Energy Sector. Annual Monitoring Report. Financial Year 2014/15. October 2015

Transcription

1 THE REPUBLIC OF UGANDA Energy Sector Annual Monitoring Report Financial Year 2014/15 October 2015 Ministry of Finance, Planning and Economic Development P.O. Box 8147 Kampala

2 Table of Contents FIGURES:... vii ABBREVIATIONS AND ACRONYMS... viii FOREWORD... xii EXECUTIVE SUMMARY... xiii CHAPTER 1: INTRODUCTION Background Rationale Report Outline... 2 CHAPTER 2: METHODOLOGY Scope Methods Limitations... 5 CHAPTER 3: SECTOR PERFORMANCE : Overall performance Programme Performance Project 1023: Promotion of Renewable Energy and Energy Efficiency Project (PREEEP) Project 1198: Modern Energy from Biomass for Rural Development Project 1140: Nile Equatorial Lake Subsidiary Action Program (NELSAP) Project 1212: Energy Sector Development Project (ESDP) Project 1024: Bujagali Interconnection Project (BIP)/ Bujagali Switch yard Upgrade Project 1221: Opuyo Moroto Interconnection Project Project: 1143: Isimba Hydroelectricity Power Project Project: 1183 Karuma Hydroelectricity Power Project Project 1142: Management of Oil and Gas ii

3 Project 1184: Construction of the Oil Refinery Project Project 1199: Uganda Geothermal Resources Development Project: 1200: Airborne Geophysical Survey and Geological Mapping of Karamoja Project 1261: Global Partnerships on Output Based Aid - Grid Extension Program Project 1262: Rural Electrification Project CHAPTER 4: OVERALL CONCLUSIONS AND RECOMMENDATIONS Conclusions Overall recommendations Annex I: References Annex II: List of Persons Met iii

4 TABLES: Table 1.1:Energy Sector projects monitored in FY 2014/ Table1.2: Financial Performance of Energy and Minerals Sector (Ug shs billion)... 6 Table1.3: Physical Performance of Promotion of Renewable Energy and Energy Efficiency Project Table1.4: Location and beneficiary institutions of the Solar Photo Voltaic systems for the Promotion of Renewable Energy and Efficiency Project Table1. 5: Effectiveness of Solar Panel installation in Institutions for the Promotion of Renewable Energy and Efficiency Project Table1.6: Performance of the Installed windmills in Local governments by July 2015 for the Promotion of Renewable Energy and Efficiency Project Table1.7: Performance against the annual planned outputs for Modern Energy from Biomass for Rural Development by FY 2014/ Table1.8: Donor Co-Financing Contributions as at 30th June 2015 for the NELSAP Table 1.9: Financial performance of RAP implementation for NELSAP by 30 th June Table 1.10: Summary of RAP implementation for Bujagali-Tororo Transmission line Table 1.11: Summary of RAP implementation for Lot B: Mbarara-Mirama Transmission Line 49 Table 1.12: Physical Performance of Mbarara-Mirama transmission line and Associated Sub stations Table1 1.13: Physical Performance of Bujagali- Tororo transmission line and Associated Sub stations Table: 1.14: RAP Disbursements and Compensation Electricity Sector Development Project by 30 th June Table: 1.15: Loan amount and milestone dates for Electricity Sector Development Project Table: 1.16: Loan disbursements Status (Bank FY/US$M) for Electricity Sector Development Project Table: 1.17: Expenditure Performance by Line item for Electricity Sector Development Project by the 30th June Table: 1.18: Summary of RAP implementation for Kawanda- Masaka Transmission Line iv

5 Table: 1.19: Summary of the Physically Displaced Households for Kawanda- Masaka Transmission Line Table: 1.20: Physical Performance of Kawanda Masaka Transmission Line Table: 1.21: Summary of Contract Details for Masaka and Mbarara Substation Works Table: 1.22: Basic Contract Data for Consultancy Services for the Electricity Sector Development Project Table: 1.23:Progress of Consultancy Services for the Electricity Sector Development Project.. 63 Table: 1. 24: Financial performance of the Bujagali Switchyard Upgrade project as at June Table: 1.25: Planned output and physical performance for the Bujagali Switchyard Upgrade project by July Table: 1.26: Comparison of physical Progress with observed performance for the Opuyo-Moroto Interconnection Project Table: 1.27: RAP implementation for the Opuyo- Moroto Interconnection Project by 3 rd August Table: 1.28: RAP implementation by Gender and Location for the Opuyo- Moroto Interconnection Project by 3 rd August Table: 1. 29: Affected Property and Compensation value for the selected PAPs on the Opuyo- Moroto Interconnection Project by 3 rd August Table: 1.30: Affected Acreage and Compensation value for the selected PAPs on the Opuyo- Moroto Interconnection Project by 3 rd August Table: 1.31: Physical Performance of Isimba HPP Table: 1.32: Physical Performance for Construction of Karuma Hydropower Plant Project Table: 1.33: Summary of Annual Planned outputs by Physical performance for the Management of Oil and Gas Sector in Uganda by 30 th June Table: 1.34: Financial performance for construction of the Data Centre for the Petroleum Directorate Table: 1.35: Performance of Construction of the Oil Refinery Project by 30th June Table: 1.36: Annual planned outputs against physical performance for Uganda Geothermal Resources Development project by 30 th June v

6 Table: 1.37: Annual planned outputs against level of achievement the Airborne Geophysical Survey and Geological Mapping of Karamoja by 30th June Table: 1.38: Budget and financing for Output Based Aid(OBA) Project Table: 1.39: Expenditure line and amount for Output Based Aid(OBA) Project by 30th June Table: 1.40: Performance of household connections by Distributor for the Output Based Aid(OBA) Project by 30 th June Table: 1.41: Performance of Apac-Chegere-Alemi grid extension Project Table: 1.42: Performance of Serere/Soroti/Pallisa/Kapchorwa/Kumi grid extension Project Table: 1.43: Areas served by the Kapchorwa-Bukwo-Suam grid extension Project by July vi

