Power Projects and Covid-19: A Practical Analysis of the Relevance of Force Majeure Clauses under the Standardised Power Purchase and Implementation Agreements of Uganda

Document Cited in Related
DOI10.3366/gels.2020.0026
Published date01 August 2020
Date01 August 2020
Pages189-193
Author

Uganda's liberalised and unbundled power sector's generation installed capacity is 1,252.3MW with an energy mix of over 90% generated from renewable sources.1 The national energy policy's objectives include promoting renewable and alternative energy sources.2 Other sector policies3 buttress the goal to increase access to cleaner energy and develop clean energy technologies to reduce Greenhouse Gas (GHG) emissions and meet its Nationally Determined Contribution reduction by 22% by 2030.4

The relationship between Independent Power Producers (IPP) and the state owned off-taker Uganda Electricity Transmission Company Limited (UETCL), is governed by a standardised Power Purchase Agreement (PPA). Government guarantees the obligations of UETCL under a standardised Implementation Agreement (IA) between the IPP and the Government of Uganda.5 The IA and PPA have detailed provisions for force majeure (FM). However, Uganda's contract law does not specify FM as a legal concept. In its stead is the doctrine of frustration where a party may be discharged from a further performance where a contract becomes impossible to perform.6 Accordingly, the application of force majeure in Uganda is a subject of the contract.

On 30th January 2020, the World Health Organisation (WHO) declared COVID-19 a pandemic. Uganda confirmed its first case on 21st March 20207 and enforced strict measures of a lockdown; prohibiting international travel; restricting movement, and restricting the operations of factories and construction sites.8 These measures have affected Generating Companies (GENCOs) by blocking timely access to imported services and equipment; limiting access to construction sites; and incurred costs for extension of the hire period for plant and equipment. In addition to disruption of transportation; supply chains; labour and workforce. This situation has triggered the scrutiny and application of previously abstract FM...

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