REA MASTER PLAN Central PDF

USAID – Uganda Master Plan Project
Cooperative Agreement No. AID-OAA-A10-00028
September 19, 2018
i
Central Service Territory Business Plan
Prepared by NRECA International

For
USAID – Uganda Master Plan Project

Cooperative Agreement No. AID-OAA-A10-00028
September 19, 2018
ii
Uganda REA Master Plan – Central Service Territory Business Plan
Table of Contents
List of Acronyms & Abbreviations ............................................................................................... iv
Executive Summary ..................................................................................................................... vi
Introduction .............................................................................................................................. 1
Description of Central Service Territory ......................................................................................... 3
Service Provision in the Central Service Territory ........................................................................... 3
CST Staffing Plan ..................................................................................................................... 4
Service Expansion Potential .......................................................................................................... 5
Grid expansion: methodology & results ...................................................................................... 6
Financial analysis of expansion projects ..................................................................................... 9
Intensification potential ....................................................................................................... 12
System reliability investments.................................................................................................. 13
Base case load flow analysis of CST..................................................................................... 13
Voltage drop analysis with expansion projects....................................................................... 15
CST characteristics with 2022-2027 load levels..................................................................... 17
Cost Estimates .................................................................................................................... 18
Mini-grid expansion ................................................................................................................ 19
Customer growth and demand projections................................................................................. 26
Financial analysis of CST............................................................................................................ 30
Capital requirements ............................................................................................................... 30
Consumer/Sales Forecast ......................................................................................................... 32
Revenue requirements ............................................................................................................. 32
Revenue forecasts ................................................................................................................... 34
CST Cash flow analysis........................................................................................................... 36
Risk analysis........................................................................................................................... 40
Other risks .......................................................................................................................... 41
Annex 1. Identified grid expansion projects .................................................................................. 43
Annex 2. Load flow analysis allowable voltage drop .................................................................. 53
Annex 3. Organization chart for the service provider .................................................................... 54
Annex 4. Non distribution infrastructure capital requirements ....................................................... 57
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List of Acronyms & Abbreviations
AAAC All Aluminum-Alloy Conductor

CAPEX capital expenditures
CST Central Service Territory
EBITDA earnings before interest taxes and depreciation
ERA Electricity Regulatory Authority
EU European Union
EPC Engineering, Procurement and Construction
FTE full time employees
GIS Geographic Information System
GoU Government of Uganda
GWh gigawatt-hours
HR Human Resources
IT Information Technology
km kilometer
km2 square kilometers
KRECS Kyegegwa Rural Electricity Cooperative Society Limited
kV kilovolt
kVA kilovolt amperes
kW kilowatt
LED light emitting diode
LV Low voltage
MEMD Ministry of Energy & Mineral Development
mm2 square millimeters
MV Medium Voltage
MW megawatt
NPV Net Present Value
NRECA NRECA International
O&M Operations and Maintenance
PV photovoltaic
iv
REA Rural Electrification Agency

RESP Rural Electrification Strategy and Plan
ROE return on equity
SP Service Provider
ST Service Territory
UEDCL Uganda Electric Distribution Company Limited
UEGCL Uganda Electric Generation Company
UETCL Uganda Electric Transmission Company Limited
USAID United States Agency for International Development
US$ United States Dollars
WENRECO West Nile Rural Electrification Company
WTP Willingness to pay
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Executive Summary
During the development phase of the Rural Electrification Plan and Strategy (RESP) Phase II, the Rural
Electrification Agency (REA) divided Uganda into thirteen rural electric service territories that would
be managed by service providers responsible for service delivery throughout each service area. Each
service territory will serve a large geographic area designed to create sufficiently large business units -
that have the potential of achieving self-sustainability through energy sales.
Kyegegwa Rural Electricity Cooperative Society Limited (KRECS) is licensed to provide service to
clients connected to electric distribution infrastructure financed by REA in the Central Service Territory
(CST). Going forward, KRECS will serve existing and future consumers connected via the expansion
plan described in this document.
This business plan for the CST presents a description of the location and characteristics of the territory,
a discussion of existing electric distribution infrastructure, the results of the expansion plan and
investment options to increase service connections in the territory, comments and recommendation s
regarding the organization of service provider in the territory. This is followed by the results of a
financial analysis carried out to illustrate expected operating costs and revenues in the territory and
evaluate financial sustainability for the service provider.
Description of Central Service Territory

Central Service Territory (CST) is centrally located in Uganda covering an area of 56,000 square
kilometers (km2) and ranking as the largest service territory in terms of land area. It is bordered by the
Eastern ST to the east and Lake Victoria to the south. CST is served by 6,000 kilometers (km) of primary
and secondary roads.
The CST is home to 17 million people living in 1.9 million households. It includes 17 districts and
major population centers are Kampala, Entebbe, Jinja and Mityana. The geography of the service
territory is moderately hilly with a significant portion of the territory covered by Lake Victoria to the
south and Lake Kiyoga the north. The southern portion of this service territory includes a dense rain
forest known as the Mabira Central Forest. Economic activity in the western and southern land area is
dominated by subsistence farmland, while the Nakasongola and Nakaseke districts to the north are
composed of woods or marshland. According to national population and housing census 2014, 46% of
households have electricity access in CST, with Kampala (84%) and Wakiso (63%) ranking highest and
Buvuma Island lowest at 7% access.
A total of 5,842 km of distribution line serves consumers in CST, including 3287 km of 11 kV and
2,555 km of 33 kV lines. Umeme serves the largest portion of the distribution network consisting of
5,623 km MV line including all 11kV line. Apart from Umeme, other service providers include KRECS,
Kalangala Infrastructure Services Limited (KIS), and UEDCL that manage a total of 218 km of 33kV
line serving in Kalangala, Kyankwanzi, Kyegegwa, Mityana and Mubende districts. REA has proposed
construction of 89 km of 11kV line and 613 km of 33kV line to extend the existing network to
neighboring communities.
Expansion of the distribution system in CST

Achieving full electrification coverage in CST will require intensification of existing grid infrastructure,
significant expansion of existing grid resources, and expansion of off-grid service to areas that cannot
be economically served by the grid. Grid intensification involves extending service connections from
the low voltage network to consumers in close geographic proximity to distribution service. Grid
extension is the process of building new medium voltage infrastructure to communities and housing
clusters that do not yet have access to the interconnected electricity system. Both modalities of
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expanding coverage are important and yield economic benefits. Off-grid areas, on the other hand, can
be served by a combination of mini-grids and stand-alone solar home systems. All these modalities of
service expansion are evaluated in this CST business plan.
• REA has confirmed investments in MV and LV infrastructure in the CST that includes
construction of approximately 613 km of 33 kV and 89 km of 11 kV distribution line that
combined have the potential to add approximately 5,600 new consumers1 from 2017 to 2021.
The estimated cost of the REA expansion plan is $25.23 million.
▪ Using the geospatial platform designed for CST, 121 grid expansion projects were identified
and evaluated in 14 districts. If developed in the next 10 years these projects have the
potential of adding approximately 52,200 new consumers to CST service over the ten-year
planning horizon. Projects were prioritized based upon the number of consumers served and
their unit construction costs.
▪ Intensification of existing grid service has also been evaluated and has the potential to add
approximately 3,851 consumers in areas already served with the existing distribution
infrastructure in the CST. Grid intensification activity will require funding not only for
service connections but also for expanding the low voltage network to reach the households.
▪ A system modeling exercise was conducted to identify system reinforcement and reliability
requirements in the CST to identify requirements for expansion in feeder capacity, substation
capacity, and power quality investments such as voltage regulation or reactive power
compensation.
Taken together, these activities will result in increasing the number of served consumers and electricity
sales in the CST between 2018 and 2027. Figure E1 below illustrates the growth in the number of
customers and electricity sales (from all tariff categories) resulting from grid expansion and
intensification activities assuming all identified projects are financed. Unit consumption data for tariff
categories is based on historic electricity sales and results from willingness to pay surveys.
Figure E1. Projected growth of customers and electricity consumption in the CST
As Figure E1 above shows, consumer growth is expected to increase from approximately 3,700
consumers served in 2017 to 72,600 by 2027. The majority of the consumers will be added by both grid
1 See Figure 12 below

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expansion projects (newly defined or previously identified by REA) and customer intensification work
utilizing existing distribution transformers. Likewise, Figure E1 shows electricity consumption will
grow from 2.2 GWh estimated for 2017 to 27.9 GWh in 2027.
Table E1 below summarizes the capital investment requirements in the CST for the 2018-2027
expansion period, including grid expansion projects (newly defined or previously identified by REA),
intensification activities in currently served areas, 33 kV network reinforcement projects and non-
distribution infrastructure capital requirements. Note that this investment total is related to the CST
service provider only; it excludes the capital investment needed for off-grid service. The majority of
the grid intensification and expansion projects are expected to be completed within the first five years
of the planning horizon.
Table E1. Summary of grid connected capital investment requirements in the CST
Item [in million USD} 2018-2022 2023-2027 Total
Ongoing REA grid expansion plan $ 25.23 $ 25.23
Additional grid expansion projects $ 33.45 $ 33.03 $ 66.48
Intensification activities $ 0.91 $ 0.59 $ 1.50
Network reinforcement projects $ 0.50 $ 0.50
Total distribution infrastructure $ 60.08 $ 33.62 $ 93.70
Non-distribution infrastructure $ 1.15 $ 1.15
Total CAPEX $ 61.23 $ 33.62 $ 94.85
In addition to the approximately US$25.23 million needed to complete REA expansion investments,
CST grid expansion investment, CST intensification investments, and network reinforcement results in
an overall distribution infrastructure investment requirement of US$68.47 million for the next ten years.
Adding non-distribution infrastructure investment (vehicles, tools, equipment, etc.) the total capital
investment requirements for the CST is estimated at US$94.85 million between 2018 and 2027.
Off grid areas in the CST

Many communities and housing clusters remain too far from the grid or are too small to be economically
connected via conventional grid extension. For these communities and housing clusters, mini-grid and
stand-alone solar solutions are considered the most viable alternatives to grid service. These off-grid
solutions will likely not be managed by the CST service provider; they will be owned and operated by
distributed renewable energy service providers. Mini-grid service is a specialized business requiring
knowledge of construction and operation of renewable energy systems that argues for managing this
program through third-party, mini-grid operators.
Satellite imagery was used to locate and evaluate housing clusters for purposes of identification and
evaluation of grid expansion and mini-grid project opportunities. Mini-grids are most often viable when
they serve more than 50 households given the economics of small, isolated system operation. The mini-
grid technology profile includes solar-battery charging systems distributing power over a low voltage
distribution network.
The project identification process resulted in identifying and evaluating 125 mini-grids in 102 villages
with a total of 17,752 households. Most of the housing clusters are located in the Buvuma and Kalangala
districts. Using estimates of penetration rates from the willingness to pay surveys, the number of
consumers who are likely to be served by these mini-grids is approximately 15,736 by the tenth year.
Mini-grids were ranked based on the increasing capital cost per consumer. Table E2 below summarizes
the characteristics for the 125 mini-grids evaluated from the data collected by the NRECA team.
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Table E2. Summary of mini grids evaluated in the CST

DC Capital
# of mini- Consumers Cost per
District Households Arrays Costs US$
grids (year 10) Customer US$
[kW] million
Buvuma 63 9,171 8,127 1,733 $9.44 $1,162
Kalangala 26 4,663 4,125 861 $4.78 $1,158
Kyankwazi 1 75 67 16 $0.09 $1,397
Luwero 2 222 198 44 $0.28 $1,396
Mpigi 5 575 507 108 $0.65 $1,280
Mukono 6 736 655 144 $0.78 $ 1,195
Nakaseke 5 382 339 76 $0.46 $1,372
Nakasongola 5 407 365 85 $0.55 $ 1,496
Wakiso 12 1,521 1,355 298 $1.81 $1,338
Total 125 17,752 15,736 3,365 $18.84 $1,197
The estimated total construction cost of these mini-grids is approximately US$18.84 million
representing an average cost per consumer of US$1,197.
Financial Analysis
A financial model was developed to evaluate the financial performance of the CST service provider for
the period 2018-2027. The financial analysis evaluated costs and revenues associated with existing and
future operations and included current and planned infrastructure expansion with the new connections
associated with CST system expansion. Revenue requirements include capital recovery charges taking
into consideration the nature of the grants-in-aid from REA to the service providers, staff to administer,
maintain and operate the electric distribution system and conduct repairs and expansion activities in
accordance with the license requirements for the CST.
As indicated previously, the ten-year financial analysis only includes grid connection projects.
Identified solar mini-grids are not included as they are more likely to be transferred for operation to
service providers that are independent of the CST service provider.
The financial projection for the CST service provider uses the current KRECS tariff schedule in year 1
and thereafter will use the UEDCL tariff schedule. The project also includes cost of purchased power,
and the customer and electricity consumption forecast including grid expansion and intensificat ion
activities in the territory. Based on the results of the financial analysis, working capital needs for the
service provider are estimated as the amount of cash needed to cover any annual cash operating deficit
for the planning horizon. Table E3 below summarize the results of the financial analysis for the initial
five years - which are the most critical for the service provider. The full ten-year financial analysis is
presented later in this document.
Table E3. Financial analysis for the service provider in the CST
Item – US$ million 2018 2019 2020 2021 2022
REVENUES
Total revenues from electricity sales $ 0.86 $ 1.30 $ 1.84 $ 2.44 $ 3.09
Revenues from new connections $ 0.09 $ 0.10 $ 0.13 $ 0.14 $ 0.15
Total revenues $ 0.95 $ 1.40 $ 1.97 $ 2.58 $ 3.25
Total revenues per kWh sold $ 0.24 $ 0.24 $ 0.24 $ 0.24
EXPENDITURES
Electricity purchases $ 0.45 $ 0.63 $ 0.84 $ 1.07 $ 1.33
Distribution margin $ 0.50 $ 0.77 $ 1.13 $ 1.50 $ 1.92
Distribution margin per kWh sold $ 0.13 $ 0.13 $ 0.14 $ 0.14 $ 0.14
Staff costs $ 0.06 $ 0.10 $ 0.16 $ 0.23 $ 0.32
Distribution maintenance $ 0.15 $ 0.26 $ 0.37 $ 0.48 $ 0.60
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Item – US$ million 2018 2019 2020 2021 2022

Customer costs $ 0.05 $ 0.08 $ 0.12 $ 0.16 $ 0.20
Administrative and other costs $ 0.11 $ 0.16 $ 0.20 $ 0.23 $ 0.24
Total Costs of sales $ 0.82 $ 1.21 $ 1.69 $ 2.17 $ 2.70
EBITDA $ 0.13 $ 0.18 $ 0.28 $ 0.41 $ 0.55
EBITDA margin 14% 13% 14% 16% 17%
Depreciation
Interest on debt service
Taxes $ 0.03 $ 0.05 $ 0.07 $ 0.10 $ 0.14
Profit / loss for the year $ 0.10 $ 0.14 $ 0.21 $ 0.31 $ 0.41
Margin as Percentage of Revenue 11% 10% 11% 12% 13%
Return on equity 100% 58% 47% 41% 35%
CASH FLOW
Project costs $ (11.67) $ (11.52) $ (12.92) $ (11.77) $ (13.34)
Grant $ 11.67 $ 11.52 $ 12.92 $ 11.77 $ 13.34
Loan
Net CAPEX
Net Income (Profit/loss) $ 0.10 $ 0.14 $ 0.21 $ 0.31 $ 0.41
Less Depreciations
Less Principal Payments
Cash flow from operations $ 0.10 $ 0.14 $ 0.21 $ 0.31 $ 0.41
Net Cash flow $ 0.10 $ 0.14 $ 0.21 $ 0.31 $ 0.41
NPV of Net Cash flow (10 years) $2.61
The financial analysis assumes the distribution infrastructure investment in the CST in the initial years
will be financed as a grant-in-aid for all materials and labor through REA. For this service territory, it
is also assumed that REA will finance initial non-distribution capital expenditures that represent the
cost of vehicles, tools, spare parts, IT system, etc. and other initial business-related requirements (such
as pre-operating costs).
Under these conditions and assuming the use of the current UEDCL tariffs and electricity purchase
price, the financial analysis illustrates that the service provider will show a profit in the first five years
of operations. The base case for the financial analysis assumes the use of the UEDCL tariff, which has
been adopted by the other service providers. The impact of the recently submitted KRECS tariff that is
15% lower that the UEDCL tariff is shown in the risk analysis section of this business plan.
Cash flows from operations are uniformly positive during the first 5 years of operations. The net present
value (NPV) of annual cash flow during the ten-year period and considering a 10% discount rate results
in a positive US$2.61 million.
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Central Service Territory Business Plan
Introduction
The Uganda Rural Electrification Agency (REA) was established in 2003 to design and implement the
process of expanding rural electric coverage throughout Uganda. The Government of Uganda (GoU)
initially formulated the first phase of the Rural Electrification Strategy and Plan (RESP) that employed
a combination of grid and off-grid expansion activities to provide service to rural communities. After
the first ten years of RESP implementation, REA, the World Bank and other development partners
reviewed progress and determined that a fundamental shift in the program approach was necessary. The
result was a decision to subdivide Uganda into thirteen rural electric service territories, and to promote
electrification service expansion by establishing service providers that would be responsible for large -
scale electrification coverage in each of these service areas. The revised RESP for 2013-2022 aims to
increase rural electric access to 26% of the rural population over this period.
The service territories defined in the RESP II (see Figure 1 below) are geographic areas that were
recommended by NRECA to REA for the purpose of creating sufficiently large service areas that would
result in business units – service providers – with the potential of reaching self-sustainability through
energy sales. The model for this revision in program strategy was the concession area defined for the
West Nile Rural Electrification Company (WENRECO) in the early 2000s. WENRECO operates as an
islanded generation-distribution grid supplied by a hydroelectric generation facility serving
approximately 15,000 residential and commercial consumers in a land area of 10,792 square kilometers
(km2). Prior to the date that the WENRECO concession was awarded, this area was served by the
former Uganda Electricity Board and served less than 1,500 consumers through a high-speed diesel
power plant. Establishing the larger service territory and agreeing to terms of the concession that
included joint-investment in a hydroelectric facility, a vastly expanded 33 kV distribution network and
a rapid increase of service connections led to significant expansion of coverage.
1
Figure 1. Electricity service territories in Uganda
The United States Agency for International Development (USAID) agreed to support implementation
of the RESP process by sponsoring master planning processes for each of thirteen service territories.
USAID assigned this responsibility to NRECA International (NRECA) that had worked with REA to
revise the RESP from 2011-2013 during which the first masterplan for the South-Western Service
Territory (SWST) was prepared. Recognizing that service providers will be created for multiple service
territories while other existing service providers will need to significantly expand service through the
investment in power supply infrastructure, this and other master plans are being prepared in a business
plan format.
This document begins with a description of the location and physical characteristics of the Central
Service Territory (CST). The description includes an overview of economic indicators, the existing
electric transmission and distribution infrastructure, the number of consumers who presently are served
by commercial energy service, a description of the service providers that are currently licensed to
commercial power to consumers in the service territory, and an analysis of the load characteristics and
projections for the coming years. The load analysis is followed by a description of the expansion plan
and investment options for the CST including medium and low voltage investments to expand service
to un-electrified areas. The expansion plan presents an analysis of the potential to increase service
2
connections in areas already served by the existing service provider –that is, an intensification analysis
that will significantly increase service connections at a low investment cost. The intensification analysis
will be followed by an analysis of mini-grid opportunities in the CST resulting from the geo-spatial
analysis.
In addition to evaluating expansion opportunities and investment values, the business plan presents a
discussion of the organization of the CST service provider including a discussion of the need to
strengthen management, operational, customer service and other functions in light of the significant
growth that will occur as a function of expansion of physical infrastructure. Investment in business
systems, vehicle fleet, communications and tools and equipment will also be addressed in this section.
This will be followed by results from the financial model to illustrate expected operating costs and
revenues to illustrate the sensitivity of service provider sustainability as a function of sales and tariffs
informed from results of willingness to pay surveys and commercial data from service providers
operating within the service territory and others that are in close proximity to the CST.
Description of Central Service Territory