7 FIGURES: Fig: 1.1: Financial performance for Promotion of Renewable Energy and Energy Efficiency Project by 30 th June Fig: 1.2: Share of expenditure by output categories for the Promotion of Renewable Energy and Energy Efficiency Project by 30th June Fig: 1.3: Proportion of expenditure by activity for GIZ partnership with International Life Line Fund Fig: 1. 4: Financial performance of Modern Energy from Biomass for Rural Development by 30th June Fig: 1.5: Financial Performance of NELSAP by 30 th June Fig: 1. 6: Financial performance of Electricity Sector Development Project by 30 th June Fig: 1.7: Expenditure share by line items for Electricity Sector Development Project by 30 th June Fig: 1.8: Financial performance of Bujagali Switchyard Upgrade Project by 30th June Fig: 1.9: Financial performance for the Karuma Hydropower Project Fig: 1.10: Financial performance for the Management of Oil and Gas Sector in Uganda by 30 th June Fig: 1.11: Distribution of Expenditures by Output Categories for the Management of Oil and Gas Sector in Uganda by 30 th June Fig: 1.12: Distribution of expenditure by line Item for Construction of the Oil Refinery Project Fig: 1.13: Financial performance of Uganda Geothermal Resources Development project Fig: 1.14: Financial performance for the Airborne Geophysical Survey and Geological Mapping of Karamoja by 30th June Fig: 1.15: Financial Performance for the Rural Electrification Project by 30 th June Fig: 1.16: Percentage share of expenditure for the Rural Electrification Project by 30 th June vii

8 ABBREVIATIONS AND ACRONYMS AAPG AC ADB ADF AFD AG APL BFO BOQS CAA CCCC CDAP CGV CNOOC CRS CTCN CWE D DCPT DED DHO DLGs DP DRC E&P EA EAC EAP EAPCE EIA EIPL EPC ERA ERD ERT ESDP ESMP ESPS ESS EU EVT EXIM FAT FDPs viii Association of American Petroleum Geologists Alternating Current African Development Bank African Development Fund French Agency for Development Albertine Graben Adaptable Program Loan Best and Final Offers Bills of Quantities Civil Aviation Authority China Communication Construction Company Community Development Action Plan Chief Government Valuer Chinese National Offshore Oil Company Corporate Social Responsibility Climate Technology Center and Network China International Waters and Electric Corporation Dimension Dynamic Cone Penetration Test German Development Service District Health Officer District Local governments Petroleum Directorate Democratic Republic of Congo Exploration and Production Exploration Area East African Community Energy Advisory Project East African Petroleum Conference and Exhibition Environmental Impact Assessments Energy Infratech Private Ltd, Engineering Procurement and Construction Electricity Regulatory Authority Energy Resources Department Energy for Rural Transformation Electricity Sector Development Project Environment and Social Management Plan Energy Saving Providers Energy Saving Stoves European Union Escape and Ventilation Tunnel Export Import Factory Acceptance Tests Field Development Plans

9 FEED FEED FESL FGDs FY GBOBA GIS GIZ GIZ GoU Ha HC HOCADEO HPP HSE HV ICAO ICT IDA IFMS IVA JBIC JICA Ken Gen KfW KIL KIP KNNN KNNN kv kva KW LDC LV M&E MAT MEMD MFPED MHP MoU MPS MT CREEC MVar MW MAT Front End Engineer Designs Front End Engineering Design Ferdsult Engineering Services Limited Focus Group Discussions Financial Year Global Partnerships on Output Based Aid Geographical Information System German Agency International Cooperation Deutsche Gesellschaft fuer Internationale Zusammenarbeit Government of Uganda Hectare Health Centre Hoima Caritas Development Organization Hydro Power Plant Heath Safety and Environment High Voltage International Civil Aviation Organization Information/Communication Technologies International Development Agency Integrated Financial Management System Independent Verification Agent Japan Bank for International Cooperation Japan International Cooperation Agency Kenya Electricity Generating Company Limited, German Financial Cooperation (KfW Bankengruppe) Kilembe Investment Limited Karuma Interconnection Project Kigogole-Ngege-Nsoga- Ngasa Kigogole-Ngege-Nsoga- Ngasa Kilo Volts Kilo Volt Amperes Kasamene-Wahrindi Licensed Distribution Company Low Voltage Monitoring and Evaluation Main Access tunnel Ministry of Energy and Mineral Development Ministry of Finance, Planning and Economic Development Micro Hydro Power Memorandum of Understanding Ministerial Policy Statements Metric Tonnes Centre for Research in Energy and Energy Conservation Mega Volt Ampere Mega Watt Main Access Tunnel ix

10 BADEA ROW CLUSA VF EnDev ILF ERT USAID EVT ESDP OPGW CDAP CGV JBIC NARO NBI NCC NDP NELSAP NEMA NGOs NITA-U NOC NOGP NORAD NUSAF NWSC OBA OBT OfD OPM PAP PAU PCC PDPs PECMEC Society PEPD PIP PRDP PREEEP PREPs PRR PSA PV Q RAP Arab Bank for Economic Development in Africa Right of Way National Cooperative Business Association Vote Function Energizing Development International Lifeline Fund Energy for Rural Transformation United States Agency for International Development Escape and Ventilation Tunnel Electricity Sector Development Project Open Ground Wire Community Development Action Plan Chief Government Valuer Japan Bank for International Cooperation National Agricultural Research Organization National Backbone Infrastructure National Contracting Company National Development Plan Nile Equatorial Lakes Subsidiary Action Programme National Environment Management Authority Non-Government Organizations National Information Technology Authority- Uganda National Oil Company National Oil and Gas Policy Norwegian Agency for Development Cooperation Northern Uganda Social Action Fund National Water and Sewerage Corporation Output Based Aid Output Budgeting Tool Oil for Development Office of Prime Minister Project Affected Person Petroleum Authority Uganda Plain Cement Concrete Physically Displaced and Vulnerable People Pader- Abim Community Multipurpose Electric Cooperative Petroleum Exploration and Production Department Public Investment Plan Peace Recovery and Development Plan Promotion of Renewable Energy and Energy Efficiency Programme Priority Rural Electrification Projects Petroleum Reservoir Reports Production Sharing Agreement Photo Voltaic Quarter Resettlement Action Plan x

