Uganda Power Rationing Hits Manufacturers, Coffee Processors

Date : 07/18/2011 @ 4:39AM
Source : Dow Jones News
Stock : Aggreko (AGK)
Quote : 760.4  23.4 (3.18%) @ 12:35PM
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Uganda Power Rationing Hits Manufacturers, Coffee Processors

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The ongoing power rationing in Uganda is hitting manufacturers and the processing of coffee that is at the peak of the 2010-11 (October-September) coffee season, industry officials said Monday.

This is likely to slow the marketing season of the current crop, according to David Muwonge, the head of production and marketing at Uganda's national coffee farmers' body, Nucafe. Coffee processors have been affected most because they normally operate at night and that is when most rationing occurs.

"There is too much coffee coming from farmers, but the processors are not operating at the same pace due to power shortage," he said.

In the past couple of weeks, Uganda's power distribution company, known as Umeme, has been rationing power across the country due to a shortage caused by inadequate generation from fuel-fired thermal plants over unpaid fees by the government.

Last week, the government assured the owners of thermal power plants it would pay at least 300 billion Uganda shillings ($118 million) in arrears, which seemed to ease the situation as two plants resumed generation.

However, Uganda continues to face a shortage of around 50 megawatts of power, following the closure of the diesel-fired Kiira thermal plant operated by London-listed Aggreko PLC (AGK.LN).

The government has yet to renew Aggreko's generation contract, preferring to boost generation from its main hydro power station on the River Nile, by releasing extra water until November, according to Irene Muloni, Uganda's energy and minerals minister.

In a bid to address the public outrage triggered by the power shortage, Uganda's energy regulator last week directed Umeme to restrict rationing mainly to night time, when most households are expected not be using power. However, this is hurting manufacturers, who deal in raw commodities such as coffee, cocoa, tea, fish and horticultural products.

Uganda contracted independent power generators in 2006 in a bid to ease power shortages caused by lower water levels at the country's main hydropower stations following a long drought.

Later this year, some of Uganda's thermal power plants are expected to start using heavy oils produced during the extended well-testing exercise in the oil-rich Lake Albertine rift basin.

Uganda is Africa's largest robusta coffee grower.

-By Nicholas Bariyo, contributing to Dow Jones Newswires; 256-75-2624615

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