CST is centrally located in Uganda covering an area of 56,000 square kilometers (km2) and ranking as
the largest service territory in terms land area. It is bordered by the Eastern Service Territory to the east
and Lake Victoria to the south. This service territory is served by 6,000 kilometers (km) of primary and
secondary roads.
CST is home to 17 million people living in 1.9 million households. It includes 17 districts and major
population centers are Kampala, Entebbe, Jinja and Mityana. The geography of the service territory is
moderately hilly with a significant portion of the territory covered by Lake Victoria to the south and
Lake Kiyoga the north. The southern portion of this service territory includes a dense rain forest known
as the Mabira Central Forest. Much of the western and southern portions are dominated by subsistence
farmland, while the Nakasongola and Nakaseke districts to the north are composed of woodland or
marshes. According to national population and housing census 2014, 46% of the CST households have
electricity access, with Kampala (84%) and Wakiso (63%) ranking highest and Buvuma Island lowest
at 7% electrification access.
Service Provision in the Central Service Territory

A total of 5,842 km of medium voltage (MV) distribution line serves consumers in this service territory,
including 3,287 km of 11 kV and 2,555 km of 33 kV lines. As noted in the other service territories,
Umeme serves the largest portion of the distribution network with 5,623 km of MV line including all
11 kV line. Apart from Umeme, Kyegegwa Rural Electricity Cooperative Society Limited (KRECS),
Kalangala Infrastructure Services Limited (KIS), and UEDCL manage 218 km of 33kV line serving in
Kalangala, Kyankwanzi, Kyegegwa, Mityana and Mubende districts. REA has proposed construction
of 89 km of 11kV line and 613 km of 33kV line to expand service to selected villages in CST.
3
Figure 2. Existing distribution system in CST
Note: Umeme operates blue lines (33 kV), UEDCL operates all green lines (33 kV), KIS operates all
purple lines (33 kV), and KRECs operates all orange lines (33 kV).
Table 2. Distribution infrastructure in the EST.
Item Unit KRECS Umeme UEDCL
33 kV 150mm2 lines km 320.2
33 kV 100mm2 lines km 159.2 1,013.5 58.0
33 kV 50mm2 lines km 636.7 0.2
33 kV 25mm2 AAC lines km 1.3 198.5
Total 33 kV km 160.4 2,336.3 58.2
Total 11 kV km 3,287.0
Number of MV/LV distribution #
transformers 66 7,201 151
Installed capacity in MV/LV distribution kVA
transformers 3,225 1,186,400 12,330
Through 2017, KRECS served 3,715 customers and sold approximately 2.17 GWh of electricity to CST
consumers.
CST Staffing Plan

Staffing levels for CST will be a function of the number of consumers to be served and the geographic
scope of the service territory. Currently KRECS has approximately 23 employees in an organization
similar to the one presented in Figure 3 below. Given that the geographic scope will not expand
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significantly as REA invests in expansion and grid intensification investments, staff numbers will grow
at a slower pace than consumer growth.
System operations should be managed with as few employees as possible in the early years to maintain
operating costs at a sustainable level. The number of employees will increase in rough proportion as
REA finances expansion projects and customers request and receive service. One of the benchmarks by
which highly functioning utilities are measured is the number of consumers per employee. Well-run
rural utilities similar in size and operations to CST typically start with ratios of 150-250 consumers per
employee and as customer growth continues, the ratio improves towards 800 customers per employee
or above over time2. A sample organizational chart is shown in Figure 3 below.
Figure 3. CST functional organization chart.
General Manager
Assistant
Commercial services Operations Engineering Adm and Support
Comm. Manager Operations Manager HR and Adm
Back office Supervision Accounting
Key accounts Linemen Legal and Regul.

Kasanda
Customer Reps Mubende IT
Kasanda Hoima
Mubende Other
Hoima
Warehouse
Technicians
Kasanda
Mubende
Hoima
Service Expansion Potential

Achieving full electrification coverage in the CST will require significant expansion of grid resources,
intensification of existing grid infrastructure, and expansion of off-grid service if there are areas that
cannot be economically served by the grid. Grid extension is the process of building new medium
voltage infrastructure to communities and housing clusters that do not yet have access to electric service.
Grid intensification involves extending service connections from the low voltage network or directly
from distribution transformers to consumers that in close geographic proximity to distribution service.
Both modalities of expanding coverage are important and yield economic benefits. Off-grid areas, on
2Higher ratios are more common in best performing utilities or those highly dependent on technology. The
generalized use of prepaid technologies also increases the ratio as some functions such as meter reading and
billing are not conducted.
5
the other hand, can be served by a combination of mini-grids and stand-alone solar home systems. All
these modalities of service expansion are evaluated in this CST business plan.
Grid expansion: methodology & results

The process of expansion planning involves a number of steps to prepare the geographic information
system (GIS) platform to support project identification and analysis. Project identification depends
upon establishing a clear geographic framework that includes a number of planning parameters that
form the base map with which expansion planning can be performed. The geographically referenced
data that is required includes the following:
1. Political boundaries: These include the service territory and district boundaries.
2. Road network: Primary, secondary, and tertiary roads are included.
3. Population data: Population data derived from the most recent census and projected over the
planning horizon.
4. Satellite imagery: Satellite imagery that is used to digitize and count housing clusters.
5. Substation locations: Grid and primary substation locations, capacities and power transformer
characteristics.
6. Line alignments: Umeme, KRECS, KIS, and UEDCL medium voltage line alignments,
together with distribution transformer locations and characteristics.
7. Other significant terrain features such as rivers, lakes, forests and game parks.
In addition to these geographically-specific data, evaluation of project costs and viability requires
definition of construction costs, operating costs, energy consumption patterns, and tariffs. This data was
evaluated in coordination with REA and thereafter recorded in the geospatial framework as input tables.
The values can be modified as needed to evaluate project costs, revenues and to project characteristics
if the projects are financed over time.
For each expansion project, capital costs are evaluated using construction costs that include material,
labor, engineering and project management. Because projects are designed to meet a specific
demand/energy requirement, a demand projection must be evaluated that is the primary input required
to dimension distribution system components. The parameters used to evaluate consumption and load
are presented in Tables 3 and 4 while distribution infrastructure costs are shown in Table 5.
Table 3. Assumptions for penetration levels and growth

Category Penetration Rates Ratio of total
potential
Consumers per
HH connected
Year Zero Year 5 Year 10
Residential 30% 50% 60% 97.4%
Commercial 70% 100% 100% 2.6%
As results from above, penetration rate will start at 30% of households connected to the grid from the
first year increasing to 50% by year five and 60% to year ten respectively, based on the expected annual
growth. Commercial customers that normally have higher penetration rates will increase from the initial
level of 70%, reaching 100% by year five.
Unit consumption per residential and commercial customers is based on the results of the willingness
to pay (WTP) survey. The results indicated that consumption levels are a function of the penetration
level, where the higher the penetration the less the average consumer can afford the electricity service
and the lower the unit consumption. Thus, initially connected customers tend to consume more that
those connected at later years.
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Table 4. Assumptions for consumption per household & consumer growth

Category Unit Penetration Rate Annual growth
kWh/cust- 30% 50% 60% Years 2-5 Years 6-10

Residential
month 30 22 18 3% 2%

Commercial
month 41 26 15 3% 2%
As Table 4 above shows, the initial unit consumption for residential customers is 30 kilowatt-hours
(kWh) per month. When the penetration rate reaches 50% the unit consumption for these additional
customers is assumed to fall to 22 kWh per month (however those customers connected initially when
penetration was 30% still consume 30 kWh per month plus the annual growth). New residential
customers connected when penetration reaches 60%, will consume around 18kWh per month
(compared with 30kWh when penetration was just 30%). Unit construction costs are presented in Table
5 below.
Table 5. Unit construction costs.
Construction unit Unit Cost
33 kV feeders
100 mm2 AAAC US$/km $28,000
50 mm2 AAAC US$/km $26,000
25 mm2 AAAC US$/km $20,000
Distribution Transformers -single phase
10 kVA US$/unit $2,350
LV network
LV 25 mm2 US$/km $12,200
Low cost 240 V line w 25 mm2 Triplex US$/km $11,700
Service drops
Single phase service drop US$/customer $180
Three phase service drop US$/customer $230
Low cost single phase service drop US$/customer $148
The geospatial platform was used to identify and evaluate a series of grid expansion projects for
inclusion in the business plan. This process began by downloading and processing satellite imagery for
the CST. Census data was uploaded into the GIS to evaluate population and housing density for each
political district. The road network including international, primary, secondary and tertiary roads was
also obtained, as well the data base of political units, boundaries and major population centers.
Grid infrastructure data that was developed by the NRECA GIS team in 2011-2012 was updated
showing all grid and primary substations, 33 kV and 11 kV distribution lines, and distribution
transformers. Satellite imagery was processed to show the road network, to digitize all housing
structures; to show water bodies and other features that are needed to identify potential project
opportunities and impediments to project implementation.
With the base data integrated into the GIS, the team began the process of identifying grid expansion
projects. Grid systems expand as residential, commercial and industrial activities expand. Economic
activities most often expand along transportation corridors and radially around population centers. The
7
digitized housing structures were used to identify population patterns that could be economically
interconnected via medium voltage distribution feeders and laterals to form line extension projects.
The GIS team identified and evaluated these potential projects on a project-by-project basis, recording
MV and LV line lengths, placements of distribution transformers, and the number of consumers that
could be served. These projects were added to the projects that REA has already identified. REA has
allocated funds to build approximately 89 km of 11 kV lines and 613 km of 33 kV lines (including 301
new distribution transformers) that will serve villages and housing clusters totaling approximately
15,942 existing households. The projects identified through the GIS platform will be added to the REA
projects to form the CST grid expansion plan. Figure 4 below illustrates the process of defining projects
using clustered households.
Figure 4. Household clustering methodology
Table 6 below presents a summary of the proposed grid expansion projects by district and feeder in the
CST. As Table 6 shows, one hundred thirty-two projects were identified in the GIS that would extend
the 33 kV systems by 1,566 km and serve as many as 82,733 households in the service territory. An
evaluation of the likely number of served households is presented that takes into consideration not only
household growth but affordability, resulting in a lower number of projected connected consumers.
Table 6. Identified potential grid expansion projects in the CST
Number Length of
Voltage Number of
District Feeder of 33kV network
kV existing HHs
projects [km]
Mitanya Hoima 33 2 1,209 20
Kiboga Hoima 33 2 3,594 65
Kyankwanzi Hoima 33 5 8,004 122
Luwero Wabigalo 33 6 1,285 31
Nakasongola Wabigalo 33 4 3,093 98
Wakiso Busunju 33 4 3,493 59
Mpigi Mutundwe 33 4 3,899 32
Mitanya Busunju 33 1 598 8
Mitanya Kasanda 33 19 14,840 276
8
Mubende Kakumiro 33 6 3,672 96

Mukono Nakifuma 33 3 6,125 61
Mpigi Mityana 33 1 597 14
Mitanya Mityana 33 4 4,060 57
Mpigi Masaka central 33 3 4,079 47
Mubende Mubende 33 12 5,425 109
Kyegegwe Mubende 33 1 1,391 30
Kyegegwa Mubende 33 28 10,809 326
Kyenjojo Mubende 33 1 102 2
Kayunga Kayunga 33 25 5,493 92
Buikwe Mukono2 33 1 965 20
Total 132 82,733 1,566
Annex 1 provides more detailed project-by-project information including illustrations of each project
site, cost elements of each project and a summary of the financial analyses of each project. Figure 5
below provides a visual summary of the grid expansion projects, both those that are included in the
REA investment plan as well as the projects listed in Table 6 above that were identified and evaluated
in GIS.
Figure 5. CST grid expansion projects.
Financial analysis of expansion projects

The process of prioritizing projects for construction is a function of evaluating the comparative financial
value of the projects, taking into consideration the capital cost of construction, the revenues that will be
generated, and the operating cost associated with each project. The GIS framework has been
programmed to perform net revenue analyses for projects identified using sales projections, the capital
cost of the investments, commercial efficiency metrics of the projects, and operating costs derived using
9
local cost parameters and data from Ugandan distribution service providers. Sales projections for each
project used penetration rates and sales assumptions shown in Tables 3 and 4 above in conjunction with
tariff and connection charge information presented in Table 7 below. Operating costs were evaluated
using the cost parameters illustrated in Table 8.
Table 7. UEDCL Tariffs and connection charges

Item Unit Value
End user Tariffs 3
Fixed Charge 4
Domestic US$/month $0.996
Commercial US$/month $0.996
M. Industrial US$/month $0.996
Energy Charge
Domestic US$/kWh $0.206
Commercial US$/kWh $0.186
Connection charges
Domestic US$/Connection $20.0
Commercial US$/ Connection $20.0
Industrial / Other US$/ Connection $20.0
Table 8. Operating expense parameters