11 RDP REA RESP ROW SEG SMEs SWH TOPL TRT USAID UEDCL IAEA NEMA NFC JICA ADF NELSAP ERA ERD TPDC TUOPL UA UEDCL UETCL UIA UNBS UNCST UNEP UNFCCC UNRA UNU-GTP US$ UWA VAT VF WENRECO Refinery Development Program Rural Electrification Agency Rural Electrification Strategy and Plan Right of Way Society of Exploration Geophysicists Small and Medium Enterprises Solar Water Heaters Tullow Uganda Operations Pty Limited Tail Race Tunnel United States Aid for International Development Uganda Electricity Distribution Company Limited International Atomic Energy Agency National Environment Management Authority Nyabyeya Forestry College Japan International Cooperation Agency African Development Fund Nile Equatorial Energy Regulatory Authority Energy Resources Department Tanzania Petroleum Development Corporation Tullow Uganda Operations Pty Limited Unit of Account Uganda Electricity Distribution Company Limited Uganda Electricity Transmission Company Limited Uganda Investment Authority Uganda National Bureau of Standards Uganda National Council of Science and Technology United Nations Environmental Program United Nations Framework Conventional for Climate Change Uganda National Roads Authority United Nations University Global Training Programme United States Dollar Uganda Wildlife Authority Value Added Tax Vote Function West Nile Rural Electrification Company xi

12 FOREWORD Government of Uganda is investing substantially in physical infrastructure, especially in the energy sector. Infrastructural development is a prerequisite for any structural transformation in an economy. The investments in energy and minerals therefore must be effective as they are catalytic in nature. Government has stepped up efforts to enhance effectiveness of programme implementation. The translation of financial resources into tangible outputs and thereafter outcomes requires efficient and effective implementation, supervision and monitoring of the programmes. This energy and minerals monitoring report provides an overview of the financial and physical performance of the selected programmes during FY2014/15. Of critical importance are the challenges noted and proposed actions for improvement. It is hoped that the sector shall critically review the recommendations therein and adopt them for enhanced effectiveness of programme implementation. I therefore urge the sector to seriously consider the proposed ways of ensuring value for money for the public expenditures. xii

13 xiii EXECUTIVE SUMMARY Annual performance monitoring for FY 2014/15 focused on 14 out of the 24 projects in the votes of Ministry of Energy and Mineral Development (MEMD) and Rural Electrification Agency (REA). The projects monitored from the MEMD vote were; Promotion of Renewable Energy and Energy Efficiency (PREEE), Modern Energy from Biomass for Rural Development; Bujagali Switchyard Upgrade; Nile Equatorial Lakes Subsidiary Action Programme (NELSAP); Electricity Sector Development Project (ESDP); Opuyo-Moroto Interconnection Project; Isimba Hydro Power Plant (HPP); Karuma HPP. Others were; Management of Oil and Gas Sector in Uganda, and Construction of the Oil Refinery. Projects that were monitored in the REA vote were; West Nile Grid Extension Program, and Rural Electrification Project. Projects selected for monitoring were based on; the magnitude of budget allocations, projects that had been monitored before and had key implementation challenges and regional representation. Qualitative and quantitative approaches were adopted using both primary and secondary data collection methods. These included; literature review, key informant interviews, focus group discussions, and observations. Photographs were also taken for visual enhancement of the observed physical performance. Findings Annual release performance was fair (50%) but all funds were spent. Overall physical performance for the energy sector was good. There was an improvement in delivering outputs on schedule as compared to the precious Financial Year (FY) 2013/14. Karuma Hydro Power Plant (HPP), Isimba HPP, Construction of the Oil refinery, and Management of Oil and gas sector in Uganda performed well. For instance, Karuma HPP was on schedule while Isimba was ahead of schedule in comparison to the 20% disbursement made by the end of the financial year. The UETCL projects also registered improvement in performance compared to FY2013/14. The power lines that were initially behind schedule but were progressing well included: Nile Equatorial Lakes Subsidiary Action Project (NELSAP), where substation works at Mirama had stalled due lack of land for construction but had been acquired by the end of the FY. Other projects whose performance improved included; Opuyo-Moroto, and Kawanda-Masaaka transmission lines. Similarly, there was an improvement in the number of household connections implemented by the Rural Electrification Agency in FY2014/15 up from those of the previous year. Poor performance on the other hand was noted in the Modern Energy from Biogas for Rural Development which achieved about 50% of the planned outputs; and PREEE project (GoU component under the installation of windmills). The seven wind mills to generate wind energy were installed but five did not have adequate batteries to store the energy. In Lopei Primary

14 School Napak, the windmill was not operating well even after repair of the system. In Apilotok Primary School Kaberamaido, the system was not operating due to problems with the batteries while those in Losakuca P/S, Kotido; and Aisha P/S, Mityana were producing inadequate power. The Grid extension project implemented by REA did not perform well as majority of the grid extension projects were not completed as planned. Implementation challenges for the sector included; 1. Delays in the procurement process in the Biomass project, PREEEP, the petroleum subsector and the UETCL projects. Examples of outputs that were slowed down due to procurement process include; Construction of Biogas Systems for Electricity Generation; Promotion of Large Scale Briquetting Technology. Procurement of a consultant to develop a Monitoring and Evaluation strategy for the national oil and gas policy was still under review by the contracts committee. Procurement of supervision consultants to for the UETCL projects delayed project implementation. 2. Delayed acquisition of the Right of Way for projects implemented by the UETCL, MEMD and the petroleum subsector. Affected projects included; Mbarara- Mirama/Bujagali Tororo, Isimba HPP, Opuyo-Moroto. The major reasons highlighted for the delays included; disputes arising from low compensation packages, rejection of compensation packages by Project Affected Persons (PAPs) in the same geographical area affected by two UETCL projects as a result of issuance of different valuation rates, and non willingness of landlords for big pieces of land to be compensated to enable project implementation. 3. Poor prioritization and therefore limited funding for the Modern Energy from Biomass for Rural Development project. The contribution of biomass to energy production has not been appreciated. The project was off target by end the FY. Outputs, Development of Biofuel, biogas standards and bio-fuel regulations, Promote Large Scale biogas technology for electricity generation, Large scale Briquetting Technology, achieved less than 20% progress. A number of other outputs did not progress at all for example, Promotion of Household Gasification, and Promotion of gasification for electricity generation. 4. Rural Electrification projects have been affected by delayed payments to the contractors. Physical Performance for all grid extension projects were behind schedule. This was majorly due to delayed advance payment to the contractors. Such projects included; Apac-Chegere-Alemi; Ntungamo/Rukungiri/Kabale/Kanungu/Kisoro; and Gulu/Kitgum/Pader/Otuke/Lamwo. Progress for the household connection project also delayed by limited financial capacity for Licensed Distribution Companies (LDCs) to make connections as REA takes long to reimburse funds used for connections. xiv

