Juba’s electricity woes explained
The residents of Juba City, on 10th January, were shocked to receive a notice from Juba Electricity Distribution Company Ltd (JEDCO) informing them that the utility company had been forced to halt electricity supply effective 12th January (yesterday) due to lack of payment of foreign currency by the government to run its operations.
Livid electricity consumers in Juba immediately took to various social media platforms demanding answers and castigating the government.
The letter to its customers read in part, “Dear valued customers, Juba Electricity Distribution Company Ltd (JEDCO) regrets to inform all its customers that it has been forced to halt electricity supplies starting the morning of Tuesday, January 12, 2021, until further notice.”
“Despite extensive efforts by all stakeholders to prevent this unfortunate action, no workable solutions have been agreed to on time. The Republic of South Sudan government has not provided the foreign currency required to make long-overdue payments for the bulk energy Ezra Construction and Development Group supplies to JEDCO,” the letter added.
Interestingly, on 9th January, another company, Ezra Construction, and Development Group (ECDG), which ostensibly runs the power plant in Juba, had written to Juba Electricity Distribution Company Ltd (JEDCO) a letter titled ‘Final Ezra Power plant Shut-down notice’ in which the former notified the latter about the imminent shut down of the power plant.
“Ezra Construction and Development Group (ECDG) is hereby writing to your office to notify you that the Ezra power plant is due to shut-down on 12th January 2021. In reference to several communications with the different stakeholders and lastly a letter dated 05th January 2021 addressed to the Hon. Minister of Energy and Dams in which you were provided a copy, we stated that we were experiencing a low-run of fuel which would allow plant operation for utmost 5 days,” the letter read in part.
“It is unfortunate that there has been no action taken to deter the above occurrences and therefore the plant will shut down effective the above-stated date until further notice,” the letter grimly warned.
In what amounted to a knee-jerk reaction, Juba Electricity Distribution Company Ltd (JEDCO) on the same date wrote to Peter Marchello Nasir, the Minister of Energy and Dams, a letter referenced ‘Notification of total power blackout by EZRA power plant.
“We have been given a letter by the bulk power supplier EZRA Construction and Development Group (ECDG) on 9th January 2021 that states the power plant has already exhausted all necessary resources to run the power plant,” the letter read. “The letter also explicitly states that total power outage from their end is imminent, the resources they have according to the letter, can only take the power plant until Tuesday of January 2021.”
“It is to be recalled that JEDCO had notified your office with the latest letters dated 24th of November 2020, then 1st of December 2020 and the final one being on the 10th of December 2020, which are all attached with this letter on the subject matter of shortage of allocation of foreign currency to be paid for the bulk energy supplied by ECDG. The letters were all stating the challenges faced by the bulk energy supplier to run their power plant,” the letter to the energy minister read.
However, by Monday evening the electricity company and the government of South Sudan said they had reached a deal. The government was mute on the compromise reached but JEDCO put out a statement saying the shut-down had been averted for the time being.
“A last-minute solution has been found to stop the plant by the Ezra Construction and Development Group to shut down the Juba power plant.
The Government of the Republic of South Sudan has intervened, and all stakeholders are now urgently working together to make sure this drastic action never happens to the future,” JEDCO said. “Following to this latest intervention, the Juba Electricity city distribution company (JEDCO), will NOT disrupt any of its services and continue to provide all its customers with safe and reliable electricity supply.”
Juba Electricity Distribution Company Ltd (JEDCO) and Ezra Construction and Development Group (ECDG) however seem to be ‘siamese twins conjoined at the hip’. According to a past PowerPoint presentation by EZRA Group which Radio Tamazuj has seen, the group has several companies including Ezra Construction, E.L Construction, Ezra General Trading, Ezra Juba Power, SABA General Trading, Ezra Transporters, and Ezra Apartments.
Radio Tamazuj sounded out the managing director of Ezra Group, Ghebrengus Ezra, and he said the pending power shut down had been put off after a meeting with the government and other stakeholders.
“We solved it. We had plans to shut down on 12th January 2021 but today (Monday) we held a meeting with the government and all stakeholders and resolved the problem already,” Ezra said. “Our reason is the problem of hard currency, so they said they will be giving us continuous operation expenses. They released US$ 3 million and they promised to continue giving us. They approved the release of the US$ 3 million.”
He said the company has operated for almost 14 months but in this period they only received US $ 3 million at commencement.
“Right now we are operating almost 21 Megawatts and we have more than 20,000 customers so our monthly operational costs and expenses are US$ 3 million. So they promised from now to give us that money so we will not shut down unless something happens,” Ezra said.
According to Ezra, their agreement with the government of South Sudan runs for 17 years and the project is a Build-Operate-Transfer (BOT) contract which implies they will hand over the plant to the government of South Sudan when the contract ends.
“We signed a contract for 100 megawatts but we have installed 21 megawatts up to now. The demand is growing and we are installing another 21 megawatts next year,” he said.