Item Unit Value
Electricity purchase price US$/kWh $0.072
Annual O&M costs US$/kWh $0.03
Annual Adm. & General costs 5 % 1.0%
Other annual costs US$/kWh $0.003
Replacement reserve provision % 1.0%
Using the data tabulated in the above tables, a financial analysis was performed for each project to
evaluate the total capital cost, annual revenues and operating costs including the cost of purchased
energy, and a maintenance reserve; as well as evaluating the cost per consumer and the net present value
of the project. All projects with a positive NPV or a total construction costs lower than US$1,800 per
customer, are selected for development. The results of these analyses are shown below in Table 9
below. Individual project costs and the NPV for each grid expansion project are provided in Annex 1.
3 End user tariffs based on ERA approved tariffs for January 2017 and exchange rate of UGX3,611 per US
Dollar
4 Assumed equal to UEDCL.
5 As a percentage of the upfront project costs
10
Table 9. Summary of the financial analysis for the grid expansion projects in the CST
# projects Project Cost per NPV
Cust.
District Feeder projects with + Cost US$ Customer US$
Year 10
analyzed results Million US$ million
Mitanya Hoima 2 2 974 $1.04 $1,066 $0.034
Kiboga Hoima 2 2 2,896 $3.19 $1,103 $0.089
Kyankwanzi Hoima 5 5 6,450 $6.40 $992 $0.285
Luwero Wabigalo 6 5 969 $1.13 $1,164 $0.022
Nakasongola Wabigalo 4 3 1,474 $1.92 $1,305 $0.008
Wakiso Busunju 4 4 2,815 $2.93 $1,042 $0.107
Mpigi Mutundwe 4 4 3,142 $2.27 $721 $0.243
Mitanya Busunju 1 1 482 $0.46 $963 $0.023
Mitanya Kasanda 19 19 11,958 $13.02 $1,089 $0.385
Mubende Kakumiro 6 6 2,959 $4.12 $1,393 $(0.015)
Mukono Nakifuma 3 3 4,936 $3.88 $786 $0.343
Mpigi Mityana 1 1 481 $0.66 $1,371 $(0.001)
Mitanya Mityana 4 4 3,272 $3.18 $970 $0.153
Mpigi Masaka central 3 3 3,287 $2.94 $894 $0.185
Mubende Mubende 12 12 4,371 $5.25 $1,200 $0.081
Kyegegwe Mubende 1 1 1,121 $1.46 $1,305 $0.006
Kyegegwa Mubende 28 20 5,558 $7.04 $1,266 $0.058
Kyenjojo Mubende 1 1 82 $0.08 $1,013 $0.003
Kayunga Kayunga 25 24 4,371 $4.53 $1,037 $0.169
Buikwe Mukono2 1 1 778 $0.97 $1,253 $0.009
Total 132 121 62,375 $66.48 $1,066 $2.188
One hundred twenty-one of 132 identified expansion projects have a lower unit construction cost than
the assumed cap of US$1,800/customer. These projects have the potential to provide electricity service
to approximately 62,375 new consumers6 after ten years of their initial completion (including existing
households and future annual growth) with a total capital investment of US$66.48 million, equivalent
to an average of US$1,066 per consumer. The net present value for these 121 projects over a 10-year
period is approximately US$2.2 million.
Table 10 below summarizes the investment requirements for grid expansion projects for the 2018-2027
planning horizon. This table also includes the estimated project costs for the ongoing REA grid
expansion plan in the CST 7.
6 This consumer quantity makes a simplifying assumption that all projects are constructed immediate ly
7Calculated using the unit construction costs presented above and an even disbursement over the 5 -year period
between 2017 and 2021.
11
Table 10. Summary of capital cost requirements for expansion projects in the CST.
Item - US$ 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total
Million
Identified grid
expansion
projects $5.30 $6.54 $7.94 $6.78 $6.89 $7.22 $6.48 $7.89 $6.33 $5.12 $66.48
Ongoing REA
expansion
projects $4.81 $4.81 $4.81 $4.81 $6.01 $25.23
Total
$10.11 $11.35 $12.74 $11.58 $12.89 $7.22 $6.48 $7.89 $6.33 $5.12 $91.70
The grid expansion projects are sorted by year over the 2018-2027 period based on ascending cost per
consumer, to maximize the number of customers connected8. The completion of ongoing REA grid
expansion plan in the CST will require approximately US$25.23 million over the period between 2018
and 2022. This figure combined with the project costs required for the additionally identified and
prioritized grid expansion projects comes to approximately US$91.70 million required in grid
expansion projects for the next ten years in the CST. The latter estimate includes all the construction
costs needed to interconnect new customers until the tenth year.
Intensification potential
As previously indicated, customer connections can also be intensified by connecting existing
households in areas already served by distribution infrastructure. By end of 2017 KRECS served
approximately 3,715 consumers in the CST via 66 distribution transformers representing an average of
approximately 56 consumers per distribution transformer.
Based on a geospatial analysis conducted over all existing distribution transformers in the territory,
8,043 existing households or potential consumers were identified in the geodatabase within one
kilometer of all existing distribution transformers, which resulted in an average of 122 potential
consumers for each existing transformer. As such, the existing penetration rate corresponding to the
3,715 currently served customers is equivalent to 46% of the total potential consumers that could be
served by the existing distribution system (assuming there is sufficient distributing capacity installed in
the transformers).
The average transformer size is 50 kVA in the KRECS distribution system that can accommodate up to
150 consumers at the present rate of energy consumption. The new REA policy promotes service
connections to all potential consumers within 70m range of existing LV circuits. Assuming that about
70% of the potential consumers have the financial resources to wire their houses in the coming ten
years, approximately 3,851 new customers (including an annual household growth of 3%) could be
added to the existing distribution system without requiring any additional distribution transformer
capacity. Thus, the capital requirements to finance these 3,851 additional service connections between
2018 and 2027 will be approximately $693,0009.
The intensification process will require funding not only for service connections but will also require
an expansion of the low voltage network to reach the households. On average, well-designed low
voltage networks should use in total approximately 1.5 km of low voltage line per transformer 10. If we
8 As result of this 10-year construction process, by year ten the number of customers served by these 121
identified grid expansion projects is estimated at 52,200 consumers. Similarly, the REA proposed projects
developed in the first five year, would yield to approximately 13,200 consumers served by year 2027.
These consumer quantities are illustrated in Figure 12 below.
9 Based on the current mix of single and three phase connections.
10 This is the total length of the LV network per transformers and not the maximum distance from the
transformer
12
assume that the existing low voltage system for the 66 distribution transformers in CST already have
one third of the average line requirement (given the low connection rate of consumers per transformer),
this means that each transformer will require about 1 km of additional low voltage line construction –
or about 66 km in total. Referring back to Table 5 above, low voltage line with 50 mm2 conductor costs
$12,200/kilometer. These additional low voltage lines would therefore cost approximately $805,000
million bringing the total cost of the intensification program to $1.5 million to connect approximately
3,851 new consumers.
System reliability investments

Both grid expansion and intensification projects will add load to the existing 33 kV infrastructure
including the substations and feeders to which these new customers will be connected. To ensure that
existing and future consumers receive high quality service, it is necessary to evaluate the existing and
projected load on substations and feeders to determine if changes in power transformer or feeder
capacity will be required.
These investments, referred to as system reliability investments, typically include reinforcements in
existing feeder capacity, substation capacity, or other interventions such as voltage regulation or
reactive power compensation. Upgrades in capacity of power transformers, feeder, and other
enhancements are determined by performing load flow simulations for existing and future load growth.
Load flow analyses for CST were performed for Mutundwe_Mityana and Nkonge_Mubende feeders
that serve both the KRECS and Umeme service areas.
Load flow studies were prepared using the geographic data in the geospatial platform that includes data
from both the Umeme and KRECS distribution networks. The geographic data were downloaded into
an engineering platform to populate the load flow model with distribution system electrical attributes
including substation transformer characteristics, feeder conductor size and configuration, distribution
transformer locations and characteristics, and evaluated loads for each transformer. The load flow model
was developed using existing conditions and modeled with the load forecast conditions as presented in
Table 11 below.
The base case and the future case scenarios were modeled for the CST distribution system using Milsoft
WindmilTM power flow software. Existing load conditions were derived by requesting and receiving
load data from the UETCL SCADA system that yielded peak monthly load levels for each feeder. Future
loads were evaluated using projected increases in consumers and energy consumption over the period
from 2018 through 2027. The results are summarized in Table 11 below.
Table 11: Existing and Projected Demands for CST
2018 2020 2022 2022-27

2018-line
Substation Feeder Name Demand Demand length Demand
length (km) 11
(MW) (MW) (km) (MW)
Mutundwe Mityana 300 6 6.90 760 9.0

Nkonge Mubende 490 5 6.40 1531 8.7
Total 790 11.0 13.30 2,291 17.70
Base case load flow analysis of CST

The base case load flow study for the existing Umeme and KRECS system requires modeling the
performance of the feeders and laterals that serve the connected consumers based upon conductor
impedance and power flows in each circuit. The results shown in Table 11 above present feeder loads,
so loads can now be allocated to individual distribution transformers that serve housing clusters, trading
11 Total feeder line length includes all backbone and lateral feeder segments.
13
centers, and villages in the CST. Given the lack of available transformer loading data, loads were
allocated to transformers in proportion to the individual transformer capacity over the cumulative
capacity of all existing transformers.
A voltage drop analysis was conducted to model the voltage levels throughout the KRECS distribution
system. The load flow software shows the results graphically; voltages within acceptable limits are
black while circuit elements that are below acceptable limits are red. The lower limit of acceptable
voltage is 90% of nominal, or 207 volts. To achieve this limit, the minimum allowable voltage for
secondary load must be at 93% of nominal, or 213.9 volts. Figure 6 below illustrates the results of the
voltage drop study showing that the Nkonge_Mubende feeder is far below acceptable voltage levels at
84% of nominal.
Figure 6: Base case voltage simulation of CST distribution system.
The Nkonge_Mubende feeder main line is 490 km that is extremely long for 33 kV and carries a load
of 5 MW. This has resulted in a voltage drop of nearly 16%. The Mutundwe_Mityana feeder is within
voltage drop limits. Table 12 below summarizes the feeder characteristics and the results of the voltage
drop analysis for the base case.
Table 12: Results of voltage drop analysis for CST substations.
2018 Losses
2018-line Voltage Losses
Substation Feeder Demand levels
length (km) 12 Drop (%) (kW)
(MW) (%)
Mutundwe Mityana 300 6 9 305 5.1%
Nkonge Mubende 490 5 16 543 10.9%
12 Total feeder line length includes all backbone and lateral feeder segments.
14
Total 790 11 848 7.7%
Voltage drop analysis with expansion projects

Improvements will be needed to enhance voltage quality for the existing distribution system and will
likely be financed in conjunction with system expansion improvements. To evaluate the extent of the
improvements required, a load flow analysis of CST distribution system was performed after adding
the expansion projects and the additional load from grid intensification as shown in Figure 7 below.
Figure 7: CST voltage results with expansion projects and intensification load.
REA ongoing expansion projects will add 315 km of 33 kV distribution lines to the Nkonge_Mubende
feeder that was below acceptable voltage limits prior to the addition of these loads. Voltages have
clearly deteriorated throughout the distribution system compared with the base case. Voltage levels vary
from 79% to 90% of nominal for Mutundwe_Mityana and Nkonge_Mubende feeders. Power quality
for the Nkonge_Mubende feeder has also fallen below the acceptable power quality (loss level)
threshold Table 13 below summarizes the loads, voltage, and loss levels for CST after adding REA
approved expansion projects and expected intensification projects.
Table 13: Results of voltage drop analysis for CST substations after adding REA expansion and
intensification projects.
2020 Losses
2020 line Voltage Losses
Substation Feeder Demand levels
length (km) Drop (%) (kW)
(MW) (%)
Mutundwe Mityana 341 6.9 9.8 374 5%
15
Nkonge Mubende 764 6.4 21.6 916 14%

Total 1,105 13.3 1,290 10%
Several corrective measures can be used to bring the proposed system within established guidelines.
Some of these measures are needed to correct voltage or increase capacity to acceptable levels.
Corrective measure options are listed below. Measures are ranked from those generally most expensive
to implement to those least expensive to perform.
• Introduction of new grid substations
• Upgrade feeders with poor power quality or reconfigure existing feeders
• Add voltage regulators
• Add capacitor banks
• Rebalance feeder loads
The load flow analysis illustrated that the low voltage conditions on Nkonge_Mubende feeder can be
addressed by introducing a voltage regulator on the Nkonge_Mubende feeder and a capacitor bank on
the Mutundwe_Mityana feeder. Note the vastly improved voltage levels throughout the system as a
result of these interventions as illustrated in Figure 8. This figure uses distinct colors for each feeder
and location of proposed voltage regulator and capacitor bank are depicted by a circle.
In summary, the 2020 interventions include the following:
1. Install one capacitor bank at Mutundwe_Mityana feeder.

2. Install one voltage regulator at Nkonge_Mubende feeder.
Figure 8: CST load flow results after adding a voltage regulator and capacitor bank.
Simulation results illustrate that installing one voltage regulator and one capacitor bank resolves the
voltage problems throughout the distribution system. System losses are reduced from 14% to 8% in the
Nkonge_Mubende feeder, and overall are reduced from 10% to 5% in the CST. These results are
summarized in Table 14 below.
16
Table 14: Results of voltage regulator and capacitor bank interventions for CST
2020 total line 2020 Demand Voltage Losses Losses
Substation Feeder
length (km) (MW) Drop (%) (kW) levels (%)
Mutundwe Mityana 341 6.9 3.8 92 1%
Nkonge Mubende 764 6.4 7.3 540 8%
Total 1105 13.3 632 4.8%
CST characteristics with 2022-2027 load levels

The load throughout the feeders which serving KRECS is projected to increase from 11 MW to 18 MW
by 2027. Without significant interventions to improve power quality, system performance will be very
poor, and, in some places, voltages will be so low that service will not be useable. The model illustratin g
2022-27 load levels is shown in Figure 9 below. This model includes the additional interventions to
manage the impact of additional load from the increase in consumers due to new line extensions and
grid intensification. The interventions include the following:
1. Install one voltage regulator at Mutundwe_Mityana feeder.
2. Install one capacitor bank at Nkonge_Mubende feeder.
Figure 9 below shows the location of these proposed interventions in the CST (also showing those
additions proposed for 2020) and the voltage levels resulting.
17
Figure 9. Modeling of 2022-27 scenario with interventions included.
Note that the feeders in Figure 9 are shown with distinct colors for identification purposes. Simulation
results illustrate that adding one capacitor bank and one voltage regulator in the Nkonge_Mubende and
Mutundwe_Mityana feeders resolves the voltage problems throughout the distribution system. System
losses overall are within acceptable limits at 9% in the KRECS distribution system.
Table 15 below provides voltage drop values and losses by feeder after interventions have been
introduced for each feeder.
Table 15. Voltage drop and loss analysis for 2022-2027 expansion.
2022 total 2022 Losses
Voltage Losses
Substation Feeder line length Demand levels
Drop (%) (kW)
(km) (MW) (%)
Mutundwe Mityana 760 9.0 6.5 659 7.3%
Nkonge Mubende 1,531 8.7 6.7 965 11.1%
Total 2,291 17.7 1,624 9.2%
Cost Estimates
Each intervention represents an investment for the purpose of performance improvement. The
interventions include installation of two voltage regulators and two capacitor banks. These costs are
shown in Table 16 below. This analysis shows that the use of volt-VAR equipment will provide
adequate service at a load of 18 MW.
18
Table16. Costs associated with system reliability interventions.

Voltage
Capacitor Bank Cost
Year Feeder Name Regulator
(US$)
Unit Unit
Mutundwe_ Mityana 1 20,000
2020
Nkonge_ Mubende 1 55,000
Total 2020 $75,000
Mutundwe_ Mityana 1 $20,000
2022-2027
Nkonge_ Mubende 1 $55,000
Total 2022-2027 $75,000
Total System reliability capital investments $150,000
Mini-grid expansion
In addition to grid expansion projects, many communities and housing clusters remain too far from the
grid to be economically connected via conventional grid extension. For these communities and housing
clusters, mini-grid service has been evaluated. In all likelihood, this service will be contracted to mini-
grid operators that are independent of the CST service provider. Mini-grid service is a specialized
business requiring knowledge of construction and operation of renewable energy systems which argues
for managing this program through third-party, mini-grid operators. The following information
provides an analysis of the mini-grid potential including the number and size of mini-grids, the number
of potential consumers they may serve, and the projected cost of each mini-grid.
The process of identifying potential mini-grids began after the grid expansion analysis had been
completed. That is, highest priority is given to connecting communities and housing clusters to grid
electric service where and when it is economically viable to do so. For those communities and housing
clusters that are beyond the reach of grid service, mini-grids were identified and evaluated.
The process of identifying mini-grids is similar to that used for grid extension projects. Satellite
imagery is used to cluster and evaluate housing clusters for load density characteristics. Mini-grids are
most often viable when they can serve more than 50 households given the economics of small, isolated
system operation. In cases where the mini-grids may serve trading centers or where they may be located
in close proximity to other mini-grids, an exception may be made to lower the threshold from 50
consumers.
In addition, the clusters of households corresponding to grid expansion projects that did not pass the
analysis previously described either because these projects resulted in a negative NPV or because the
cost per consumers was higher than US$2,000 were included for consideration as potential mini-grid
sites.
In some larger housing clusters where the housing pattern is more concentrated, multiple mini-grids
were evaluated to serve a single, large group of houses. The mini-grid technology profile includes
solar-battery charging systems distributing power over a low voltage distribution network. The
maximum radial length from the solar photovoltaic (PV) array/battery bank to serve consumers is one
kilometer.
To dimension mini-grid components including the solar PV array, battery bank, and consumer
connections, energy consumption analyses from mini-grids built and operated in Kenya and Tanzania
were reviewed. Power supply from mini-grids is inherently more costly than grid-supplied power, so
consumers are encouraged and sometimes provided higher efficiency end-use devices such as light
emitting diode (LED) lights to reduce the energy consumption – and concurrently pay higher tariffs
than grid-supplied consumers do. For purposes of evaluation of mini-grid capacity however, where
19
Tier 3 level service is desired, higher consumption levels have been assumed. Tables 17 and 18 presents
the assumptions for penetration rate and unit consumption used in the analysis of mini-grids.
Similar to the analysis carried out for grid expansion projects, the analysis assumes consumption per
customer is linked to penetration level (where the higher the penetration the less the average consumer
can afford the electricity service and the lower the unit consumption).
Table 17. Development of potential consumer count in each mini-grid
Category Penetration Rates Ratio of total potential
Consumers per HH
connected
Year 1 Year 5 Year 10
Residential 20% 40% 60% 80%
Commercial 60% 90% 95% 20%
Table 18. Assumptions for consumption per household & consumer growth in each mini-grid
Category Unit Penetration Annual growth