15 Conclusion Overall physical performance for the energy sector was good. There was an improvement in delivering outputs on schedule as compared to the precious Financial Year (FY) 2013/14. The key sector challenges that constrained performance were: Procurement delays; delayed acquisition of the Right of Way for projects implemented by the UETCL, MEMD and the petroleum subsector. Inadequate resources to cater for counterpart funding for donor-funded projects, inability by households to afford cost of connection resulting into limited utilization of the power infrastructure constructed; and delays in disbursement of funds from the donors for the grid donor funded projects. Recommendations 1. The procurement units of the UETCL, MEMD should initiate and expedite procurements at the beginning of the financial year or early enough for multiyear projects to enhance timely funds absorption of funds. 2. The Ministry of Lands, Housing and Urban development, District Councils and District Executive committees; should support the district land boards to update the property rates annually to enable fair compensations. 3. The Ministry of Energy and Mineral Development should promote biomass as a potential source of energy by funding it to achieve its project outputs. 4. The Ministry of Finance, Planning and Economic Development, MEMD and REA should prioritize counterpart funding for the donor funded projects xv

16 1.1 Background CHAPTER 1: INTRODUCTION The sector is composed of the Energy, and Minerals sub-sectors. The former is responsible for increasing electricity generation and transmission, development and access to sustainable energy services and promotion of efficient utilization of energy. The Minerals subsector is responsible for promoting and ensuring rational development and utilization of mineral resources in a safe and sustainable environment for socioeconomic development 1. The Government, through the Ministry of Energy and Minerals Development, is responsible for provision of policy guidance in the development and exploitation of the energy resources, creation of an enabling environment to attract investment, and provision and utilization of energy resources. Energy Sector votes and priorities The sector comprises of two votes. These are: Ministry of Energy and Mineral Development (Vote 017), and Rural Electrification Agency (REA)-Vote 123. The energy sector priority areas include; i. Increase electricity generation capacity and transmission network. ii. Increase access to modern energy services through rural electrification and renewable energy development. iii. Promote and monitor petroleum exploration and development in order to achieve national production. iv. Develop petroleum refining and pipeline transportation infrastructure. v. Streamline petroleum supply and distribution; and vi. Promote and regulate mineral exploration, development, production and value addition 2 Within the sector priorities, attention is given to the following two flagship projects: i) Development of Karuma Hydropower project ii) Development of the oil refinery 1.2 Rationale There are several institutions in the accountability sector mandated to monitor and audit public resources. However information on resource use and status of service delivery remains limited. Improved access to budget monitoring data by policy and programme implementers is critical for enhanced transparency, accountability, and consequently improving service delivery. It is under those circumstances that the Budget Monitoring and Accountability Unit (BMAU) was 1 NPA Second National Development Plan 2015/ /20 2 MEMD Ministerial Policy Statement 2014/15 (Kampala 2014) 1

17 established under the Budget Directorate in the Ministry of Finance, Planning and Economic Development (MFPED). The mandate of the Unit is to effectively monitor implementation of government programmes for assessment of outputs and outcomes in selected priority areas of Energy, Health, Agriculture, Education, Roads, Water and Environment, Public Finance, Public Sector Management, ICT and industrialization to improve accountability and ensure efficiency in public expenditure. The energy and minerals sector is a key sector where government has channeled a lot of public investment and expects improved service delivery. The unit conducted an annual performance assessment of the implementation of selected government programmes or projects. This is aimed to enhance effectiveness of implementation with a view of attaining value for money for public expenditures. 1.3 Report Outline The report is structured in four chapters. Chapter one covers introduction while chapter two highlights the projects that were monitored, their location, period of monitoring. It also presents the selection criteria, methods used and limitations of the report. Chapter three presents the overall performance of the sector, an analysis of projects performance as well as challenges of the project implementation. The fourth chapter offers the conclusion on sector performance and recommendations for improvement. 2

18 2.1 Scope Chapter 2: METHODOLOGY The projects were selected basing on the following criteria Projects with large budget allocations Projects previously monitored but having major implementation issues Regional geographical representativeness The projects that were monitored during the FY2014/15 are presented in table 1.1. These were 12 out of the 22 projects from Ministry of Energy and Mineral Development (MEMD) and the two projects under the Rural Electrification Agency (REA). Table 1.1: Energy Sector projects monitored in FY 2014/15 Project code and Name Location/ Areas visited Period of monitoring Vote 017: Ministry of Energy and Mineral Development Vote Function (VF) 0301: Energy Planning, Management and Infrastructure Development 1. Project: 1023: Promotion of Renewable Energy and Energy Efficiency (PREEE) 2. Project 1198: Modern Energy from Biomass for Rural Development 3. Project 1140: Nile Equatorial Lakes Subsidiary Action Program- Mbarara-Mirama 4. Electricity Sector Development Project 5. Project 1221: Opuyo-Moroto Interconnection Project 6. Project 1024: Bujagali Interconnection Project/Bujagali Switchyard Upgrade Lira, Dokolo, Pader Mpigi, Mbarara, Masaaka Mbarara, Ntungamo Wakiso, Mpigi, Masaaka Katakwi, Amuria Jinja Semi and Annual Semi and Annual Annual Annual Annual Semi and Annual Vote Function 0302 Large Hydropower Infrastructure 3

19 Project code and Name Location/ Areas visited Period of monitoring 7. Project 1183: Karuma Hydropower Plant 8. Project 1143: Isimba Hydropower Plant Kiryandongo Kayunga Semi and Annual Semi and Annual Vote Function 0303 Petroleum Exploration Development Production (PEDP) 9. Management of Oil and Gas Sector in Uganda Entebbe, Hoima, Buliisa Semi and Annual 10. Construction of the Oil Refinery Hoima Semi and Annual Vote Function 0305: Mineral Exploration, Development and Production 11. Project 1199: Uganda Geothermal Resources Development 12. Project 1200: Airborne Geophysical Survey and Geological Mapping of Karamoja Vote 123: Rural Electrification Agency 0351: Rural Electrification 13. Project 1261: West Nile Grid Extension Program-GBOBA 14. Project 1262: Rural Electrification project Source: Author s compilation Entebbe 3 Entebbe 4 Abim, Pader, Mbale, Bududa, Iganga, Kasese, Rubirizi, Bundibugyo, Ntoroko, Kabarole Lira, Apac, Soroti, Bundibogyo, Kasese, Kamwenge, Rubirizi, Ntungamo Semi annual Semi annual Semi and Annual Semi and Annual 3 The monitoring team held meetings in Entebbe 4 Ibid 4

