Africa

Ugandan gov't makes energy top priority in national budget

(Xinhua)
Updated: 2007-06-15 01:14
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The Ugandan government has again made energy sector a top priority that must be handled in the coming financial year starting July 1 as the country continues to face an increasing power crisis that is threatening its economic growth.

Ezra Suruma, the minister of finance, planning and economic development unveiled the 2007/08 budget in the parliament here on Thursday, highlighting energy, road infrastructure, ICT and rural development among other challenges.

"Investment in the energy sector is critical in improving our competitiveness and output. The current shortfall in energy supply continues to hurt our economy as it has increased the cost of production," Suruma told the legislators.

"Next financial year therefore the budget will continue to support emergency thermal energy supply to mitigate the energy shortfall in the medium term," he said.

The country is facing an electricity deficit of 150 MW, which has slowed economic growth over the past three years by not only frustrating old investors but also deterring new ones.

The government is currently relying on the generation of thermal energy and subsidizes the generation heavily to avoid a hike in power tariffs.

"I'm providing 92 billion shillings (about 54 million U.S. dollars) to support thermal generation, additional resources will be set aside the Energy Investment Fund created last financial year."

He said construction of the 750 million dollar Bujagali hydropower project at Jinja, 80 km east of Kampala, is scheduled to start soon while the construction of Karuma hydropower plant in northern Uganda is also expected to start soon.

"These two hydropower plants will ensure a cheaper source of energy in the long term. Karuma will be fasttracked so that we do not experience any further electricity shortfalls as it is clear that the demand will outstrip supply soon after completion of Bujagali," he said.

Bujagali power plant is expected to be complete by 2011.

He said government in the next financial year will provide 119 billion shillings (70 million dollars) for the development of hydropower plants and other related infrastructure as it is focusing on introducing power saving mechanisms and support of other renewable energy schemes.

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