Aggreko embroiled in Ugandan dispute over payments and blackouts

AGGREKO, the Glasgow-based temporary power company, is embroiled in a dispute which has led to energy blackouts and civil unrest in Uganda.

The company has recently shut down its 50 megawatt Mutundwe power plant in the African country, blaming problems with supplies of diesel used to fuel the plant due to supply disruptions along the Uganda-Kenya import route.

But reports in Uganda claim the plant’s shutdown is linked to a wider financial dispute between Aggreko and other power generating companies, and the government.

Violence broke out in some parts of Uganda’s capital Kampala last week as angry business people protested over the impact of the power outages caused by the shutdown.

Power rationing was recently announced by one of the main electricity suppliers in the country following the plant closure.

The deputy secretary to the treasury in Uganda, Keith Mukahanizi, was last week quoted as confirming that the government owes Aggreko money.

Although a spokesman for Aggreko said he was not aware of the financial dispute claims in Uganda he stressed that the nature of the company’s international power business, which operates in many emerging markets, meant problems sometimes arose. He added that provision was made in the firm’s accounts in cases of delays or non-payment for energy generated.

Other generators in Uganda have reduced their production in recent months, blaming non-payment by authorities which have been relying on temporary power producers to make up for a shortfall in the nation’s energy supply.

Two power generators have also withdrawn from the country prompting speculation that the Scottish business, which has shut down two other plants in Uganda this year, could also leave. Aggreko’s international business has been a major factor in its dramatic growth in recent years. Last month the company’s chief executive Rupert Soames raised profit forecasts for the full year and said the business was continuing to see strong demand in its international power division.

Headline revenue in the third quarter rose 13 per cent, helped by a 20 per cent increase at the international division. New orders were secured in Kenya and Brazil, and capacity on hire at the end of the quarter was 21 per cent ahead of last year’s figures.

Soames said although the prospects for the global economy remained uncertain, the company had “good momentum” going into the fourth quarter of the year.