20 2.2 Methods Overall approach Qualitative and quantitative techniques were used to ascertain the progress of implementation of the development projects in the energy and minerals sector. The effectiveness of expenditure was assessed through comparison of planned/ reported financial and physical performance with that observed during monitoring. Financial data was sourced from the Integrated Financial Management System for GoU expenditures and from project profiles in the Public Investment Plan, and from implementing agencies for donor components. Sampling techniques Purposive non-probability sampling procedure was be used to select the projects to review during the annual performance monitoring. This was to ensure regional representation, coverage of projects with large sector budget allocation, projects that had been monitored before and had key implementation challenges. Data Collection Methods and instruments Primary and secondary data collection methods were adopted. Primary methods included: Key informant interviews using the interview guide with the project managers at the Ministries Departments and Agencies (MDAs), consultants, contractors, district officials Focused group discussions with project beneficiaries and the Project Affected Persons Observation at the project site. Photographs were also taken for visual enhancement of the field findings The Secondary data collection methods adopted were: Literature review of documents including; Ministerial Policy Statement(MPS), MEMD and REA work plans, the Public Investment Plan (PIP), project contracts, Project Memoranda of Understanding (MoUs), progress reports and other documents obtained from the various implementing agencies 2.3 Limitations Most of the financial information is not captured on the IFMS accounting system because the sector is mainly donor or privately financed (PPP). This makes analysis of planned versus actual expenditure, absorptive capacity and operational efficiency problematic. Donors and private firms are at times unwilling to provide detailed financial information The time to cover a wide range of projects was limited Incomplete information especially where respondents were new in offices or relevant documents were not readily available. 5

21 3.1: Overall performance Financial performance 6 Chapter 3: SECTOR PERFORMANCE The approved development budget for the Energy and Minerals sector for FY2014/2015 including donor is Ug shs trillion. The MEMD Vote took up 95% while REA Vote took up 5% of the development budget of the sector. Table 1.2 summarizes the financial performance of the Energy and Minerals sector. Table1.2: Financial Performance of Energy and Minerals Sector (Ug shs billion) Vote Approved Development Budget Releases Expenditure Percentage Release Percentage Expenditure MEMD 1, REA Total 1, Source: REA and MEMD The overall release performance for the sector was fair while absorption rates were excellent. The release performance for the MEMD was attributed to the low release of funds for the Karuma HPP (44%), which accounted for 81% of the ministry development budget. The REA over performed due to the supplementary release of Ug shs 20 billion in the fourth quarter. Expenditures were mostly made on the key ministry deliverables including; power generation, transmission, distribution and enhancing access to energy by the social and public institutions. Physical performance Overall, physical performance was good across all projects. Projects that performed well include; Isimba Hydropower Plant, Karuma Hydropower Plant, Management of Oil and Gas. Those that recorded improvement from FY2013/14 were UETCL lines of NELSAP, Opuyo-Moroto, and Kawanda-Masaka; and the free household connections of REA. The project with the least performance was Modern Energy from Biomass for Rural Development and the PREEEP component for windmills installation, the grid extension projects performance was not satisfactory, as most of the projects were not competed. Resources in a number of projects sampled were used to achieve project outputs by the end of the FY 2014/15. Construction of the Oil Refinery: Twenty-nine square kilometers of land for the construction of the oil refinery was secured. Ninety Five percent of the 2708 PAPs who opted for cash compensation were paid. Land titles for owners that opted for resettlement have been processed. Physical planning of this land was completed and plans approved. Commedable progress was also noted on capacity building, and promotion of country s petroleum pottential and licencing. The Management of Oil and gas sector in Uganda. The National expertise for the oil and gas sector was developed and maintained through master degree programs and trainings in job related fields. The second phase of the data repository centre was completed. Outstanding works were majorly internal and external finishes, architectural fixtures and fittings which will be done in Phase 3 of the project. The new building will accommodate the restructured Petroleum

22 Directorate (DP). The access road to the formerly extremely inaccessible King Fisher Development Area (KFDA) was 91% complete. Isimba Hydropower Plant: The Engineering, Procurement and Construction (EPC) project was ahead of schedule. The contractor was using own resources before payment was advanced. Foundation pit excavations for the first stage structures were nearing completion. The geological surface mapping of the excavated foundation surface and works at the quarry involving excavations were ongoing. The aggregate crushing plant and the concrete batching plant were commissioned. The machinery and equipment deployed on site were adequate for the scheduled work. Karuma Hydropower Plant: The first stage river closure had been completed by the EPC contractor and this was a major milestone for the project. The contractor finished construction of the Main Access Tunnel (MAT); Escape and Ventilation Tunnel; Two out of five benches of the central gullet of the powerhouse and the Underground excavation work of the Tailrace Tunnel Adits 8 and 9. Reinforcement works for final lining had started. Underground excavations of Adits 1, 3, 6 and 7 was in progress. Adit 9, upstream and downstream excavation of the Tailrace Tunnel (TRT 2) were completed. The RAP implementation is at 96%. The project was largely on schedule at 10% physical progress. Modern Energy from Biomass for Rural Development project: about 50% of project outputs were achieved by the end of the financial year. The 50kW Nyabyeya gasification system was rehabilitated and functional; Bio latrines had been constructed and functional in the various schools. The GoU component of the PREEE project; installation of seven windmills had been completed. However, five out of the seven windmills installed did not have adequate batteries to save the energy produced. In Lopei Primary School Napak, the windmill ceased operating as its batteries blew due to overwhelming power. In Apilotok Primary School, Kaberamaido, the system was not operating due to problems with the batteries. Inadequate power was produced from the windmills in the schools of Losakuca P/S, Kotido; and Aisha P/S, Mityana. With the support of GIZ funding, solar installation were completed in health centers, schools and sub counties. These were functional. Dissemination of household and institutional stoves continued through partnerships with International Lifeline Fund, National Cooperative Business Association (CLUSA) and United States Agency for International Development (USAID) The UETCL Projects: Good progress was made on a number of projects implemented by the UETCL that were formally behind schedule. On the Mbarara-Mirama transmission line of the Nile Equatorial Lakes Subsidiary Action Project (NELSAP), the land owner on the proposed Mirama substation had refused the proposed compensation. However, an agreement was reached with the PAP and construction works of the substation have commenced. Other projects whose performance has improved include; Opuyo-Moroto where RAP implementation was about 22% and construction of the Kawanda-Masaaka transmission had commenced. 7