Residential
month 12 10 10 1.5% 1%
kWh/cust- 50% 75% 100 Years 2-5 Years 6-10

Commercial
month 25 25 25 2% 1%
To evaluate the cost of mini-grids, unit costs were derived for solar PV arrays, battery banks and a
standard enclosure used to provide shelter for the batteries and control equipment. The unit costs for
these components13 are shown in Table 19 below. Low voltage distribution and service installations
were taken from standard grid construction costs as shown in Table 5 above. We assume that all mini-
grids will use distribution networks that are designed and constructed to follow REA construction
standards to allow the low voltage networks to be readily interconnected to the CST medium voltage
network when it becomes economical to do so.
Table 19. Unit construction costs for solar mini grids
Item and size Unit Rate
Solar PV plant generation infrastructure
PV Panel arrays (w/inverters) US$/kWDC $2,500
Batteries – Lithium Ion batteries w/inverter US$/kWh $450
Enclosure for Batteries/Inverters (1 per mini- US$/Unit $5,000
grid)
The project identification process resulted in identifying and evaluating 125 mini-grids located in 102
villages in the CST. The mini-grid characteristics are shown in Table 20 below. The locations of the
mini-grids are shown in Figure 10 directly follow Table 20. The mini-grids appear as purple squares in
Figure 11.
13 All unit construction costs include material, labor, engineering and project management.
20
Table 20. Technical and financial results for the identified mini grids in the CST
Cons
DC Solar Cost per
Town/Vill umers Project Cost Cost of service
# District Households array custome
age (year US$ US$/kWh
kW r US$
10)
1 Nakasongola Mayirikiti 97 87 20 $122,169 $1,400 $0.49
2 Kamirampan
86 78 19 $126,716 $1,634 $0.53
Nakasongola go
3 Nakasongola Kikooge 91 81 18 $118,465 $1,463 $0.54
4 Nakasongola Soweto 79 70 16 $96,218 $1,366 $0.53
5 Nakasongola Nakayonza 54 48 12 $81,818 $1,689 $0.62
6 Luwero Lukowe 143 129 29 $179,008 $1,391 $0.45
7 Luwero Manywa 79 69 15 $97,444 $1,404 $0.59
8 Nakaseke Kyabigulu 62 54 12 $75,508 $1,386 $0.63
9 Nakaseke Bidduku 62 55 13 $81,637 $1,471 $0.56
10 Kalangala Nakibanga 135 119 25 $142,426 $1,201 $0.49
11 Kalangala Kisaba 310 275 57 $342,718 $1,244 $0.57
12 Kalangala Buzingo 68 61 14 $105,774 $1,741 $0.61
13 Kalangala Buwanga-i 79 70 16 $93,743 $1,331 $0.52
14 Kalangala Lwanabatya 137 120 25 $135,796 $1,128 $0.46
15 Kalangala Buyange 145 127 26 $140,349 $1,101 $0.46
16 Lwazi_bugo
104 92 20 $108,480 $1,174 $0.47
Mukono mbe
17 Kalangala Bubeke 260 230 48 $251,139 $1,090 $0.39
18 Ntuwa -
66 59 14 $77,891 $1,320 $0.53
Kalangala bunjazi
19 Kalangala Buyovu 98 87 19 $108,733 $1,248 $0.49
20 Kalangala Kazi bugaba 151 134 28 $150,341 $1,125 $0.43
21 Kalangala Lulindi 148 131 28 $151,089 $1,153 $0.43
22 Kalangala Semawundo 199 177 37 $199,138 $1,126 $0.41
23 Kalangala Kisujju-i 124 111 25 $131,784 $1,188 $0.43
24 Kalangala Lwabaswa 250 221 45 $235,526 $1,067 $0.40
25 Kalangala Kisujju-ii 205 181 37 $198,518 $1,096 $0.42
26 Kagonya/bu
171 152 33 $172,921 $1,136 $0.42
Kalangala nyama
27 Kalangala Bbosa 188 166 35 $183,311 $1,103 $0.42
28 Kalangala Banda 124 110 24 $126,977 $1,155 $0.45
29 Kalangala Kitobo 294 258 51 $303,083 $1,173 $0.61
30 Kalangala Kagonya 142 125 26 $137,434 $1,101 $0.46
31 Kalangala Misonzi a 323 286 58 $339,347 $1,187 $0.56
32 Kalangala Kaaya 256 226 46 $241,222 $1,068 $0.40
33 Kalangala Kakyanga 399 354 72 $419,522 $1,186 $0.52
34 Kalangala Kamese 160 141 29 $156,159 $1,111 $0.46
35 Kalangala Luwungulu 96 84 18 $100,253 $1,188 $0.52
36 Kyankwanzi Banda a 75 67 16 $93,468 $1,397 $0.53
37 Nakaseke Kalagala 50 45 11 $68,799 $1,531 $0.59
38 Buvuma Buwanzi b-i 118 106 24 $126,832 $1,200 $0.44
39 Buvuma Buwanzi b-ii 157 138 28 $155,291 $1,126 $0.46
40 Buvuma Buwanzi a-i 115 102 22 $122,047 $1,196 $0.47
41 Buvuma Lingira 224 200 43 $226,105 $1,131 $0.39
42 Buvuma Kyoya 114 102 23 $120,981 $1,184 $0.44
43 Buvuma Namatooke 185 164 34 $180,751 $1,105 $0.42
44 Buvuma Yubwe 153 134 28 $146,735 $1,091 $0.44
45 Buvuma Lufu 265 235 48 $256,856 $1,094 $0.39
21
Cons
DC Solar Cost per
kW r US$
10)
46 Buvuma Buiri-i 161 143 31 $170,342 $1,187 $0.43
47 Buvuma Buiri-ii 147 130 28 $147,798 $1,135 $0.44
48 Buvuma Buiri-iii 110 97 20 $112,289 $1,162 $0.50
49 Buvuma Lukaale 283 250 50 $267,193 $1,070 $0.40
50 Buvuma Bulugulu 157 139 29 $159,064 $1,145 $0.44
51 Buvuma Mpondwe 135 120 26 $135,824 $1,135 $0.44
52 Buvuma Bugabo-i 156 138 29 $155,440 $1,126 $0.44
53 Buvuma Bugabo-ii 132 117 25 $134,807 $1,152 $0.45
54 Buvuma Bukwaya-i 117 103 22 $117,639 $1,144 $0.49
55 Buvuma Buwanga-ii 103 91 19 $104,881 $1,159 $0.51
56 Buvuma Namuziru 193 170 34 $180,498 $1,064 $0.43
57 Buvuma Bumazime 117 106 25 $158,510 $1,498 $0.48
58 Buvuma Kachanga 130 115 25 $131,245 $1,139 $0.45
59 Buvuma Tojjwe 198 176 37 $193,743 $1,101 $0.40
60 Buvuma Namugombe 143 127 27 $146,217 $1,154 $0.44
61 Buvuma Mubaale 188 167 36 $192,788 $1,153 $0.41
62 Buvuma Namakeba 265 235 48 $264,610 $1,127 $0.40
63 Buvuma Kifulu 198 175 36 $189,256 $1,082 $0.41
64 Buvuma Zinga 126 112 24 $127,242 $1,139 $0.44
65 Buvuma Buye 95 84 19 $105,286 $1,246 $0.49
66 Buvuma Buwaga-i 97 86 19 $102,530 $1,189 $0.48
67 Buvuma Buwaga-ii 86 76 16 $89,198 $1,180 $0.53
68 Buvuma Butale 113 99 21 $111,994 $1,128 $0.49
69 Buvuma Buwaga-iii 56 50 12 $83,473 $1,663 $0.61
70 Buvuma Kalambi 155 137 29 $157,102 $1,145 $0.44
71 Buvuma Kibo 107 94 20 $106,945 $1,137 $0.5
72 Buvuma Nkata 134 119 26 $135,283 $1,139 $0.45
73 Buvuma Muwama 176 156 33 $171,440 $1,101 $0.42
74 Buvuma Bweema 159 141 30 $156,493 $1,112 $0.43
75 Buvuma Gunda 119 106 23 $122,633 $1,162 $0.46
76 Buvuma Kaziru 151 134 28 $149,547 $1,119 $0.43
77 Buvuma Nalubale 167 148 31 $165,655 $1,121 $0.43
78 Buvuma Bukwaya-ii 131 116 25 $134,082 $1,155 $0.45
79 Buvuma Namatale 172 152 32 $169,573 $1,115 $0.43
80 Buvuma Nyenda 166 146 30 $160,021 $1,097 $0.45
81 Buvuma Kembo-i 162 144 31 $164,659 $1,141 $0.42
82 Buvuma Kembo-ii 117 104 23 $120,290 $1,159 $0.46
83 Buvuma Tome-i 100 89 20 $108,779 $1,224 $0.49
84 Buvuma Kirongo 104 92 20 $110,205 $1,193 $0.47
85 Buwanzi b-
95 84 19 $117,453 $1,390 $0.52
Buvuma iii
86 Buvuma Buwanzi a-ii 136 122 27 $163,302 $1,344 $0.46
87 Buvuma Tome-ii 94 85 20 $133,171 $1,574 $0.52
88 Buvuma Galigatya 103 92 20 $109,098 $1,192 $0.48
89 Buvuma Bukaayo 62 56 15 $97,664 $1,729 $0.55
90 Buvuma Lukoma 220 195 41 $229,265 $1,174 $0.42
91 Buvuma Kibibi 213 188 39 $205,873 $1,094 $0.41
92 Buvuma Lukalu 200 176 36 $188,051 $1,070 $0.43
93 Buvuma Zirumuto 131 115 24 $126,444 $1,098 $0.46
94 Buvuma Kalungi 233 206 42 $225,603 $1,097 $0.41
22
Cons
DC Solar Cost per
kW r US$
10)
95 Buvuma Lwajje 107 95 21 $112,073 $1,179 $0.47
96 Buvuma Kiwololo 122 107 22 $119,037 $1,110 $0.48
97 Mukono Buyana 172 153 33 $172,093 $1,124 $0.41
98 Mukono Lubembe 164 146 32 $168,575 $1,154 $0.42
99 Mukono Ngaga a b -i 90 81 19 $111,992 $1,381 $0.48
100 Mukono Ngaga a b -ii 89 78 17 $93,158 $1,191 $0.52
101 Mukono Zingola 117 104 23 $128,080 $1,234 $0.48
102 Wakiso Buyemba-i 130 115 25 $138,511 $1,202 $0.46
103 Wakiso Koja 53 48 12 $81,264 $1,708 $0.63
104 Buaganga
155 137 29 $164,121 $1,196 $0.45
Wakiso landing site
105 Wakiso Buyemba-ii 66 59 14 $87,253 $1,479 $0.57
106 Wakiso Kava-ii 107 96 22 $117,332 $1,222 $0.45
107 Wakiso Kava-i 144 129 28 $147,216 $1,145 $0.42
108 Malija
111 100 23 $123,375 $1,239 $0.46
Buvuma bwanika
109 Buvuma Bulima 145 129 28 $180,416 $1,394 $0.47
110 Mpigi Buyiga b-i 112 100 23 $141,009 $1,404 $0.48
111 Mpigi Buyiga b-ii 70 62 14 $90,669 $1,474 $0.62
112 Mpigi Buyiga b-iii 222 195 39 $231,081 $1,185 $0.45
113 Mpigi Buyiga a-i 97 85 18 $101,897 $1,195 $0.52
114 Mpigi Buyiga a-ii 74 65 14 $84,543 $1,300 $0.58
115 Lwazi_bube
135 119 25 $131,018 $1,104 $0.46
Kalangala ke
116 Nakaseke Katuugo 155 137 29 4170,521 $1,243 $0.46
117 Buvuma Mawanga-i 142 127 28 $157,986 $1,246 $0.44
118 Buvuma Mawanga-ii 100 88 19 $103,076 $1,173 $0.51
119 Wakiso Gulwe 132 117 25 $153,947 $1,316 $0.49
120 Wakiso Kinywante 90 81 19 $131,404 $1,621 $0.53
121 Wakiso Tebankiza 245 218 46 $277,823 $1,273 $0.42
122 Wakiso Bwayire-i 87 77 18 $126,977 $1,639 $0.57
123 Wakiso Bwayire-ii 140 125 28 $183,206 $1,465 $0.49
124 Wakiso Bwayire-iii 172 152 32 $203,564 $1,338 $0.48
125 Nakaseke Kinoni 53 47 11 468,259 $1,466 $0.66
Total 17,752 15,736 3,365 $18,842,495 $1,197
The 125 mini-grids can provide service to 102 communities that have a total of approximately 17,752
households. Using the penetration rate estimates as shown in Table 17, the number of consumers who
are likely to be served by these mini-grids is approximately 15,736 by the end of the tenth year.
23
Figure 11. Identified off-grid areas in the CST
The cost of service in mini-grids is significantly higher than grid service due to the relatively high
capital cost of the energy generation and distribution systems combined with the small size of the mini
grids. The cost of delivered service can vary from US$0.39/kWh to $0.66/kWh depending upon the
market, the size of the mini-grid, the technology that is used and the quality and source of materials.
In an effort to organize the 125 mini-grids presented in Table 20 in terms of prioritization for
implementation, each mini-grid was evaluated with respect to its total estimated capital cost, capital
cost per served consumer, and the cost of service. Prioritized mini grids are those with a total cost per
consumer lower than US$2,000 and a cost of service up to US$0.60 per kWh. As a result of this
analysis, 99 mini grids were prioritized as shown in Table 21, where mini grids are sorted by ascending
cost of service.
Table 21. List of prioritized mini grids in the CST

Cost per Cost of
Project Consumers Capital
District Town/Village Customer service
Id (year 10) Costs US$
US$ US$/kWh
17 Kalangala Bubeke 230 $251,139 $1,090 $0.39
41 Buvuma Lingira 200 $226,105 $1,131 $0.39
45 Buvuma Lufu 235 $256,856 $1,094 $0.39
24 Kalangala Lwabaswa 221 $235,526 $1,067 $0.40
32 Kalangala Kaaya 226 $241,222 $1,068 $0.40
49 Buvuma Lukaale 250 $267,193 $1,070 $0.40
59 Buvuma Tojjwe 176 $193,743 $1,101 $0.40
62 Buvuma Namakeba 235 $264,610 $1,127 $0.40
61 Buvuma Mubaale 167 $192,788 $1,153 $0.41
63 Buvuma Kifulu 175 $189,256 $1,082 $0.41
91 Buvuma Kibibi 188 $205,873 $1,094 $0.41
24
Cost per Cost of

US$ US$/kWh
94 Buvuma Kalungi 206 $225,603 $1,097 $0.41
97 Mukono Buyana 153 $172,093 $1,124 $0.41
43 Buvuma Namatooke 164 $180,751 $1,105 $0.42
73 Buvuma Muwama 156 $171,440 $1,101 $0.42
81 Buvuma Kembo-i 144 $164,659 $1,141 $0.42
90 Buvuma Lukoma 195 $229,265 $1,174 $0.42
98 Mukono Lubembe 146 $168,575 $1,154 $0.42
107 Wakiso Kava-i 129 $147,216 $1,145 $0.42
121 Wakiso Tebankiza 218 $277,823 $1,273 $0.42
46 Buvuma Buiri-i 143 $170,342 $1,187 $0.43
56 Buvuma Namuziru 170 $180,498 $1,064 $0.43
74 Buvuma Bweema 141 $156,493 $1,112 $0.43
76 Buvuma Kaziru 134 $149,547 $1,119 $0.43
77 Buvuma Nalubale 148 $165,655 $1,121 $0.43
79 Buvuma Namatale 152 $169,573 $1,115 $0.43
92 Buvuma Lukalu 176 $188,051 $1,070 $0.43
38 Buvuma Buwanzi b-i 106 $126,832 $1,200 $0.44
42 Buvuma Kyoya 102 $120,981 $1,184 $0.44
44 Buvuma Yubwe 134 $146,735 $1,091 $0.44
47 Buvuma Buiri-ii 130 $147,798 $1,135 $0.44
50 Buvuma Bulugulu 139 $159,064 $1,145 $0.44
51 Buvuma Mpondwe 120 $135,824 $1,135 $0.44
52 Buvuma Bugabo-i 138 $155,440 $1,126 $0.44
60 Buvuma Namugombe 127 $146,217 $1,154 $0.44
64 Buvuma Zinga 112 $127,242 $1,139 $0.44
70 Buvuma Kalambi 137 $157,102 $1,145 $0.44
117 Buvuma Mawanga-i 127 $157,986 $1,246 $0.44
28 Kalangala Banda 110 $126,977 $1,155 $0.45
53 Buvuma Bugabo-ii 117 $134,807 $1,152 $0.45
58 Buvuma Kachanga 115 $131,245 $1,139 $0.45
72 Buvuma Nkata 119 $135,283 $1,139 $0.45
78 Buvuma Bukwaya-ii 116 $134,082 $1,155 $0.45
80 Buvuma Nyenda 146 $160,021 $1,097 $0.45
Buaganga landing
104 Wakiso 137 $164,121 $1,196 $0.45
site
106 Wakiso Kava-ii 96 $117,332 $1,222 $0.45
112 Mpigi Buyiga b-iii 195 $231,081 $1,185 $0.45
30 Kalangala Kagonya 125 $137,434 $1,101 $0.46
34 Kalangala Kamese 141 $156,159 $1,111 $0.46
39 Buvuma Buwanzi b-ii 138 $155,291 $1,126 $0.46
75 Buvuma Gunda 106 $122,633 $1,162 $0.46
82 Buvuma Kembo-ii 104 $120,290 $1,159 $0.46
86 Buvuma Buwanzi a-ii 122 $163,302 $1,344 $0.46
93 Buvuma Zirumuto 115 $126,444 $1,098 $0.46
102 Wakiso Buyemba-i 115 $138,511 $1,202 $0.46
108 Buvuma Malija bwanika 100 $123,375 $1,239 $0.46
115 Kalangala Lwazi_bubeke 119 $131,018 $1,104 $0.46
116 Nakaseke Katuugo 137 $170,521 $1,243 $0.46
40 Buvuma Buwanzi a-i 102 $122,047 $1,196 $0.47
84 Buvuma Kirongo 92 $110,205 $1,193 $0.47
95 Buvuma Lwajje 95 $112,073 $1,179 $0.47
109 Buvuma Bulima 129 $180,416 $1,394 $0.47
57 Buvuma Bumazime 106 $158,510 $1,498 $0.48
66 Buvuma Buwaga-i 86 $102,530 $1,189 $0.48
88 Buvuma Galigatya 92 $109,098 $1,192 $0.48
25
Cost per Cost of

