ERA, Investor in Bitter Row Over Kisoro Power Project

1435 Views Kampala, Uganda

In short
In July 2019, ERA issued a license revocation notice to the company saying it “was unlikely to fulfill its obligations under the license”. ERA gave the company 45-days to show cause why the license shouldn’t be revoked.

There is a bitter row between Elemental Energy Uganda Limited and Electricity Regulatory Authority-ERA over the license for the construction of a hydro power project on River Kaku in Kisoro district. 



Elemental Energy received a license in October 2017 to build the 7MW Nyamabuye power dam on the river at the cost of US$27million. 




In July 2019, ERA issued a license revocation notice to the company saying it "was unlikely to fulfill its obligations under the license". ERA gave the company 45-days to show cause why the license shouldn't be revoked.  




In the notice to the company, ERA said: "The Authority at its 315th meeting held on 4th July 2019, assessed the licensee's compliance and noted that the licensee had registered minimal progress towards the development of the project and was thus unlikely to fulfill its obligations under the license...the licensee is in breach of its license terms and conditions."    



In November last year, the company missed a key date for financial close - where financial arrangements are completed - but it asked for an extension to complete negotiations with financiers. 


ERA has rejected this. Julius Wandera, the ERA spokesperson, said the company had not shown lack of seriousness, which is unacceptable.   




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Carol Kutesa, the head of business development at Elemental Energy said they had done whatever they were supposed to do but the regulator is being unfair - and at worst having 'sinister reasons' to revoke their license.  

 
She said they successfully did the feasibility study and spent more time doing the hydrology gauges to ensure the river has enough water for the project, a requirement for all projects that request for money from the World Bank.  




River Kaku had never had a hydrology study done there.    




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According to ERA, the company was expected to reach a financial close in November last year in vain. Financial close is the date on which the licensee has concluded financial arrangements and disbursements by the lenders. 

  
Wandera said the company was just holding the license and failed to court investors to give it money and instead tried to sell the license.







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The company has rejected this claim, saying they brought in investors DI Frontier as an equity investor and FMO from the Netherlands as a debt funder but were rejected by ERA.  Kutesa told URA they were not convinced why the regulator had rejected the funders.  


She said the regulator has refused to respond to the financier's inquiries about the ability of government to evacuate the power once the project has been completed.


ERA also says the company had wrangles among the shareholders where one wrote to it, saying she hadn't been consulted on the investors; they were bringing on board to buy shares in the company. 


Elemental Energy Uganda Limited is owned by five shareholders, according to Kutesa and the person who wrote to ERA is not one of them.

ERA told URN it is Esteri Akandwanaho. She was wife to Roland Sekaziga, the current managing director of Elemental Energy. They divorced a few years back.  Elemental has protested her being a shareholder.