23 3.2 Programme Performance Vote 017: Ministry of Energy and Mineral Development The mandate of the Ministry of Energy and Mineral Development (MEMD) is to Establish, promote the development, strategically manage and safeguard the rational and sustainable exploitation and utilization of energy and mineral resources for social and economic development 5 The vote comprises of six vote functions namely: Energy Planning, Management and Infrastructure Development; Large Hydropower Infrastructure; Petroleum Exploration Development and Production; Mineral Exploration Development and Production; Petroleum Supply, Infrastructure and Regulation; and Policy, Planning and Support Services. The annual monitoring focused on four vote functions namely: Energy Planning, Management and Infrastructure Development, Large Hydropower Plants, Petroleum Exploration, Development and Production, and Mineral Exploration, Development and Production. Vote Function 0301: Energy Planning, Management and Infrastructure Development The Vote Function (VF) is responsible for promoting; increased investment in power generation, renewable energy development, rural electrification, improved energy access, energy efficient technologies, and private sector participation in the energy sector. 6 The vote function took up 9% of the energy sector budget. The VF comprises of 16 projects namely: Energy for Rural Transformation (ERT); Support to Thermal Generation; Promotion of Renewable Energy and Energy Efficiency; Bujagali Interconnection Project; Karuma Interconnection Project, Mputa Interconnection Project; Mbarara-Nkenda/ Tororo-Lira Transmission Lines; Nile Equatorial Lakes Subsidiary Action Programme. Others are; Hoima-Kafu Interconnection; UETCL/ Statnett Twinning Arrangement (Phase II); Modern Energy from Biomass for Rural Development; Electricity Sector Development Project; Opuyo-Moroto Interconnection Project; Electrification of Industrial Parks, Mirama-Kikagati- Nshungyenzi Transmission Line; Kampala-Entebbe Expansion Project. A total of six projects were monitored and the detailed performance is presented below Project 1023: Promotion of Renewable Energy and Energy Efficiency Project (PREEEP) Background The main objective of the project is to improve access to modern energy services and the efficient use of energy by households and the private sector, especially in Northern Uganda. The PREEEP is composed of two components that are co-financed by GoU and German Agency for International Cooperation (GIZ). The GIZ support aims to improve the framework conditions for 5 MEMD Ministerial Policy Statement 2014/15 (Kampala 2014) 6 MEMD Ministerial Policy Statement 2014/15 (Kampala 2014)19 8

24 the access to renewable energy and efficient energy consumption in industries and households. The project commenced in 2008 and is in the third phase (November 2013 January 2017). The expected outputs of the project by year 2017 include; 150,000 improved household stoves disseminated 400 improved institutional stoves disseminated 1,000 solar home systems disseminated 100 solar institutional systems disseminated At least 350,000 tons of wood saved each year Annual planned outputs for FY2014/15 Output : Energy Policy/ plans Dissemination, Regulation and Monitoring 9 Policy for fuel efficiency in the transport sector formulated. Monitoring and Evaluation (M&E) tool for energy projects developed. Technical support offered to the Electrical Power, Renewable Energy and Energy Efficiency activities. Output : Energy Efficiency Promotion Small and Medium Enterprises (SME) Programme on identified energy efficient technologies and financing opportunities conducted. Energy Audits conducted for four public institutions. Energy Management and auditing training conducted for energy managers, consulting engineers, public institutions and industrialists conducted. Implementation of the Voluntary Programme on Energy Efficient Standards and Labels for five appliances (fridges, freezers, AC, electric motors, lighting appliances and air conditioners) started. Energy Week 2014 and associated activities held. Energy awareness materials on efficient use of energy for households, industries, hotels, commercial buildings, schools and colleges developed Output : Renewable Energy Promotion Energy efficient cooking technologies promoted through dissemination of efficient institutional and household cook stoves and training of artisans. Five micro hydropower Sites less than 100KW identified for development. Operations of Bwindi and Suam micro hydropower projects monitored. Solar Water Heaters (SWHs) rehabilitated at Lira and Mbale referral hospitals refurbished. Wind energy technologies promoted through collection and dissemination of wind data on speeds and applications (mills and water pumping). Existing windmills for water pumping studied and packaged for rehabilitation. Output : Purchase of Specialized machinery and Equipment Ten small wind energy systems procured. Two wind measuring equipment procured.

25 Computers for wind data procured. Findings Financial performance The GoU and GIZ jointly finance the project. a) GoU funding Figure 1.1 shows the financial performance of the project. By 30 th June 2015, 87% of the approved budget was released and 97% of the release was spent. The release and expenditures were excellent. Fig: 1.1: Financial performance for Promotion of Renewable Energy and Energy Efficiency Project by 30 th June 2015 Source: IFMS Data The distribution of expenditure by output category is presented in figure 1.2. The figure shows that majority of payments were made under output category of purchase of specialized machinery and equipment while the lowest was under energy policy plans dissemination, regulation and monitoring. 10

26 Fig: 1.2: Share of expenditure by output categories for the Promotion of Renewable Energy and Energy Efficiency Project by 30 th June 2015 Source: IFMS Expenditure distribution was mainly on line items of: machinery and equipment (34%), short term consultancy services (14%), Contract Staff Salaries (Incl. Casuals, Temporary) - 10%, travel inland (10%), Consultancy Services- Long-Term (6%), Fuel, Lubricants and Oils (6%), Advertising and Public Relations (4%). The remaining 16% was distributed among workshops and seminars travel abroad, telecommunications, small office equipment, and maintenance of vehicles, computer supplies and ICT among others, which varied from 3% to 1%. The resource allocation was therefore good. b) GIZ funding A total of Euros 920,000 worth technical cooperation was provided for FY 2014/15. The support aims to improve the framework conditions for access to renewable energy and efficient energy consumption in industries and households. The GIZ funding focuses on the three major areas of: Energy Policy Support, Access to Energy and Climate Change Mitigation. Physical performance Table 1.3 summarizes the physical performance of the PREEEP against the annual planned outputs. The overall physical performance of the project was good at 69% achievement level. Stoves were disseminated at both the household and institutional level, specialized equipment was purchased and some equipment installed. 11