US$ US$/kWh
96 Buvuma Kiwololo 107 $119,037 $1,110 $0.48
99 Mukono Ngaga a b -i 81 $111,992 $1,381 $0.48
101 Mukono Zingola 104 $128,080 $1,234 $0.48
110 Mpigi Buyiga b-i 100 $141,009 $1,404 $0.48
124 Wakiso Bwayire-iii 152 $203,564 $1,338 $0.48
54 Buvuma Bukwaya-i 103 $117,639 $1,144 $0.49
65 Buvuma Buye 84 $105,286 $1,246 $0.49
68 Buvuma Butale 99 $111,994 $1,128 $0.49
83 Buvuma Tome-i 89 $108,779 $1,224 $0.49
119 Wakiso Gulwe 117 $153,947 $1,316 $0.49
123 Wakiso Bwayire-ii 125 $183,206 $1,465 $0.49
48 Buvuma Buiri-iii 97 $112,289 $1,162 $0.50
71 Buvuma Kibo 94 $106,945 $1,137 $0.50
55 Buvuma Buwanga-ii 91 $104,881 $1,159 $0.51
118 Buvuma Mawanga-ii 88 $103,076 $1,173 $0.51
33 Kalangala Kakyanga 354 $419,522 $1,186 $0.52
35 Kalangala Luwungulu 84 $100,253 $1,188 $0.52
85 Buvuma Buwanzi b-iii 84 $117,453 $1,390 $0.52
87 Buvuma Tome-ii 85 $133,171 $1,574 $0.52
100 Mukono Ngaga a b -ii 78 $93,158 $1,191 $0.52
113 Mpigi Buyiga a-i 85 $101,897 $1,195 $0.52
36 Kyankwanzi Banda a 67 $93,468 $1,397 $0.53
67 Buvuma Buwaga-ii 76 $89,198 $1,180 $0.53
120 Wakiso Kinywante 81 $131,404 $1,621 $0.53
89 Buvuma Bukaayo 56 $97,664 $1,729 $0.55
31 Kalangala Misonzi a 286 $339,347 $1,187 $0.56
105 Wakiso Buyemba-ii 59 $87,253 $1,479 $0.57
122 Wakiso Bwayire-i 77 $126,977 $1,639 $0.57
114 Mpigi Buyiga a-ii 65 $84,543 $1,300 $0.58
37 Nakaseke Kalagala 45 $68,799 $1,531 $0.59
29 Kalangala Kitobo 258 $303,083 $1,173 $0.61
69 Buvuma Buwaga-iii 50 $83,473 $1,663 $0.61
111 Mpigi Buyiga b-ii 62 $90,669 $1,474 $0.62
103 Wakiso Koja 48 $81,264 $1,708 $0.63
125 Nakaseke Kinoni 47 $68,259 $1,466 $0.66
Total 13,000 $15,420,498 $1,186
These 99 solar mini grids, listed in order of priority, would have an estimated total construction cost of
approximately US$15.4 million representing an average construction cost per consumer of US$1,186.
As mentioned before, none of these solar mini-grids are included in the analysis described in the
financial analysis of the CST service provider given that we assume that mini-grids will be operated by
companies that specialize in mini-grid construction and operation.
Customer growth and demand projections

Revenues from electricity sales and new connections, as well as future operating costs of the electricity
service provider in the CST are directly linked to the growth in customers served, electricity
consumption and peak demand. As such, the CST grid-connected demand forecast is the foundation for
analysis of revenues, operating costs, and the overall financial sustainability of the CST service
provider. Towards this end, a sales and demand forecast was developed for the 2018-2027 period.
The sales and demand forecast is based upon investments in and expansion of the CST distribution
system analyzed and described in previous section of this document. The ten-year forecast includes
annual customer connections from grid intensification and expansion projects. Expansion projects
26
include existing REA investments as well as those projects identified and prioritized through the
geospatial planning platform. Off-grid power systems in the CST are not included in the demand
forecast, as it is envisaged different service providers will operate these systems.
Growth in connected consumers is a function of organic growth of households that will increase in
rhythm with population growth rate, as well as increasing penetration of consumers as rural
communities become more familiar with and interested in receiving electric service. Growth in specific
consumption is a function of consumers becoming more comfortable with electricity supply and their
ability to meet the periodic cost of electric service.
Electricity demand is evaluated in the demand model by aggregating energy consumption for each
category of consumers and adjusting total energy supplied by including a provision for energy losses.
Demand is then evaluated using a regression formula with two regression variables, including the
number of consumers and the average monthly consumption of the consumer group. The formula 14 is
as follows:
𝐸 0.885
𝐷𝑒𝑚𝑎𝑛𝑑 (𝑘𝑊 ) = 𝐶 × (1 − 0.4 × 𝐶 + 0.4 × √𝐶 2 + 40) × [0.005925 × ( ) ]
𝐶
Where:
C = number of customers
E = monthly energy consumption in kWh
The sales and demand forecast for CST is shown in Table 22 below. Table 22 starts with a projection
of connected consumers by consumer category. The consumer projections are followed by growth in
consumption – also by consumer category. The final row presents power demand including a provision
for energy losses that uses the regression formula above. With regard to electricity losses, the forecast
starts with the level of 38% for 2017 based on the available information for currently served areas in
the territory, diminishing to 15 by 2022 and 12% by 2027. The reduction is significantly influenced by
service to new served areas whose demand will outpace existing demand, and therefore will reduce
losses overall in CST. Losses levels in new areas are assumed to equal 10%.
14REA Bulletin #45-2, US Department of Agriculture/Rural Services, Multi-year study for estimating maximum
peak demand for customers in peri-urban and rural areas
27
Table 22. Consumer and load forecast for 2017-2027 in the CST
2017 15 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Customers
Residential
3,624 7,930 12,647 18,601 25,106 32,377 39,109 46,219 54,191 61,706 69,289
Commercial
91 344 612 943 1,290 1,663 1,990 2,321 2,687 3,000 3,301
Other
Total CST
3,715 8,275 13,259 19,544 26,396 34,040 41,098 48,540 56,878 64,706 72,589
Growth 0% 123% 60% 47% 35% 29% 21% 18% 17% 14% 12%
Electricity sales – MWh
Residential
1,453.0 3,043.9 4,810.5 7,036.8 9,460.5 12,125.4 14,605.7 17,202.6 20,110.8 22,840.5 25,624.5
Commercial
727.9 859.3 998.4 1,166.7 1,337.8 1,512.2 1,664.7 1,819.6 1,992.6 2,142.0 2,288.4
Other
Total CST
2,180.9 3,903.1 5,808.9 8,203.5 10,798.3 13,637.6 16,270.3 19,022.2 22,103.4 24,982.5 27,912.9
Growth 0% 79% 49% 41% 32% 26% 19% 17% 16% 13% 12%
Total electricity purchases
3,495.1 5,532.0 7,623.0 10,247.4 13,084.5 16,183.8 19,022.7 21,989.5 25,318.3 28,418.7 31,573.6
Peak demand – MW
1.0 1.7 2.4 3.3 4.2 5.2 6.2 7.2 8.3 9.3 10.3
15 Estimated based on 2016 data and customers added from ongoing REA grid expansion plan.
28
Grid expansion projects, both those that are in the REA expansion plan and those identified by the
geospatial platform will result in increasing the number of served consumers by a factor of seven for
the next five years and by a factor of fifteen through 2027. Over the same period, electricity
consumption will grow by a factor of seven in the next five years and by a factor of sixteen after ten
years. The overall reduction in unit consumption occurs primarily due to connection of a large number
of lower-income consumers as predicted by the results of the willingness to pay survey.
Figure 12 below illustrates the increase in consumers in existing areas, increases in consumers due to
REA-financed projects, and the increase in consumers identified through the geospatial platform.
Figure 12. Evolution of customers in the CST
As Figure 12 above shows, consumer growth is expected to increase from 3,700 consumers in 2017 to
72,600 in 2027. The newly defined grid expansion projects would add approximately 52,200 consumers
if there is sufficient capital to finance this part of the expansion plan 16. Already approved and ongoing
REA projects would add another 12,900 consumers, while intensification projects would add
approximately 3,900 customers to the CST.
Figure 13 below shows the progression of demand by origin of investment. The bottom-most part (blue)
of the stacked bar graph represents growth from intensification investments; the middle bar (red) shows
the growth in demand derived from projects planned by REA; and the top bar (green) shows the growth
in demand from projects identified and evaluated in the geospatial platform.
16 The difference between Figure 12 above versus the number of consumers shown in Table 9 results from the
assumption that the identified grid expansion projects are built over a ten-year period, so by year 2017
some grid expansion projects are fully realized while other projects are still in their earlier years of
operation, not yet reaching their full potential of connected customers.
29
Figure 13. Consumption forecast in the CST in GWh
Financial analysis of CST

Financial analysis is the core of any business plan. Financial analysis presents the costs and revenues
associated with operating and expanding an electric utility, as well as the revenue associated with
commercialization of electric service needed to achieve financial sustainability and to drive expansion
of service into the future.
A financial model was prepared to evaluate financial performance of CST for the period 2018 -2027
that includes projections of costs and revenues associated with existing and future operations, as well
as current and planned infrastructure expansion with new connections. Revenue requirements for the
service provider include capital recovery charges taking into consideration the nature of the grants-in-
aid from REA to the service providers.
The process of evaluating costs and revenues begins with forecasting consumer growth and sales both
of which are a function of annual investment in expansion of feeders and consumer connections. Sales
projects are calculated taking into consideration growth of consumers and specific consumption by
consumer category
The cost of purchased power is evaluated using composite sales and energy losses, while operating
costs are evaluated taking into consideration projected staffing levels, historic and projected
maintenance expenses, training costs, transportation expenses and other administrative,
commercialization and related expenses.
Electric utilities that are either newly established or are in a modality of rapid expansion require working
capital to finance expansion activities. For this reason, the financial model was also used to evaluate
working capital requirements over the five-year planning horizon.
Capital requirements
Table 23 below summarizes the capital investment requirements as evaluated in the previous sections
of this business plan for the 2018-2027 expansion periods. The table includes grid expansion projects
(both the ongoing REA grid expansion plan and the additional identified expansion projects),
intensification activities in currently served areas, 33 kV network reinforcement projects and non-
distribution infrastructure capital requirements.
30
Table 23. Summary of capital investment requirements in the CST, in million USD.
Item 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 Total
Ongoing REA
grid
expansion
plan $4.81 $4.81 $4.81 $4.81 $6.01 $25.23
Additional
grid
expansion
projects $5.30 $6.54 $7.94 $6.78 $6.89 $7.22 $6.48 $7.89 $6.33 $5.12 $66.48
Intensification
activities $0.16 $0.17 $0.18 $0.19 $0.20 $0.12 $0.12 $0.13 $0.13 $0.09 $1.50
Network
reinforcement
projects $0.25 $0.25 $0.50
Total
distribution
infrastructure $10.52 $11.52 $12.92 $11.77 $13.34 $7.33 $6.60 $8.01 $6.46 $5.21 $93.70
Non-distribution
infrastructure $1.15 $1.15
Total CAPEX $11.67 $11.52 $12.92 $11.77 $13.34 $7.33 $6.60 $8.01 $6.46 $5.21 $94.85
In addition to the approximately US$25.23 million needed to complete REA expansion investments,
CST grid expansion, CST intensification investments, and network reinforcement results in an overall
distribution infrastructure investment requirement of US$68.47 million. As explained in the previous
section, network reinforcements include capacitor banks and voltage regulators. Adding non-
distribution infrastructure investment (vehicles, tools, equipment, etc.17.) the total capital investment
requirements for the CST is estimated at US$94.85 million between 2018 and 2027. Annex 4 presents
the breakdown of the non-distribution infrastructure capital requirements. Figure 14 below illustrates
the total capital investment requirements by type of activity.
Figure 14. Summary of capital investment requirements for the CST
The distribution capital investment requirements are relatively evenly distributed over the first five
years with an average of US$12 million per year including both ongoing and additionally identified
projects and declining to an average of approximately US$7 million per year for the remainder of the
ten-year period. This investment pattern results in the maximization of connected customers that in turn
17 Some non-distribution infrastructure investment like vehicles and computers need to be replaced after 5 years.
31
will result in more revenues from electricity sales for the service provider over the analysis period. In
year one, there is a $1.15 million provision for non-distribution capex (vehicles, tools, etc.).
Consumer/Sales Forecast
Projecting consumer growth is the first step required for revenue projections. Consumer forecasts must
identify not only the number of consumers, but also the distribution of consumers into specific consumer
categories, such as residential, commercial, large commercial, and other customer categories.
The customer and sales forecast for CST builds upon the connection results of the combined grid
expansion and intensification activities. Grid expansion and intensification will add a significant
number of new connections that taken together will impact sales significantly. Table 24 presents the
projected number of customers, sales and demand for CST for the 2018-2027 planning horizon.
Table 24. Customer and electricity sales forecast for the CST
Item 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Consumers
8,275 13,259 19,544 26,396 34,040 41,098 48,540 56,878 64,706 72,589
Sales
GWh 3.90 5.81 8.20 10.80 13.64 16.27 19.02 22.10 24.98 27.91
Demand -
MW 1.7 2.4 3.3 4.2 5.2 6.2 7.2 8.3 9.3 10.3
The forecast shown in Table 24 assumes there is sufficient capital to finance all the investment
requirements identified and included in the previous section.
Revenue requirements
In electric distribution utilities, expenses are dominated by the cost of purchased power that often is
50% or more of the total expenditures in any given year. Expenditures on purchased power are normally
followed by the cost of salaries and benefits for utility staff.
The projections based on typical ratios for the industry of customers per full time employees (FTE)
shown herein suggest that although a service provider could have managed operations in 2017 with
approximately 23 employees, employment would need to grow as significant numbers of consumers
are connected to the CST distribution system. Assuming three regional offices are established to manage
inscription of the large number of new customers in the initial years, each managed by a team of
approximately 8 employees18, CST should maintain its current staffing levels at 22 employees in total
by end of the first investment year including supporting staff. If sufficient financing is invested, CST
will serve approximately 34,040 consumers by 2022 and the service provider will need to add 43
employees to keep pace with commercial and operations/maintenance functions, totaling 65 employees.
By 2027 the headcount should be 82 employees to serve the forecasted 72,589 consumers in the
territory.
Annex 3 includes the proposed organization chart for the service provider and the resulting number of
employees for each function over the period. Table 25 summarizes the growth scenario assumed for the
CST employees.
18 Using common ratios in the industry such as customers per FTE for customer representatives and supporting
staff and linemen per 100km of lines for O&M
32
Table 25. Employee growth adjusting to growth in consumers

Item 2018 2019 2020 2021 2022 2027
Consumers
8,275 13,259 19,544 26,396 34,040 72,589
Employees
22 31 41 52 65 82
Other non-power and non-labor operating expenditures include operation and maintenance costs,
commercial costs, administration and other costs (rents, legal, human resources, etc.). Main assumptions
for the forecast of operating expenditures are as follows:
• Cost of purchased power: US$ 0.072/kWh based on current UEDCL electricity purchase
price (based on 2017 average for UEDCL).
• Electricity losses: for new construction, we assume 10% losses rates while for currently
served areas, losses will evolve from current levels (38%) to 12% by 2027
• Staff costs: based on staff number and current average labor costs per direct employees
(assumed current KRECS salary level of US$2,500 per year in the first year, increasing to
US$5,000 per year by year 5).
• Distribution operation and maintenance costs: 1.0% of plant value
• Customer costs: US$ 0.50 per customer-month
• Administrative & other costs: 15% of staff, distribution O&M and customer costs, and 5%
for other costs (insurance, consultancies, professional services, etc.)
• Replacement reserve: approximately 1/3 of depreciation value of plant in service
The results of the forecast of the revenue requirements for the service provider in the CST are shown in
Table 26 below.
Table 26 Forecast of the revenue requirements for the CST in US$ million
Item 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Electricity purchases $0.45 $0.63 $0.84 $1.07 $1.33 $1.56 $1.80 $2.08 $2.33 $2.59
Staff costs $0.06 $0.10 $0.16 $0.23 $0.32 $0.35 $0.37 $0.39 $0.40 $0.41
Distribution
maintenance costs $0.15 $0.26 $0.37 $0.48 $0.60 $0.63 $0.66 $0.69 $0.70 $0.70
Customer costs $0.05 $0.08 $0.12 $0.16 $0.20 $0.25 $0.29 $0.34 $0.39 $0.44
Administrative & other

costs $0.11 $0.16 $0.20 $0.23 $0.24 $0.26 $0.27 $0.28 $0.28 $0.29
Replacement reserve $0.17 $0.28 $0.41 $0.53 $0.66 $0.74 $0.80 $0.88 $0.95 $1.00
Total Costs of service $0.99 $1.50 $2.10 $2.70 $3.36 $3.78 $4.19 $4.66 $5.06 $5.42
19
Cost per kWh sold $0.25 $0.26 $0.26 $0.25 $0.25 $0.23 $0.22 $0.21 $0.20 $0.19
Based on the capital investment requirements for the CST and the forecast of customers and electricity,
the revenue requirement for the service provider in the CST varies from US$0.26 to US$0.25 per kWh
sold during the 2018-2022 period, averaging US$0.25 per kWh. Then and as the increase in consumers
and electricity sales outpace expenditures’ growth, the revenue requirement for the service provider in
19 The units for cost per kWh sold are US$/kWh, as opposed to US$ million for the remaining rows of this table
33
the CST is expected to decrease to US$0.19 per kWh by 2027. Figure 15 below depicts the composition
of the costs of service during the 10-year period.
Figure 15. Composition of cost of service
Electricity purchases are the single highest expense, accounting for 43% of the total cost of service,
followed by replacement reserve (19%) as well as distribution maintenance costs (16%).
Revenue forecasts
Revenues include sales of electricity to consumers, fees for service connections, fees for disconnections,
and other charges that may be allocated to consumers from time to time. The primary source of revenues
is sales of electricity - as it is in all distribution utilities. Metering practice in Uganda has moved steadily
to prepaid platforms so the majority of CST consumers purchase energy on a prepayment basis already.
Thus, revenue collection is assumed to be 100% and there are no costs or fees associated wit h
disconnections; prepaid meters automatically disconnect when energy credit has expired. Connection
fees are evaluated based on the US$ 20 fee as proposed by REA.
Table 27 below presents the tariff schedule for UEDCL in the CST in US$, which is used for the base
case financial analysis for KRECS. The impact of the recently submitted KRECS tariff is evaluated in
the risk analysis section below.
Table 27. KRECS tariffs and connection fees used in revenue forecasts
Customer category Fixed Fee 20 Energy tariff
(US$/month) (US$/kWh)
Domestic $0.996 $0.206
Commercial $0.996 $0.186
Using the tariff schedule in Table 27 and $20 per connected consumer, revenues are projected over the
ten-year planning horizon and shown in Table 28. Revenues build upon sales projections for each
consumer category that are in turn, based upon consumer connection projections presented earlier in
20 Assumed equal to UEDCL