Asked about the challenges the company is facing, Ezra said, “Our challenge is only hard currency. You know, according to our agreement with the government, we collect tariffs in local currency-South Sudanese Pounds (SSP) at the central bank rate. The tokens we sell to the public are based on the central bank's daily rate. But the government has not been giving us dollars. According to our agreement, the government is supposed to take the SSP we collect and give us dollars for fuel, spare parts, operational management fees, etc. For salaries and local expenses, we use SSP. All these need hard currency. So we are supposed to get hard currency from the central bank according to our agreement.”
“We have more than US$ 28 million in local currency. We have collected more than SSP 4 billion in our bank account. So this is our only challenge, there is nothing else and everything is operating smoothly,” Ezra added. “We have to import fuel from Mombasa and pay for it in hard currency. We pay for spare parts from Europe in Euros and then we have to pay the expatriate engineers in hard currency also. So for the plant to operate smoothly, it needs hard currency.”
Ezra revealed that they also inked a Power Purchasing Agreement (PPA) with the government which stipulates that the company should be paid the equivalent of what they collect from the public in hard currency.
Asked how long they had not been paid, Ezra said, “14 months. We were only paid US$ 3 million once at the start and they have now added another US$ 3 million. But we need the US$ 3 million US dollars every month. We have almost SSP 4.5 billion in our account.”
Ezra said they have employed 156 staffers, 20 percent of whom are foreigners.
“We also have a training center where the foreign experts train the local staff. This is so that the citizens can take over operations at the plant when we hand over to the government.”
He stressed, “We really need support and guarantees from the government to operate smoothly. You know, other foreign companies came up with similar projects but failed. For example, an Italian electrical company called Ascot came and asked the government of South Sudan for a sovereign guarantee before setting it up but the government could not give it to them. So they left the project. So we came, because we have been in South Sudan for a long time, we took up the project. We used our cash and injected it in because the project was over US$ 100 million.”
The managing director said his company has brought in a refinery to cut the cost of importing fuel for the plant, “after one year we will not even need dollars for fuel because we will use the crude oil from Upper Nile or Bentiu States.”
He said Kenya Commercial Bank is demanding US$ 11 million from JEDCO because the bank gave them a loan in two tranches to buy fuel. “They gave us US $ 4.7 million twice to import fuel and we have not yet paid them. So we appeal to the government to solve this problem so that it is smooth operating. Otherwise, we are very happy with doing our projects in South Sudan.”
Tasked to explain the dynamics of the fuels used in the generation of electricity, Ezra said, “Currently we are using Heavy Fuel Oil (HFO) which we import from Mombasa in Kenya. To avoid the high cost of importing HFO, we have already imported a mini-refinery but it will take time to install this refinery. But after installation, we will not even need dollars from the government to import fuel and the electricity tariffs will even be cheaper. When we use South Sudanese crude oil, our mini-refinery, and barges to transport fuel, the price of electricity will be 50 percent cheaper.”
Ezra said the consumers are very cooperative and pay their bills and the company runs a pre-paid billing system.
South Sudan's President Salva Kiir, in November 2019, during the launch of the power plant said the power plant built by Ezra Company Limited in November 2017, will help the world's youngest nation to embark on post-conflict recovery after more than five years of conflict.
"This project marks a major milestone for the Ministry of Energy and Dams and the nation at large. More importantly, it is hoped for us as people that our dreams will not just remain dreams but will become a reality. This project will spur development across the (economic) sectors," Kiir said.
In 2017 the Board of Directors of the African Development Bank Group (AfDB) approved an African Development Fund (ADF) supplementary loan of US $14.57 million to rehabilitate and expand the distribution networks in Juba, South Sudan.
At the time, AfDB said the Power distribution system rehabilitation and expansion project aims at strengthening the distribution networks in Juba to provide reliable electricity supply from existing and future generation facilities and thus satisfy the suppressed load and demand growth in the city.
The project consisted of the construction of 145 km of 33 kV lines; 370 km of 415/230-volt lines; the purchase and installation of 195 transformer stations, as well as 20,000 prepaid meters for connecting 20,000 new customers.
The Board of Directors of the African Development Fund had earlier approved a grant of USD 26 million on 18 December 2013 to finance the project. This amount was used to fund the whole scope of the project which includes recruitment of the project supervision and management consultant and distribution systems construction contractor. The current supplementary loan is approved to cover the budget deficit of the total project.
Presenting the project to the Board, the Director-General, East Africa Regional Development and Business Delivery Office, Gabriel Negatu, explained that South Sudan was facing several challenges to improve the life of the South Sudanese. For him, South Sudan being amongst the poorest countries in Sub-Saharan Africa requires huge support from development partners. “The country’s infrastructure particularly the energy sector, is in its infancy and would require substantial investments to create an enabling environment for economic development,” he underscored, stressing that: “The project will contribute to reduce the inefficiencies of the network and increase electricity access in Juba.”