27 Table1.3: Physical Performance of Promotion of Renewable Energy and Energy Efficiency Project Annual Planned output Achievement to June, Energy Policy/Plans Dissemination, Regulation and Monitoring Policy for Fuel Efficiency in Transport Sector Formulated. Concept note for the fuel efficiency programme was finalised and Preparations were under way for the Consultative workshops on fuel Efficiency policy. This output was 30% achieved. Monitoring and Evaluation (M&E) Tool for Energy Projects Developed. Technical support to the electrical power, renewable energy and energy efficiency activities offered A consultant was procured to formulate a monitoring and evaluation system/tool. The inception report was completed in May By the end of June 2015, more stakeholders meetings were still ongoing. Development of the data collection guidelines for all Energy and Mineral Development (EMD) stakeholders were facilitated. The ministry achieved 60% of the planned output. In cooperation with ERD, a consultant was procured to prepare the draft amendment bill to the Electricity Act 1999 and cabinet memo for presentation was submitted and ready for Cabinet approval. Bi- and multi-lateral stakeholder meetings were held. Baseline study was commissioned and carried out; working group of MEMD, REA, Electricity Regulatory Act and GIZ was formed Energy Efficiency Promotion 12 Energy Audits for four Public Institutions conducted. Energy Management and Auditing Training conducted The ERA and MEMD through the PREEEP funding are working together to ensure small scale energy generators like Suam and Bwindi micro-hydro power have fair licencing procedures. A survey was completed by December Technical support in terms of providing for experts in the areas of renewable energy and energy efficiency provided to ministry team. The ministry achieved 100% of the planned output. Participating facilities were identified and inception workshop in the Eastern region was conducted on 12th August 2014 at Sunset Hotel International Jinja. The Energy Audit was conducted at Source of the Nile Hotel Jinja from 13th to 16th August, 2014 and Amber House in December The level of achievement was 100% The procurement process for a consultant to conduct the Energy Management and Auditing Training for energy

28 Annual Planned output for energy managers, consulting engineers, public institutions and industrialists Energy awareness materials on efficient use of energy for households, industries, hotels, commercial buildings, schools and colleges developed Implementation of the voluntary programme on energy efficient standards and labels for five appliances (fridges, freezers, Alternate Current (AC) electric mortars, lighting appliances and air conditioners) started. Achievement to June,2015 managers, consulting engineers, public institutions and industrialists was concluded. Training commenced with opening workshops in Jinja and Kampala. Dissemination of Energy Awareness Materials was done during the workshops. The percentage achievement was 100%. Energy awareness materials on efficient use of energy for households, industries, hotels, commercial buildings, schools and colleges were produced and disseminated during the energy week Dissemination continued to the end of June The ministry achieved 100% of this output. Importers Guide on the Energy Efficient Standards and Labels for the five appliances produced and approved by MEMD and Uganda National Bureau of Standards (UNBS). A list of identified participating firms in the implementation of the Voluntary Programme on Energy Efficient Standards and Labels was compiled. The ministry achieved 100% of the planned outputs. Energy Week 2014 and associated activities held Renewable Energy Promotion Energy efficient cooking technologies promoted through dissemination of efficient institutional and household cook stoves and training of artisans. The Energy Week 2014 was held from 8th to 13th September The activities included; the exhibition at Forest Mall, Sustainable Energy Forum. The impact of the Energy Week 2014 was evaluated and included in the Energy Week Report. The ministry achieved 100% of this output. Draft stove construction manual was produced; 11 beneficiary schools were selected; two people and cooks from each school were attached to the contractor for training and piloting the use of twin stoves. Construction of institutional cook stoves was completed in 11 schools. These were (Everrest Girls Secondary School (SS) in Oyam district, Hill Side Annex Primary School and Lango College SS in Lira District. Others were; Masindi Army SS in Masindi District; Kisojo SS in Kyenjojo district, Mt. Rwenzori Girls SS,and Standard High School in Kasese, Fort Portal SS in Kabarole district, King Solomon College Kyatega in Kyegegwa district, Uganda Martyrs SS, Kayunga district, and Ntare School in Mbarara District.(See field findings under construction of energy saving stoves below) The MEMD in partnership with local governments identified and trained 30 artisans. These were in equal number from the districts of Tororo and Masaka district. This output achieved 100% by close of June

29 Annual Planned output Small and medium enterprises Five (5) Micro Hydropower sites less than 100kW identified for development. Operations of Bwindi and Suam Micro-Hydropower Projects monitored. Solar Water Heaters (SWHs) at Lira and Mbale Referral Hospitals refurbished and rehabilitated Wind Energy Technologies promoted through collection and dissemination of wind data on speeds and applications (mills and water pumping). Achievement to June,2015 Information was not readily available. The output was scored 0% Field surveys to identify Micro hydropower sites less than 100kW in Rwenzori Ranges in Kasese and Mt. Elgon were identified. Six sites were identified; three in Kasese, one in Buhweju, one towards Kapchorwa on Mt. Elgon and another one in Arua district. Additional studies were to be carried out on the identified sites. The ministry achieved 100% of the output. Monitoring of the operations of Bwindi and Suam Micro- Hydropower Projects was done. Bwindi was operational while Suam was not and the reports were in place. The MEMD achieved 100% of the planned output. One of the three large solar water heating system on operation theatre was refurbished in Mbale hospital. Monitoring exercise for SWH at Lira and Mbale Referral Hospitals done to evaluate performance. The overall achievement was 15%. Procurement of the Contractor to carry out the data collection was finalized. The works were to commence in FY2015/16. This output achieved 30%. Existing Wind Mills for Water pumping studied and packaged for rehabilitation. One windmill for water pumping at Kotido Church of Uganda diocese was refurbished and was pumping water. Additional 40 windmills in the country also require comprehensive study to ascertain the requirements for rehabilitation. This output registered 60% achievement as the installed wind mills were not functioning well Purchase of Specialized Machinery & Equipment Ten small wind energy systems procured Seven small wind energy demonstration systems were installed in Karamoja, around the shores of Lakes; Victoria and Kyoga, and Mityana district. (See field findings on Small wind energy systems procured and installed below). The installations were completed at the seven sites but 71% of the installed mills were performing poorly. This output achieved 60% progress. Two wind measuring equipment procured 14 Contract for supply and installation of wind measuring equipment was signed. The contractor delivered the equipment in June % of the planned output was achieved. Computers for wind data No computers were procured. The renewable unit had old