34
this business plan. The revenues include monthly sales figures (fixed monthly and energy sales) and
connection fees for newly connected customers.
Table 28. Revenue forecast in the CST in US$ million
Item 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Residential customers $0.70 $1.11 $1.62 $2.18 $2.80 $3.38 $3.98 $4.65 $5.28 $5.93
Commercial
customers $0.16 $0.19 $0.22 $0.26 $0.29 $0.32 $0.35 $0.39 $0.42 $0.45
Other customers
Total revenues from
electricity sales $0.86 $1.30 $1.84 $2.44 $3.09 $3.70 $4.33 $5.04 $5.70 $6.38
Revenues per kWh
sold $0.22 $0.22 $0.22 $0.23 $0.23 $0.23 $0.23 $0.23 $0.23 $0.23
Revenues from
connection fees $0.09 $0.10 $0.13 $0.14 $0.15 $0.14 $0.15 $0.17 $0.16 $0.16
Total revenues $0.95 $1.40 $1.97 $2.58 $3.25 $3.84 $4.48 $5.21 $5.86 $6.54
Revenues per kWh
sold 21 $0.24 $0.24 $0.24 $0.24 $0.24 $0.24 $0.24 $0.24 $0.23 $0.23
Based on the customer and demand forecast, total revenues for the service provider in the CST will
increase from US$0.95 million in 201822 to US$3.25 million in 2022, representing approximately US$
0.24 per kWh sold. Revenues from electricity sales represent 94% of the total revenues in the period.
Revenues from connection fees average US$122,000 per year representing only 6% of the total
revenues. By year ten, total revenues are expected to increase to US$6.54 million or US$0.23 per kWh
sold. Figure 16 below depicts the difference between the revenues and the revenue requirement per
kWh sold for the service provider in the CST.
21 The units for Revenues per kWh sold is US$/kWh, as opposed to US$ million which is used for the remaining
rows of this table
22 Total revenues in 2017 estimated at approximately US$460,000.
35
Figure 16. Revenue versus revenue requirements in the CST
Newly formed businesses or businesses that are in a mode of rapid expansion require working capital
during the start-up or rapid expansion phase to cover any gaps that may arise between revenues and
operating expenses. While the cost of service and revenue analyses point to a situation that may reflect
revenue-cost parity by year six, it is nonetheless clear that a working capital allowance could be needed
to support CST during the early years of operation, as shown in Figure 16 above. The next section will
address these needs.
CST Cash flow analysis

The model for investment in future grid expansion is that the Government of Uganda has made a policy
decision to finance all capital costs associated with rural electrification grid investments. As the
executing agency, REA is responsible for programming and managing these investments, and post
investment, for tracking the assets that are financed through the REA program.
In addition, consumer connection costs will be integrated into the capital cost of grid expansion projects
– meaning that consumers will not be required to pay more than the nominal connection fee ($20) levied
and collected by the service provider. Thus, service providers will assume responsibility for capital
investments in non-grid investments including vehicles, tools, business systems and maintenance
materials.
The CST service provider will bill and collect tariffs from customers, hire the staff to administer,
maintain and operate the electric distribution system and conduct repairs and expansion activities in
accordance with the license requirements for the CST.
Main assumptions
The assumptions embedded in the financial analysis and projections presented in a latter section of this
chapter are as follows.
1. Capital expenditures: 100% grant in aide
2. Service connection costs: included in capital investment cost
3. Other capital investment requirements: service provider equity
4. Working capital costs: service provider equity
5. Tariffs: identical to UEDCL for CST
6. Collection efficiency: 100%
7. Cost of purchased power: equal to UEDCL power costs
36
8. Depreciation: standard rates in the industry over each type of assets, less grants received.
9. Corporate taxes: 30%
10. Total electricity losses: From 38% in 2017 to 12% by 2027 (same as revenue requirements,
weighted average percentages resulting from evolution of losses levels in new or currently
served areas)
A financial projection for the CST service provider was developed using the sales and demand
projections, the UEDCL tariff schedule, the cost of service estimates and all of the assumptions listed
above. Earnings before interest taxes and depreciation (EBITDA), profit/loss margin for the year and
operating cash flow were calculated based upon these assumptions and analyses for a ten-year planning
horizon. Working capital requirements were evaluated to cover any operating deficits in the early years
of CST service provider operation. Based on the results of the financial analysis, working capital needs
for the service provider are estimated as the amount of cash needed to cover any annual cash operating
deficit in this 10-year period.
Table 29 below presents the financial projections using the assumptions and analyses described above
for 2018 through 2027.
37
Table 29. Cash flow analysis for the service provider in the CST
Item – US$ million 2018 2019 2029 2021 2022 2023 2024 2025 2026 2027
REVENUES
Total revenues from electricity sales $ 0.86 $ 1.30 $ 1.84 $ 2.44 $ 3.09 $ 3.70 $ 4.33 $ 5.04 $ 5.70 $ 6.38
Revenues from new connections $ 0.09 $ 0.10 $ 0.13 $ 0.14 $ 0.15 $ 0.14 $ 0.15 $ 0.17 $ 0.16 $ 0.16
Total revenues $ 0.95 $ 1.40 $ 1.97 $ 2.58 $ 3.25 $ 3.84 $ 4.48 $ 5.21 $ 5.86 $ 6.54
Total revenues per kWh sold $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.24 $ 0.23 $ 0.23
EXPENDITURES
Electricity purchases $ 0.45 $ 0.63 $ 0.84 $ 1.07 $ 1.33 $ 1.56 $ 1.80 $ 2.08 $ 2.33 $ 2.59
Distribution margin $ 0.50 $ 0.77 $ 1.13 $ 1.50 $ 1.92 $ 2.28 $ 2.68 $ 3.13 $ 3.53 $ 3.95
Distribution margin per kWh sold $ 0.13 $ 0.13 $ 0.14 $ 0.14 $ 0.14 $ 0.14 $ 0.14 $ 0.14 $ 0.14 $ 0.14
Staff costs $ 0.06 $ 0.10 $ 0.16 $ 0.23 $ 0.32 $ 0.35 $ 0.37 $ 0.39 $ 0.40 $ 0.41
Distribution maintenance $ 0.15 $ 0.26 $ 0.37 $ 0.48 $ 0.60 $ 0.63 $ 0.66 $ 0.69 $ 0.70 $ 0.70
Customer costs $ 0.05 $ 0.08 $ 0.12 $ 0.16 $ 0.20 $ 0.25 $ 0.29 $ 0.34 $ 0.39 $ 0.44
Administrative and other costs $ 0.11 $ 0.16 $ 0.20 $ 0.23 $ 0.24 $ 0.26 $ 0.27 $ 0.28 $ 0.28 $ 0.29
Total Costs of sales $ 0.82 $ 1.21 $ 1.69 $ 2.17 $ 2.70 $ 3.05 $ 3.39 $ 3.77 $ 4.11 $ 4.42
EBITDA $ 0.13 $ 0.18 $ 0.28 $ 0.41 $ 0.55 $ 0.79 $ 1.09 $ 1.43 $ 1.75 $ 2.12
EBITDA margin 14% 13% 14% 16% 17% 21% 24% 28% 30% 32%
Depreciation
Interest on debt service
Taxes $ 0.03 $ 0.05 $ 0.07 $ 0.10 $ 0.14 $ 0.20 $ 0.27 $ 0.36 $ 0.44 $ 0.53
Profit / loss for the year $ 0.10 $ 0.14 $ 0.21 $ 0.31 $ 0.41 $ 0.59 $ 0.82 $ 1.07 $ 1.32 $ 1.59
Margin as Percentage of Revenue 11% 10% 11% 12% 13% 15% 18% 21% 22% 24%
Return on equity 100% 58% 47% 41% 35% 97% 57% 43% 34% 29%
CASH FLOW
Project costs $ (11.67) $ (11.52) $ (12.92) $ (11.77) $ (13.34) $ (7.33) $ (6.60) $ (8.01) $ (6.46) $ (5.21)
Grant $ 11.67 $ 11.52 $ 12.92 $ 11.77 $ 13.34 $ 7.33 $ 6.60 $ 8.01 $ 6.46 $ 5.21
Loan
Net CAPEX $ (1.15)
Net Income (Profit/loss) $ 0.10 $ 0.14 $ 0.21 $ 0.31 $ 0.41 $ 0.59 $ 0.82 $ 1.07 $ 1.32 $ 1.59
Less Depreciations
Less Principal Payments
Cash flow from operations $ 0.10 $ 0.14 $ 0.21 $ 0.31 $ 0.41 $ 0.59 $ 0.82 $ 1.07 $ 1.32 $ 1.59
Net Cash flow $ 0.10 $ 0.14 $ 0.21 $ 0.31 $ 0.41 $ (0.55) $ 0.82 $ 1.07 $ 1.32 $ 1.59
NPV of Net Cash flow $2.61
38
Revenues and expenditures
Revenues from electricity sales and connection fees are estimated at US$0.95 million in 2018 growing
to US$3.25 million by 2022, as result of the system expansion and new consumers connected to the
grid. By 2027 total revenues are expected to increase to US$6.54 million, as penetration rates increase
and more customers are connected. The cost of service is concurrently expected to increase from
US$0.82 million in 2018 to US$2.70 million by 2022 and US$4.42 million by 2027. As Figure 16
above illustrates, there is a deficit in revenues versus the cost of service until year 6.
Margin on sales and return on equity

Margins range from a low of 10% in 2019 to a high of 24% in 2027. Due to the year 1 contribution of
non-distribution CAPEX investment as part of the REA grant – the return on equity ranges from a high
of 100% in year 1, declining to 29% by year 10.
Capital investment
The distribution infrastructure investment in the CST will be financed by grants in aid made by REA.
REA will also need to contribute the required funds for non-distribution capital expenditures as part of
the grants in aid investments. This includes US$1.15 million for vehicles, tools, spare parts, and
business systems. After five years REA would need to replace part of the non-distribution capital
expenditures, but the financial analysis has already factored in the depreciation for these assets to allow
their replacement.
Cash flow analysis and Net Present Value

The financial analysis suggests the cash flow from operations equal to the profit/loss for the year less
depreciation and principal payments will be consistently positive throughout the 10-year planning
horizon of CST operations. As the analysis illustrates, the CST has positive annual cash flows in every
year across the ten-year planning horizon ranging from US$100,000 in year 1 to US$410,000 in year 5
(2022) and US$1.59 million in 2027.
The met cash flow is positive in the first year due to the initial investment made by REA in non-
distribution CAPEX. Then net cash flow follows the cash flow from operations, but with a loss of
US$550,000 in year six due to the replacement of the fully depreciated initial non-distribution assets.
Thus, the NPV of the net cash flow during this ten-year period, and considering a 10% discount rate,
results in a positive US$2.61 million.
Figure 17 below shows the annual evolution of cash flow from operations for the CST service provider
and the CAPEX expected from the SP.
39
Figure 17. Net cash flow for the service provider in the CST
Figure 17 shows the result of the initial US$1.15 million investment made by REA at the beginning of
the period, resulting in a positive cash flow throughout the ten-year planning horizon. As mentioned
previously this includes the estimates for non-distribution capital expenditures and other initial pre-
operating expenditures. A similar disbursement is required after five years to replace depreciated assets
(vehicles, computers, etc.) which will need to be provided by REA.
Working capital requirements

As Table 29 shows, the financial analysis suggests the CST service provider will not experience a cash
deficit from operations throughout the 10-year planning horizon. Therefore, there is no need for working
capital support.
Risk analysis
To evaluate the financial performance under a variety of conditions, a series of scenarios have been
modeled using the financial model developed for the CST. Risk analysis has been performed for four
risk scenarios as outlined below:
1) Increased cost of purchased power
This risk factor assumes an increase of 10% in the cost of purchased power throughout the
period that cannot be passed through to consumers.
2) Reduced grid expansion funding
This risk has to do with a reduced level of funding for grid expansion – that is, a 50% reduction
in the identified grid expansion projects that results in lower consumers and electricity sales
over the evaluation period.
3) Lower penetration rates
This risk has to do with lower than anticipated consumer connection rates – reduced from 60%
penetration to 40% after ten years for residential consumers (instead of 60%) and from 100%
to 85% for commercial consumers after ten years.
4) KRECS Tariffs
In this scenario we assume that the KRECS tariff reflect in its recent application will be charged
to its customers.
The risk that electricity loss levels may continue at current level has not being analyzed since the current
loss levels situation is unsustainable for any Service Provider.
All scenarios are analyzed independently from one another using the following financial indicators:
▪ Cost of service in US$ per kWh sold – ten-year average
▪ Total revenues in US$ per kWh sold – ten-year average
40
▪ Sum of annual operating cash flow over the ten-year planning horizon, in US$ million
▪ 5 year working capital needs, in US$ million (to cover annual deficits in operating cash flow)
▪ Net present value of net cash flow, in US$ million
Table 30 below presents the results of the financial analysis for each scenario modeled. For convenience
the base case scenario is also included.
Table 30. Financial analysis for different scenarios
Cost of Revenues Operating Working NPV
Scenario Service Cash flow capital
US$/kWh US$/kWh US$ million US$ million US$ million
Base case $0.221 $0.236 $6.56 $2.61
1 – Increased cost of power $0.231 $0.236 $5.46 $2.02
2 - Reduced expansion funding $0.222 $0.235 $5.72 $2.25
3 - Lower initial penetration rates $0.231 $0.233 $5.05 $1.88
4 – KRECS proposed tariffs $0.221 $0.206 $3.14 $0.93 $0.79
The sensitivity analysis reveals several important findings. For the base case, and as mentioned in the
previous section, the ten-year average cost of service is $0.221 per kWh sold while the average ten-year
revenues are US$0.236 per kWh sold, which explains the cumulative ten-year operational cash flow of
US$6.56 million. The ten-year NPV is US$2.61 million considering the initial investment of US$1.15
million by REA for ancillary investment needs.
If the cost of purchased power increases by as much as 10% and there is no concurrent increase in
tariffs, the cost of service would increase by 4% with no change in revenues. This would result in a
reduced operating cash flow by approximately US$1.1 million over the ten-year planning horizon and
the 10-year NPV would decrease to negative US$2.02 million.
If funding for grid expansion were reduced by as much as 50% (or approximately $47 million from the
initial $95 million) fewer but more financially viable projects would be completed particularly those
that have a lower cost per consumer. However, the fixed costs are distributed over a smaller customer
data base, resulting in an increase in the cost of service of approximately one-half percent. Revenues
per kWh would decline by a minimal 0.5%. The cumulated cash flow from operations would drop by
US$840,000 over ten years as result of a smaller utility with fewer sales, and the NPV of net cash flow
would fall from US$2.61 million to US$2.25 million.
If grid expansion projects continue as proposed but penetration rates are lower than anticipated in the
long term (i.e. 40% instead of 60% for residential after 10 years), the cost of service would increase by
4% and the net cash flow from operations would decline from US$6.56 million to US$5.05 million after
10 years. The resulting NPV will fall to US$1.88 million.
If KRECS recently submitted tariffs are used instead of UEDCL tariffs, the cost of service will remain
unchanged – but revenues will fall by 15% to US$0.206/kWh. Under this scenario, operating cash flow
will decline from US$6.56 million to US$3.14 million and the NPV will drop by US$1.82 million to a
positive US$790,000. Under this scenario, the working capital of US$930,000 would be required.
In summary, the use of the KRECS currently proposed tariff would require subsidies to cover operating
deficit as revenues from sales are insufficient to cover operating costs unless tariffs are increase to levels
observed by UEDCL customers.
Other risks
In addition to financial risks, there are multiple risks encountered related to expansion of service
territory and consumers for electric power distribution systems. The following risks should be taken
into consideration so that mitigation strategies can be developed prior to implementation of service
provider expansion plans.
▪ Technical risks:
41
The proposed technologies for developing the distribution network and commercializing power
through prepaid platforms are sound and well known in Uganda. The key is ensuring that
equipment complies with regulatory requirements pertaining to technical and quality standards,
as well as ensuring the metering technology will be durable and perform as anticipated. This is
particularly important for meters, poles, and distribution transformers where any defective
provision will increase future costs, electricity losses and reliability.
▪ Operational risks
The service provider will have to hire, train and manage a significant number of new linemen
and customer service staff members in expansion areas. Hiring and training a large number of
new staff members will require significant management challenges that will need to be carefully
monitored to ensure that the new staff perform according to plan. A reasonable compensation
plan will be required to hire and avoid high attrition levels.
Also in the context of a very rapid expansion as expected over the five-year period it will be
important to ensure that technical and commercial operating procedures are well defined and
enforced to ensure customer service is maintained, loss and theft levels are controlled, and
revenue recovery is not compromised.
▪ Regulatory risks
Tariffs cases for individual service providers are not evaluated as such by ERA. The CST
service provider may therefore be exposed to mismatch between operating costs and tariff,
delays in tariff adjustments, and potentially from increases in the cost of purchased power that
is not passed through to customer tariffs. The financial analysis reveals a very thin financial
margin to endure any gaps in power purchase cost that is not reflected in tariff adjustments that
could lead to a financial default. If energy sales are not robust as expected, it is likely that
revenues will have to be increased through higher tariffs.
Moreover, any change in the connection policy and fees allowed for the service provider could
significantly impact the balance between costs and revenues.
▪ Legal risks
The business plan is formulated assuming REA will finance and build the expansion of the
system, including new connection costs incurred after initial commissioning of the expansion
projects. The legal agreement between the service provider, the owner of the distribution
infrastructure and REA will have to clearly define responsibilities and obligations for transfer
of assets, financing, disposal and/or transfer upon completion, including treatment of
liabilities. The mechanisms and source of financing for working capital needs (if deemed
necessary) must also be clearly and fully clarified.
42
Annex 1. Identified grid expansion projects

