EAPP was the lack of transmission interconnection facilities, but with about 70% of the countries interconnected, and with the support from our development partners geared towards operationalization of the market, we are optimistic that the market will become operational by end of 2024.