Uganda rejects proposed power hikes

BAK · 2007-12-31T01:13:01+00:00

Uganda rejects proposed power hikes By DAVID MUSOKE THE EAST AFRICAN The government has given a welcome New Year gift to thousands of electricity consumers in Uganda by deciding not to increase end-user electricity tariffs. The government position is that end-user electricity tariffs for 2008 should be reducing and, at worst, stay unchanged at the current levels, the chief executive officer of the state-run Electricity Regulatory Authority, Dr F. B. Sebbowa, said. To ensure this, the government made provisions in the 2007/2008 national budget to extend a subsidy to end-user consumer tariffs; this amount, together with the planned substitution of the diesel-based generation plant by cheaper mini-hydro, baggage and heavy fuel oil generation, should ensure no tariff rise during 2008. Dr Sebbowa was reacting to applications to ERA made by utility companies in the country, which want the government to hike end-user energy tariffs. Dr Sebbowa said that although the government had decided not to increase electricity tariffs for 2008, to ensure transparency, ERA had decided to invite the public and all interested parties to view the utility companies applications, now available at the ERA resources centre at its headquarters in Kampala. The deadline for viewing the applications and making comments was fixed for December 31. The applications will be examined by ERA technocrats before a decision is made whether to reduce the current electricity tariffs or to maintain them, he said. The ERA chief said that the government had set aside a total of Ush92 billion ($52.6 million) for one year as a subsidy to support consumer electricity tariffs. The government decision not to increase end-user electricity tariffs comes at a time when the Uganda Electricity Distribution Company Ltd, commonly known as Umeme, is reported to have failed to control power losses. It was reported that Umeme lost 95.29 MW of electricity in the third quarter of 2007. Power distributor Umeme is proposing a 21 per cent increase to the domestic tariff that would push rates from the current Ush426.01 (24 US cents) to 515.41 (29 US cents) per unit. Commercial tariffs would see a 26.5 per cent rise from Ush398.80 (23 US cents) to Ush504.89 (29 US cents) per unit. Large industrial users would suffer the highest increase of 59 per cent, from the current Ush187.20 (11 US cents) to Ush298.20 (17 US cents). Small scale industries will also pay 36 per cent more, from Ush369.71 (21 US cents) to Ush505.51 (29 US cents). Umeme managing director Paul Marie attributed the power losses to a poor and aged distribution network and power theft due to increased power supply during the month of November 2007. The loss was about 37.37 per cent of the 255 MW generated from the Jinja hydropower facilities. But Dr Sebbowa disputed the reasons given by UEDCL for the continued loss of electricity. The reasons given by the utility company are not entirely correct. Evidence obtained from areas where the poor and aged distribution networks have been replaced or rehabilitated does not show a drastic change in energy losses, he said. He said that in addition to poor and aged distribution networks, energy losses could be attributed to commercial losses like energy thefts, non-billing by the utility itself or poor meter reading by its staff. The South African-owned company has undertaken to invest a total of $65 million during the first five years in rehabilitation of the power distribution network. During the first two years, it has invested about $20 million. Electricity consumers have also complained that Umeme is not billing them correctly for power consumed. For several months, they have been giving us estimated bills that are higher than power consumed, one consumer said. Last year, the government gave out over 300,000 energy saving bulbs to every electricity end user free of charge. The move was aimed at reducing 29 MW of power use during peak time generation capacity. In addition, they were estimated to have saved at least 37 per cent of energy bills for those who adopted them. The energy-saving bulbs have also contributed to the decrease in the time devoted to loadshedding of electricity, Dr Sebbowa said. He added that, by thus saving energy, the utility company could sell its power to more consumers. In his national budget speech in June 2007, the Minister of Finance, Planning and Economic Development, Dr Ezra Suruma, said that investment in energy development was critical for improving the countrys competitiveness and output. The 2007/2008 budget continued to support emergency thermal energy supply to mitigate the energy shortfalls in the medium term. The government will deploy cheaper heavy fuel oil thermal generating plants in the medium term to mitigate the use of more expensive diesel plants. Additional resources were also set aside in the Energy Investment Fund, created in the financial year 2006/2007, for the construction of the Bujagali and Karuma hydropower dams. The budget provision is Ush119 billion ($68 million) in the financial year 2007/2008 for development of hydropower plants and related infrastructure. The National Planning Authority (NPA) has proposed the introduction of the Energy Bond as one way of ensuring sustainable financing of the development of the energy sector. The energy bond would be subscribed to by all interested Ugandans. The energy bond would help augment funding for generation of hydroelectric energy in the country. One energy expert has challenged the Uganda government to take the bull by the horns by deciding to meet the costs of funding a new hydropower project from taxpayers money. The government should put aside at least $100 million per year for four years to fund a hydro power project near Jinja. It would save itself from loans from the World Bank and other funders. If it has no capacity to run such a dam, it can concession it out to a competitive bidder, the expert said.

Thread starter BAK
Start date Dec 31, 2007

BAK

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Dec 31, 2007

Fundi Mchundo

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Uganda rejects proposed power hikes

BAK

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Fundi Mchundo

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