Location of identified grid expansion projects
43
44
45
46
47
48
49
50
List of identified grid expansion projects and their individual financial analysis
MV
Project # Substation Feeder District Project Name 33kV length by conductor - km LV length Total Consumers Project Costs US$ Cost per NPV
Voltage DTs Households
[km] (Year 10) Million Consumer US$ Million
100mm2 50mm2 25mm2 25mm 2 phase Total
1 Busunju Hoima Mityana WANGOMA-KYAKKOSI 33 - 8.5 2.3 - 10.8 6 10.8 541 436 $ 512,301 $ 1,175 $9,431
2 Busunju Hoima Mityana BOMBO-KABULAMULIRO 33 - 7.5 1.9 - 9.5 7 12.6 668 538 $ 526,213 $ 978 $24,716
3 Busunju Hoima Kiboga NABWENDO-KIMMULI 33 - 19.6 9.3 - 28.9 17 30.6 1,431 1,153 $ 1,376,694 $ 1,194 $22,299
4 Busunju Hoima Kiboga LUWUNGA B-DDEGEYA 33 - 24.0 11.5 0.7 36.1 23 41.4 2,163 1,743 $ 1,816,269 $ 1,042 $66,230
5 Busunju Hoima Kyankwanzi BAMUSUUTA-MUNYAAMI 33 - 8.0 - - 8.0 6 10.8 694 559 $ 477,934 $ 855 $34,128
6 Busunju Hoima Kyankwanzi KIGANDO A-KANYOGOGA-KISOJO 33 25.7 10.7 2.4 - 38.9 24 43.2 2,152 1,734 $ 2,033,585 $ 1,173 $38,052
7 Busunju Hoima Kyankwanzi NTWETWE-KAMUKANGA B 33 - 14.6 5.3 - 19.8 11 19.8 1,065 858 $ 944,944 $ 1,101 $26,382
8 Busunju Hoima Kyankwanzi BUKWIRI-BYERIIMA B 33 - 12.4 2.5 0.4 15.2 7 12.6 857 691 $ 695,988 $ 1,008 $29,143
9 Busunju Hoima Kyankwanzi KATANABIRWA-KIRIMBI 33 - 23.0 16.6 0.9 40.5 30 54.0 3,236 2,608 $ 2,247,426 $ 862 $156,827
10 Bombo Wabigalo Luwero KASWA-LUKOOGE 33 - 4.5 3.0 1.1 8.6 7 12.6 518 417 $ 461,026 $ 1,105 $12,655
11 Bombo Wabigalo Luwero KYETUME-BUYONDO 33 - - 2.9 0.9 3.8 3 5.4 226 182 $ 185,467 $ 1,018 $7,445
12 Bombo Wabigalo Luwero BUBUUBI-KASIRIBITI 33 - - 4.4 1.9 6.3 3 5.4 172 139 $ 221,142 $ 1,596 ($4,165)
13 Bombo Wabigalo Luwero KIKANDWA-MAKONKONYIGO 33 - - 2.7 - 2.7 1 1.8 101 81 $ 97,192 $ 1,194 $1,567
14 Bombo Wabigalo Luwero KABUNYATA-BAMUGOLODDE 33 - - 6.8 - 6.8 1 1.8 82 66 $ 175,487 $ 2,656 ($10,597)
15 Bombo Wabigalo Nakasongola KABUSINDE-KAMUWANULA 33 - - 1.0 3.0 4.0 2 3.6 102 82 $ 131,170 $ 1,596 ($2,475)
16 Bombo Wabigalo Nakasongola KABUSINDE-BATUUSA 33 - - 2.1 - 2.1 1 1.8 86 69 $ 81,633 $ 1,178 $1,472
17 Bombo Wabigalo Nakasongola NAKASONGOLA TOWN-KYALUSAKA 33 - 30.5 18.4 1.5 50.4 17 30.6 1,264 1,019 $ 1,834,082 $ 1,801 ($56,257)
18 Bombo Wabigalo Nakasongola KASENYI-TUMBA 33 - 27.2 14.8 - 42.0 17 30.6 1,641 1,322 $ 1,710,345 $ 1,293 $9,397
19 Bombo Wabigalo Luwero KYAWANGABI-NABUTAKA 33 - 1.4 - 1.2 2.7 3 5.4 186 150 $ 163,058 $ 1,088 $4,847
20 Kawanda UETCL Busunju Wakiso NAKYELONGOOSA B-KASOOZO 33 - 10.3 7.8 0.6 18.7 14 25.2 1,147 924 $ 985,458 $ 1,066 $32,375
21 Kawanda UETCL Busunju Wakiso LUTISI - BIGO - MPANGA 33 - - 13.9 - 13.9 8 14.4 651 525 $ 595,660 $ 1,136 $13,907
22 Kawanda UETCL Busunju Wakiso LUKOMA-KITAYITA PRISON 33 - - 9.7 - 9.7 9 16.2 702 566 $ 542,286 $ 959 $27,290
23 Kawanda UETCL Busunju Wakiso BUWASA-NAKEDDE 33 - - 16.5 - 16.5 12 21.6 993 800 $ 810,170 $ 1,013 $33,310
24 Masaka Central Mutundwe Mpigi LUBANGA-BUGEYE 33 - - 4.2 - 4.2 4 7.2 564 454 $ 279,339 $ 615 $41,138
25 Masaka Central Mutundwe Mpigi LUBANGA-NTINZI 33 - - 1.2 - 1.2 2 3.6 568 458 $ 163,448 $ 357 $55,916
26 Masaka Central Mutundwe Mpigi BUKEMBA B-LWAWEBA 33 - 10.3 15.9 - 26.2 22 39.6 1,949 1,571 $ 1,480,798 $ 943 $78,821
27 Masaka Central Mutundwe Mpigi SANGO A-KATEBO-KYANGO 33 - - 0.0 - 0.0 8 14.4 818 659 $ 341,995 $ 519 $67,427
28 Mityana Busunju Mityana SEKANYONYI A-KITEREDE 33 - 8.0 - - 8.0 6 10.8 598 482 $ 464,017 $ 963 $22,993
29 Mityana Kasanda Mityana NYANZI-BUTEBI B 33 - - 3.2 - 3.2 2 3.6 227 183 $ 151,934 $ 831 $11,700
30 Mityana Kasanda Mityana MAJOJI - MAYIRIKITI 33 - - 7.8 - 7.8 3 5.4 242 195 $ 275,224 $ 1,411 ($1,444)
31 Mityana Kasanda Mityana NKAZEBUKU-KIMULI-MWALO 33 - - 0.8 - 0.8 1 1.8 102 82 $ 59,219 $ 720 $6,367
32 Mityana Kasanda Mityana NKAZEBUKU 33 - - 1.4 - 1.4 1 1.8 57 46 $ 64,408 $ 1,402 ($292)
33 Mityana Kasanda Mityana GULWE B-LUBAJJA A 33 - - 3.5 - 3.5 2 3.6 167 135 $ 148,636 $ 1,105 $4,077
34 Mityana Kasanda Mityana KIZIMIZO-MABIRA 33 - - 2.9 - 2.9 2 3.6 138 111 $ 133,184 $ 1,198 $2,095
35 Mityana Kasanda Mityana KIZIMIZO-KYANDALO B 33 - - 6.3 - 6.3 4 7.2 324 261 $ 283,783 $ 1,087 $8,477
36 Mityana Kasanda Mityana KYENGEZA 33 - - - - - 1 1.8 53 43 $ 34,447 $ 807 $2,855
37 Mityana Kasanda Mityana KANYALE-KALUNGU-BALA-KIREKU 33 - - 5.1 - 5.1 3 5.4 292 235 $ 227,260 $ 966 $11,141
38 Mityana Kasanda Mityana BUWALA-LUBIRA 33 - - 1.1 - 1.1 1 1.8 78 63 $ 60,339 $ 960 $3,018
39 Mityana Kasanda Mityana NAKASEETA-MAWANGA 33 - - 1.1 - 1.1 1 1.8 83 67 $ 61,121 $ 914 $3,591
40 Mityana Kasanda Mityana BUZIBAZZI-NABIGAAGA 33 - - 0.9 - 0.9 1 1.8 85 68 $ 58,267 $ 851 $4,209
41 Mityana Kasanda Mityana KAKINDU-MISIMBA 33 - - 7.2 - 7.2 6 10.8 524 422 $ 386,452 $ 915 $22,622
42 Mityana Kasanda Mityana KITWE-KAYANGA 33 - - 1.6 - 1.6 1 1.8 68 55 $ 69,271 $ 1,264 $582
43 Mityana Kasanda Mityana BUSIRIMU - KISOSONKOLE - KIRYOKYA A 33 23.8 19.8 5.5 0.3 49.4 31 55.8 2,735 2,204 $ 2,550,195 $ 1,157 $52,578
44 Mityana Kasanda Mityana KISENYI-KABULAMULIRO 33 28.3 8.2 46.6 - 83.2 44 79.2 3,207 2,584 $ 3,621,740 $ 1,401 ($15,945)
45 Mityana Kasanda Mityana MAKONZI A-KAMPINDU 33 - 17.6 7.4 2.2 27.1 17 30.6 1,254 1,010 $ 1,284,888 $ 1,272 $9,896
46 Mityana Kasanda Mityana BAKULE-KIREEBA 33 - 21.9 14.4 2.2 38.5 25 45.0 3,535 2,849 $ 2,104,517 $ 739 $214,399
47 Mityana Kasanda Mityana KASSANDA ROAD - KYEYAGALIRE 33 - - 35.2 - 35.2 18 32.4 1,669 1,345 $ 1,448,488 $ 1,077 $45,324
48 Mubende Kakumiro Mubende KANYEGERA 33 - - 0.0 - 0.0 1 1.8 69 56 $ 38,660 $ 695 $4,478
49 Mubende Kakumiro Mubende MIJUNWA - KABATENDE 33 - - - 2.2 2.2 1 1.8 49 39 $ 65,884 $ 1,669 ($1,544)
50 Mubende Kakumiro Mubende KABAJJOKI 33 - - 1.6 - 1.6 1 1.8 57 46 $ 68,120 $ 1,483 ($748)
51 Mubende Kakumiro Mubende KAYINJA - KITALEMWA 33 - - - 2.2 2.2 1 1.8 53 43 $ 66,056 $ 1,547 ($1,030)
52 Mubende Kakumiro Mubende KIJUNGA - BUKOBA B - KASAMBYA 33 - 40.8 26.7 9.8 77.4 41 73.8 2,800 2,256 $ 3,265,279 $ 1,447 ($26,601)
53 Mubende Kakumiro Mubende LUWUNGA - LWEMIGGO A B 33 - 7.6 2.5 2.1 12.2 9 16.2 644 519 $ 618,155 $ 1,191 $10,206
54 Mukono Nakifuma Mukono KIYUNGA-MUSOMBWA-BULIMU 33 - 5.7 5.5 - 11.2 12 21.6 1,281 1,032 $ 779,625 $ 755 $75,602
55 Mukono Nakifuma Mukono NAKIBANO-MANGIRA-BULIKA 33 - 9.6 9.5 - 19.2 20 36.0 2,419 1,949 $ 1,353,034 $ 694 $157,414
56 Mukono Nakifuma Mukono MAYANGAYANGA-NAMAKOMO-KISOGA 33 - 12.7 14.6 3.4 30.8 26 46.8 2,425 1,954 $ 1,746,180 $ 894 $109,903
57 Mutundwe Mityana Mpigi JJEZA B-KIBUMBIRO-BUZIMWA / KATUUSO 33 - 7.4 5.5 1.6 14.5 9 16.2 597 481 $ 659,315 $ 1,371 ($1,142)
58 Mutundwe Mityana Mityana NALUGAMBA-DDAGYE-NSOZIBBIRI A 33 - 8.5 8.8 2.5 19.7 14 25.2 1,127 908 $ 981,793 $ 1,081 $30,150
59 Mutundwe Mityana Mityana NABATTU -KIKONGE-NAMUGULU-ZZIRA 33 - 4.7 11.7 - 16.3 14 25.2 1,227 989 $ 923,539 $ 934 $50,690
60 Mutundwe Mityana Mityana ZIGOTI SOUTH-NABWIRI-KANGUNDU-BULENGE-BUYUKWE
33 - 4.5 9.1 - 13.5 14 25.2 1,092 880 $ 844,032 $ 959 $42,396
61 Mutundwe Mityana Mityana NAKANYENYA-BUKALAKAMBA 33 - - 6.8 0.3 7.2 7 12.6 614 495 $ 425,640 $ 860 $29,850
62 Mutundwe Masaka central Mpigi KALAGALA-BWANYA-BUSOMBA 33 - 16.6 1.4 - 18.1 16 28.8 1,549 1,248 $ 1,131,325 $ 906 $68,243
63 Mutundwe Masaka central Mpigi DDERA-MUSA-LUUBU 33 - 15.8 2.7 0.4 19.0 16 28.8 1,651 1,330 $ 1,157,743 $ 870 $78,645
64 Mutundwe Masaka central Mpigi MITALA-MARIA - KALONGERO -BUMBO 33 - 10.3 - - 10.3 9 16.2 879 708 $ 648,535 $ 916 $37,918
65 Nkonge Mubende Mubende KASAMBYA A-KYAASA-KYENTULEGE 33 - 7.9 2.8 - 10.7 8 14.4 603 486 $ 572,091 $ 1,177 $10,380
66 Nkonge Mubende Mubende NDEEBA - RUBONA - LUGAZI 33 - 6.1 6.1 - 12.3 9 16.2 715 576 $ 635,852 $ 1,104 $17,532
67 Nkonge Mubende Mubende KIRUME-KITEERA 33 - 6.5 - - 6.5 7 12.6 571 460 $ 447,454 $ 972 $21,415
68 Nkonge Mubende Mubende BUTAWATA - MUGOLODDE 33 - - 1.6 - 1.6 1 1.8 57 46 $ 68,304 $ 1,487 ($771)
69 Nkonge Mubende Mubende BAGEZZA-KALINGO-KACWAMANGO 33 - 12.6 6.4 - 19.1 11 19.8 859 692 $ 887,561 $ 1,282 $5,868
70 Nkonge Mubende Mubende KISEKENDE-KAWUMMULO-KYABWIRE 33 - 18.3 9.2 - 27.5 18 32.4 1,497 1,206 $ 1,377,546 $ 1,142 $31,026
71 Nkonge Mubende Kyegegwe NAKANYASI-KIKONGE LCI-KITALEMWA 33 - 19.6 9.2 1.1 29.9 20 36.0 1,391 1,121 $ 1,463,173 $ 1,305 $6,319
72 Nkonge Mubende Mubende KABANYI-NGOMAZAMUKASA-LWEMAMBA 33 - - - 3.2 3.2 2 3.6 103 83 $ 114,546 $ 1,380 ($298)
73 Nkonge Mubende Mubende LWOBWANA-KYAKAJANKU-KYEJUNGA 33 - - 0.8 1.6 2.4 2 3.6 122 98 $ 111,519 $ 1,134 $2,616
74 Nkonge Mubende Mubende NABINGOOLA-KAJUMIRO-KITONZI 33 - - 10.7 - 10.7 6 10.8 401 323 $ 437,528 $ 1,354 ($113)
75 Nkonge Mubende Kyegegwa KASULE LCI-LYARUHINDA-MIKOLE 33 - 24.2 13.7 5.1 43.0 24 43.2 1,479 1,192 $ 1,850,661 $ 1,553 ($29,525)
76 Nkonge Mubende Kyegegwa RUBOONA-KITENDE 33 - - - 2.9 2.9 2 3.6 97 78 $ 108,527 $ 1,388 ($361)
77 Nkonge Mubende Kyegegwa KATENTE 33 - - - - - 1 1.8 54 44 $ 34,592 $ 795 $2,971
78 Nkonge Mubende Kyegegwa BUTEERA-MUHANGI 33 - - 1.2 - 1.2 2 3.6 152 122 $ 102,619 $ 838 $7,725
79 Nkonge Mubende Kyegegwa KABWEZA 33 - - - - - 1 1.8 63 51 $ 36,998 $ 729 $3,879
80 Nkonge Mubende Kyegegwa KYAKATWANGA-KIBUYE A-MAAYA 33 - - 4.8 - 4.8 2 3.6 141 114 $ 172,830 $ 1,521 ($2,376)
81 Nkonge Mubende Kyegegwa KYAKA SETTLEMENT-KYAMAGABU-ISANGA 33 - 8.1 2.7 - 10.8 6 10.8 396 319 $ 487,116 $ 1,527 ($6,876)
82 Nkonge Mubende Kyegegwa KYAKA SETTLEMENT-BWENGANJANI-MAAYA 33 - 9.2 12.9 - 22.2 16 28.8 1,138 917 $ 1,106,991 $ 1,207 $16,236
83 Nkonge Mubende Kyegegwa KYAKA SETTLEMENT-BUJUBULI-SWESWE A 33 - 4.2 8.8 0.3 13.2 11 19.8 911 734 $ 726,592 $ 990 $32,608
84 Nkonge Mubende Kyegegwa NKANJA-KYAMAGABU-BUJUBULI 33 - - 4.9 1.8 6.6 6 10.8 368 297 $ 339,803 $ 1,146 $7,480
85 Nkonge Mubende Kyegegwa BUJUBULI 33 - - - - - 1 1.8 60 48 $ 36,563 $ 756 $3,531
86 Nkonge Mubende Kyegegwa BUJUBULI-KISHAGAZI-KASIKIZI 33 - 10.3 2.8 2.8 15.9 11 19.8 850 685 $ 789,848 $ 1,153 $16,672
87 Nkonge Mubende Kyegegwa KYEGEGWA-MUSOMBA 33 - - 10.6 - 10.6 5 9.0 345 278 $ 398,757 $ 1,434 ($2,842)
88 Nkonge Mubende Kyegegwa MUSANJU-NYAKATOMA 33 - - 7.2 - 7.2 5 9.0 296 239 $ 324,224 $ 1,359 ($240)
89 Nkonge Mubende Kyegegwa MPARA-NYAKATOKE 33 - - 4.3 - 4.3 3 5.4 172 139 $ 195,163 $ 1,408 ($972)
90 Nkonge Mubende Kyegegwa MPARA-KYARUTUMBA-KIJANAMIGANDA 33 - 18.2 6.5 1.0 25.7 10 18.0 680 548 $ 992,211 $ 1,811 ($30,945)
91 Nkonge Mubende Kyegegwa MPARA-RUTEERWA-KAJUMBURA 33 - 30.7 18.1 5.7 54.6 19 34.2 1,014 817 $ 1,910,665 $ 2,338 ($99,122)
92 Nkonge Mubende Kyegegwa NKAAKA-KIHONGERWA 33 - - 1.9 - 1.9 1 1.8 76 61 $ 75,893 $ 1,239 $839
93 Nkonge Mubende Kyegegwa KACUMBI 33 - - - - - 1 1.8 52 42 $ 34,302 $ 819 $2,739
94 Nkonge Mubende Kyegegwa KIDONGO 33 - - - - - 1 1.8 53 43 $ 34,447 $ 807 $2,855
95 Nkonge Mubende Kyegegwa KIDONGO-KARUMAIMA 33 - - - 3.5 3.5 1 1.8 50 40 $ 84,633 $ 2,101 ($3,714)
96 Nkonge Mubende Kyegegwa KIDONGO-MWARO 33 - - 3.5 - 3.5 1 1.8 60 48 $ 107,155 $ 2,216 ($5,144)
97 Nkonge Mubende Kyegegwa NYABITINDA LCI-KATAMBA LCI 33 - - 5.2 - 5.2 3 5.4 92 74 $ 197,292 $ 2,661 ($11,939)
98 Nkonge Mubende Kyegegwa MISENYI LCI-IGUNDA A LCI 33 - - 2.5 - 2.5 1 1.8 59 48 $ 86,931 $ 1,828 ($2,792)
99 Nkonge Mubende Kyegegwa KISOJO LCI-KAMUGENYI A B-MAGOMA 33 - 18.6 17.1 4.4 40.1 15 27.0 849 684 $ 1,424,093 $ 2,082 ($61,405)
100 Nkonge Mubende Kyegegwa KAKONGORANWA LCI-KALIBWOYA LCI-KYABAGASHA
33 - - 1.5 0.8 2.3 2 3.6 109 88 $ 112,112 $ 1,276 $804
101 Nkonge Mubende Kyegegwa KAKONGORANWA LCI-MIGAMBA-KABARABA 33 - 22.6 15.1 4.8 42.5 18 32.4 1,107 892 $ 1,611,571 $ 1,807 ($49,921)
102 Nkonge Mubende Kyegegwa KAKONGORANWA LCI-KYABAGASHA 33 - - 1.4 - 1.4 1 1.8 86 69 $ 68,076 $ 982 $3,138
103 Nkonge Mubende Kyenjojo RWIBAALE-KYABAGASHA 33 - - 2.0 - 2.0 1 1.8 102 82 $ 83,259 $ 1,013 $3,413
104 Nkonge Mubende Mubende KYENDA - KYAKADAALI 33 - - 6.4 - 6.4 3 5.4 178 143 $ 236,656 $ 1,650 ($5,268)
105 Nkonge Mubende Mubende MIJUNWA - KIJUUYA 33 - - 1.8 - 1.8 1 1.8 63 51 $ 72,548 $ 1,429 ($489)
106 Nkonge Mubende Mubende KISENYI - GOGONYA 33 - - 6.8 - 6.8 4 7.2 256 206 $ 285,107 $ 1,382 ($785)
107 Njeru Kayunga Kayunga KAWOMYA-KYAMBOGO 33 - 8.1 - 0.9 9.0 7 12.6 683 550 $ 517,325 $ 940 $27,816
108 Njeru Kayunga Kayunga NAKATOOKE-BUGUVU 33 - - 2.7 - 2.7 2 3.6 142 114 $ 130,908 $ 1,144 $2,910
109 Njeru Kayunga Kayunga WABUSONKO-LUSENKE 33 - - 14.2 - 14.2 13 23.4 1,114 898 $ 807,398 $ 899 $49,842
110 Njeru Kayunga Kayunga NAMUKUMA-KYENGERA 33 - - 2.0 - 2.0 2 3.6 179 144 $ 121,015 $ 839 $9,077
111 Njeru Kayunga Kayunga NONGO - NAKIVUBO-NANGABO 33 - - - 1.2 1.2 1 1.8 55 44 $ 52,116 $ 1,176 $951
112 Njeru Kayunga Kayunga NAMULABA 33 - - 0.9 - 0.9 1 1.8 73 59 $ 57,174 $ 972 $2,738
113 Njeru Kayunga Kayunga MANSA A-WANTENTE 33 - - 1.4 - 1.4 1 1.8 56 45 $ 63,661 $ 1,411 ($334)
114 Njeru Kayunga Kayunga NYONDO A-NAWANKONGE 33 - - 1.4 - 1.4 1 1.8 78 63 $ 66,310 $ 1,055 $2,284
115 Njeru Kayunga Kayunga BUKOMBA A B-BUJWAYA 33 - 8.2 - - 8.2 6 10.8 476 384 $ 449,673 $ 1,172 $8,430
116 Njeru Kayunga Kayunga NKOKONJERU A-KABALIRA A 33 - 5.0 - - 5.0 3 5.4 239 193 $ 249,470 $ 1,295 $1,319
117 Njeru Kayunga Kayunga NKOKONJERU A-NAKIVUBO A 33 - - 1.4 - 1.4 1 1.8 116 93 $ 73,395 $ 785 $6,499
118 Njeru Kayunga Kayunga TWEYAGALIRE B-NAWANKONGE 33 - - 1.7 - 1.7 1 1.8 63 51 $ 71,243 $ 1,403 ($329)
119 Njeru Kayunga Kayunga NAMABUGA-WABUNYONYI 33 - 4.3 - 1.2 5.5 4 7.2 398 321 $ 298,098 $ 929 $16,620
120 Njeru Kayunga Kayunga KAMUSABI-WABUNYONYI 33 - - 3.3 - 3.3 2 3.6 142 114 $ 141,816 $ 1,239 $1,569
51
MV
Project # Substation Feeder District Project Name 33kV length by conductor - km LV length Total Consumers Project Costs US$ Cost per NPV
Voltage DTs Households
[km] (Year 0.5) Million Consumer US$ Million
100mm2 50mm2 25mm2 25mm 2 phase Total
121 Njeru Kayunga Kayunga KASOLOKAMPONYE-BUGONYA B 33 - 5.5 - - 5.5 3 5.4 307 247 $ 271,414 $ 1,097 $7,722
122 Njeru Kayunga Kayunga KAYONZA 33 - - 0.2 - 0.2 1 1.8 59 48 $ 41,295 $ 869 $2,816
123 Njeru Kayunga Kayunga NAMALIIRI 33 - - 1.1 - 1.1 1 1.8 79 64 $ 60,822 $ 955 $3,093
124 Njeru Kayunga Kayunga KAWOLOKOTA WEST-NAMAVUNDU A 33 - 6.7 - - 6.7 4 7.2 413 333 $ 345,321 $ 1,038 $12,824
125 Njeru Kayunga Kayunga KAWOLOKOTA EAST-NAMIZO A 33 - 6.9 - - 6.9 5 9.0 369 297 $ 370,825 $ 1,247 $3,802
126 Njeru Kayunga Kayunga BUKERERE 33 - - 1.2 - 1.2 1 1.8 75 60 $ 63,404 $ 1,049 $2,240
127 Njeru Kayunga Kayunga NSONGWE-KIRIMANTOOGO 33 - - 2.2 - 2.2 2 3.6 139 112 $ 119,314 $ 1,065 $3,933
128 Njeru Kayunga Kayunga KAATO-BUGOMA 33 - - - 1.8 1.8 1 1.8 54 44 $ 60,198 $ 1,383 ($176)
129 Njeru Kayunga Kayunga KABALANGAJA-NSAMBYA 33 - 6.6 - - 6.6 1 1.8 69 56 $ 210,049 $ 3,778 ($16,584)
130 Njeru Kayunga Kayunga BUSUNGIRE 33 - - 1.0 - 1.0 1 1.8 65 52 $ 56,807 $ 1,085 $1,713
131 Njeru Kayunga Kayunga KIKOTA 33 - - - 0.5 0.5 1 1.8 50 40 $ 41,470 $ 1,029 $1,590
132 Namanve Mukono2 Buikwe KITALA - GAMBA 33 - 13.4 5.6 0.9 19.9 13 23.4 965 778 $ 974,195 $ 1,253 $9,406
Total 77.9 714.5 686.4 86.7 1,565.5 988 1,778.4 82,733 66,667 $ 75,109,931 $ 1,127 $1,839,865
52
Annex 2. Load flow analysis allowable voltage drop