30 Annual Planned output procured Source: MEMD, Field Findings Achievement to June,2015 computers that could suffice. The department procured the computers for the units with computer need. This output registered 0% physical progress. Monitoring focused on social institutions, cooking energy for households, electricity for household s appliances, and productive use of electricity. The status of implementation of these key performance indicators are here after. GIZ support in Construction and dissemination of Energy Saving Stoves During FY 2014/15, the GIZ collaborated with and provided technical support to specialized organizations to promote access to modern energy services to aid cooking in the households and institutions. The partners were: National Cooperative Business Association (CLUSA), United States Agency for International Development (USAID) and International Lifeline Fund (ILF). The program aims to reduce the problems associated with the traditional three stones fire such as: burns among children, depletion of natural resources, a lot of time wasted collecting firewood and cooking which would be used to engage in other development activities. a) The GIZ Partnerships with CLUSA International Background The CLUSA is an international organization, which among other things mobilizes farmers to promote conservation farming. The overall objective of the cooperation is to reduce poverty, improve living conditions and conserve the natural biodiversity within the farming communities through sustainable access and use of improved cook stoves. The project focuses on Lango sub region. The GIZ opted to engage CLUSA and take advantage of the numerical strength of farmer groups to learn how to construct market and promote use of energy saving stoves. The collaboration started in July 2014, while the partnership agreement and implementation commenced in October 2014 and expected ended in June 2015, with possibility of extension. The project is implemented in Dokolo and Amolatar districts. In FY2014/15, the GIZ provided funding worth Ug shs 38,000,000 to cater for technical works, stove trainer contracts, and construction costs. The project involved training the farmer groups in household stoves construction for domestic use and for sale. The targeted households to benefit from the stoves were 6,389 (Amolatar 300 and Dokolo 6098) by By July, 2015, 4500 (70%) households had benefited from the project which was an excellent performance. Stoves dissemination in Amolatar had ended in February In Dokolo, the project began in February 2015 and was still ongoing as the funds were still available. 15

31 To ascertain the performance of the farmer groups in the construction and dissemination of energy savings stoves, representatives from two groups were interviewed. Responses from group leaders are presented in box 1.1. Box 1.1: Interview with the Bedigen Farmer Group Ayen Collins is the mobiliser of Bedigen farmer group located in Kangai Sub-County, Anywalacut village. The group had thirty (30) members of which two were male. The group received; training, two uniforms as stove promotion materials, and five sets of molds from GIZ. The construction commenced in March 2015 and by July 2015, the group, had constructed and sold thirty- eight (38) stoves each at Ug shs 2,500 for the participating farmers and Ug shs 20,000 for the none members. Ayen Collins is the group leader a user and a trader of the stoves. She mentioned that she uses two (2) pieces of firewood compared to the ten (10) pieces with the three stone open fires used before. She highlighted that the stoves were a source of income. Challenges i) Few stoves were constructed due to the delayed supply of the drying shade from the GIZ. ii) Lack of transport means for the heavy stoves. Box 1.2: Interview with Can Rac Farmer Group Can Rac Farmer Group is located in Anywalacut village, Kangai sub county. The group composed of 18 males and 32 females. It started stove construction in April 2015 upon receiving training and the two sets of stove molds from GIZ. By July 2015, the group had constructed and sold seven (7) stoves. The selling price was Ug shs 10,000 to group members and Ug shs 20,000 to the non-group members. Seven men out of the 39 stove builders participated in the construction processes of the 7 stoves made. The major benefits were; limited smoke emission while cooking; the business was a source of income and cooked faster. In spite of owning energy saving stoves, Ms. Atar Anna, the chairperson of the group, was not fully utilizing the stoves. She preferred to use the three stone fire that allows use of large pieces of firewood. Ms Anna recommended that an energy saving stove with a large firewood chamber be introduced. Challenges included; Delayed delivery of the molds that were to facilitate the stove construction. There was limited involvement of the men in the construction processes. Lack of a storage facility for the stoves as this limited the level of production. Source: Field findings 16

32 L-R: Use of traditional three stone fires compared to energy saving stove; Energy saving stove used alongside traditional three stones Conclusion There was under utilization of stoves among the farmer groups. A number of members preferred to use traditional three stones compared to the energy saving stoves. This was due to the reported ineffectiveness and inappropriateness of the technology to the needs of the users. Recommendation The MEMD and GIZ should conduct sensitization of communities on the benefits of energy saving stoves. The MEMD and GIZ field staff should conduct follow up visits to farmer groups to promote efficient use of the energy saving stoves. b) Partnership with International Lifeline Fund Background In April 2014, the GIZ partnered with ILF, which is involved in promotion of clean cook stoves, and water and sanitation programs. Focus of monitoring was on the clean cook stoves program. The ILF established that the traditional three stones were predominantly (90%) used in Uganda. They introduced the improved ILF Rural Wood Stove (ILFRW Stove) that saves 30% of the energy. 17

33 Findings Financial performance The GIZ provided Ug shs 69,334,500 for various activities including; Promotional activities, conducting of research, supplying 500 stoves to Energy Service Providers, and construction of the kiln. Figure 1.3 summarizes the breakdown of the allocated expenditure. The expenditure allocation was efficient as it was put on the core activity for construction of the stoves. Fig 1.3: Proportion of expenditure by activity for GIZ partnership with International Life Line Fund 14% Construction of Kiln 10% 8% 68% Promotion activities Supplying 500 stoves to ESPs Research study Source: Field Findings Physical performance Promotion activities implemented included: training of energy saving stove vendors, running of radio adverts, open air campaigns in Lira town, and training of the communities on the operation and maintenance. The research study covered efficiency of the stoves and the results were provided by CREEC in Makerere University. The research results continue to be implemented to ensure increased efficiency of the stoves produced The construction of an efficient kiln started in May 2015 and was expected to be completed in August The commencement of its use was expected in October after sufficient drying. The kiln will have a drying capacity for the linings for 1,500 cook stoves per week. By 30th June 2015, the kiln was 80% complete. The key outstanding work was construction of the Arch. 18