Allowable voltage drop by Uganda standards are as following:
On 33 kV lines: 10%
On 11 kV lines: 10%
On LV lines: 6%
The power transformers at 132/33 kV and 33/11 kV substations are equipped with on-load tap changers
which can be adjusted to compensate for voltage fluctuations in the source lines and maintain rated
voltage at the outgoing bus. However, after power flow analysis of the “existing system” model was
carried out, the voltage-drop at the furthest end of 33 kV line was noted as high as 31%. Moreover, the
Ugandan grid code standards do not give a clear guide for relational voltage drop at different points in
the system. It is therefore recommended that the following general guide for allowable voltage drop at
different points in the system.
Recommended Voltage Drop Guidelines

Nominal Voltage 230V
Maximum Voltage 106% or 244 Volts
Minimum Allowable Voltage at Service Entrance 90% or 207 Volts
Voltage Drop Allowable on the MV System 7.0% or 16.1 Volts
Voltage Drop Allowable on the Distribution Transformer 2.0% or 4.6 Volts
Voltage Drop Allowable on the LV System 2.5% or 5.8 Volts
Voltage Drop Allocated for the Service Drop 0.5% or 1.1 Volts
According to the above guidelines for voltage drop the minimum voltage at the various locations would
be, as shown below.
Minimum Voltage Drops at Various Points

Substation Bus 102% (234.6 volts)
MV Bushing of Dist. Transformer 95% (218.5 volts)
LV Bushing of Dist. Transformer 93% (213.9 volts)
End of LV System 90.5% (208.1 volts)
Service Entrance Meter 90% (207 volts)
53
Annex 3. Organization chart for the service provider

Year 2018
General Manager 1
Assistant 1
Commercial services 7 Operations 9 Engineering 1 Adm and Support 4
Comm. Manager 1 Operations Manager 1 HR and Adm 1
Back office 1 Supervision 3 Accounting 1
Key accounts - Linemen 3 Legal and Regul. 1

Kasanda 1
Customer Reps 2 Mubende 1 IT 1
Kasanda 1 Hoima 1
Mubende 1 Other -
Hoima 1
Warehouse 2
Technicians 3
Kasanda 1
Mubende 1
Hoima 1
54
Year 2022
General Manager 1
Assistant 1
Key accounts - Linemen 29 Legal and Regul. 2

Kasanda 10
Kasanda 2 Hoima 10
Mubende 2 Other 1
Hoima 2
Warehouse 3
Technicians 6
Kasanda 2
Mubende 2
Hoima 2
Year 2027
General Manager 1
Assistant 1
Key accounts 1 Linemen 34 Legal and Regul. 2

Kasanda 11
Kasanda 3 Hoima 11
Mubende 3 Other 3
Hoima 3
Warehouse 3
Technicians 9
Kasanda 3
Mubende 3
Hoima 3
55
Summary by year
Employees by function 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
General Manager
1 1 1 1 1 1 1 1 1 1
Assistant
1 1 1 1 1 1 1 1 1 1
Commercial services
7 9 11 13 15 16 18 19 21 22
Comm. Manager
1 1 1 1 1 1 1 1 1 1
Back office
1 1 1 1 1 1 1 1 1 1
Key accounts
1 1 1 1 1
Customer Reps
Kasanda
1 1 1 2 2 2 2 2 3 3
Mubende
1 1 1 2 2 2 2 2 3 3
Hoima
1 1 1 2 2 2 2 2 3 3
Technicians
Kasanda 1 1 2 2 2 2 3 3 3 3
Mubende 1 1 2 2 2 2 3 3 3 3
Hoima 1 1 2 2 2 2 3 3 3 3
Operations
9 14 21 28 37 39 41 42 43 44
Operations Manager
1 1 1 1 1 1 1 1 1 1
Supervision
3 3 3 3 4 4 5 5 6 6
Linemen
Kasanda
1 3 5 7 10 10 11 11 11 11
Mubende
1 3 5 7 10 10 11 11 11 11
Hoima
1 3 5 7 10 10 11 11 11 11
Warehouse
2 2 2 3 3 3 3 3 3 3
Engineering
1 1 2 2 2 2 2 2 2 2
Engineer 1
1 1 1 1 1 1 1 1 1 1
Engineer 2
- 1 1 1 1 1 1 1 1
Supporting
4 5 6 8 9 10 11 12 13 13
HR and Adm
1 1 1 2 2 2 3 3 3 3
Accounting
1 2 2 2 2 2 2 2 2 2
Legal and Regul.
1 1 1 2 2 2 2 2 2 2
IT
1 1 2 2 2 2 2 3 3 3
Other
- 0 (0) (0) 1 2 2 2 3 3
Total staff
23 31 41 52 65 70 73 78 80 82
56
Annex 4. Non distribution infrastructure capital requirements

Year 2018
Item Unit costs Qty Total US$
Vehicles
4x4 pick ups $ 35,000 13 $ 455,000
Bucket trucks w/ equipment $ 164,000 3 $ 492,000
Subtotal vehicles $ 947,000
Tools
Hot sticks $ 400 14 $ 5,600
Lineman toolkit $ 250 21 $ 5,186
Work uniform $ 25 30 $ 760
Boots $ 60 21 $ 1,245
Ladders $ 250 26 $ 6,500
POS handhelds $ 500 12 $ 6,000
Other tools & equipment $ 1,000 7 $ 7,000
Subtotal Tools $ 32,290
Spare parts
Meters $ 60 200 $ 12,000
Conductors - mts $ 0.8 10,000 $ 7,500
Service cable - mts $ 0.7 10,000 $ 7,000
Secondary cable - mts $ 2.0 4,000 $ 8,000
Distribution transformers - units $ 4,130 6 $ 25,155
Poles - units $ 250 56 $ 13,889
Hardware, insulators, joints, fuses, etc - lot $ 15,000 2 $ 22,500
Subtotal spare parts $ 96,044
Communication
VHS radios $ 200 21 $ 4,149
Antennas $ 500 3 $ 1,500
Mobile phones $ 300 14 $ 4,073
Subtotal Communication $ 9,722
IT business systems
Accounting module $ 2,000 4 $ 8,000
Network module $ 2,000 4 $ 8,000
Server and UPS $ 8,000 3 $ 24,000
Subtotal IT $ 40,000
Office equipment
Hardware and Software $ 1,000 21 $ 21,445
Furniture $ 500 21 $ 10,722
Printers $ 500 5 $ 2,500
Other office equipment $ 500 21 $ 10,722
Subtotal Office equipment $ 23,945
Total initial non-distribution infrastructure CAPEX $1,149,001
57

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USAID – Uganda Master Plan Project

Cooperative Agreement No. AID-OAA-A10-00028

September 19, 2018

Prepared by NRECA International

USAID – Uganda Master Plan Project

September 19, 2018

List of Acronyms & Abbreviations

AAAC All Aluminum-Alloy Conductor

REA Rural Electrification Agency

Description of Central Service Territory

Expansion of the distribution system in CST

1 See Figure 12 below

Off grid areas in the CST

Table E2. Summary of mini grids evaluated in the CST

Item – US$ million 2018 2019 2020 2021 2022

Figure 1. Electricity service territories in Uganda

Description of Central Service Territory

Service Provision in the Central Service Territory

Figure 2. Existing distribution system in CST

CST Staffing Plan

Commercial services Operations Engineering Adm and Support

Comm. Manager Operations Manager HR and Adm

Back office Supervision Accounting

Key accounts Linemen Legal and Regul.

Service Expansion Potential

Grid expansion: methodology & results

Table 3. Assumptions for penetration levels and growth

Table 4. Assumptions for consumption per household & consumer growth

kWh/cust- 30% 50% 60% Years 2-5 Years 6-10

kWh/cust- 70% 100% 100% Years 2-5 Years 6-10

Figure 4. Household clustering methodology

Mubende Kakumiro 33 6 3,672 96

Figure 5. CST grid expansion projects.

Financial analysis of expansion projects

Table 7. UEDCL Tariffs and connection charges

Table 8. Operating expense parameters

Total 132 121 62,375 $66.48 $1,066 $2.188

System reliability investments

2018 2020 2022 2022-27

Mutundwe Mityana 300 6 6.90 760 9.0

Base case load flow analysis of CST

Total 790 11 848 7.7%

Voltage drop analysis with expansion projects

Nkonge Mubende 764 6.4 21.6 916 14%

1. Install one capacitor bank at Mutundwe_Mityana feeder.

Mutundwe Mityana 341 6.9 3.8 92 1%

Nkonge Mubende 764 6.4 7.3 540 8%

Total 1105 13.3 632 4.8%

CST characteristics with 2022-2027 load levels

Figure 9. Modeling of 2022-27 scenario with interventions included.

Table16. Costs associated with system reliability interventions.

kWh/cust- 20% 50% 75% Years 2-5 Years 6-10

kWh/cust- 50% 75% 100 Years 2-5 Years 6-10

Total 17,752 15,736 3,365 $18,842,495 $1,197

Figure 11. Identified off-grid areas in the CST

Table 21. List of prioritized mini grids in the CST

Cost per Cost of

Cost per Cost of

Customer growth and demand projections

Figure 13. Consumption forecast in the CST in GWh

Financial analysis of CST

Table 25. Employee growth adjusting to growth in consumers

Administrative & other