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Umeme wants to increase power pricesPublish Date: Mar 01, 2014
Umeme wants to increase power prices
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Umeme managing director Charles Chapman
newvision

  SATURDAY VISION  

By Ibrahim Kasita

Umeme has applied to the Electricity Regulatory Authority (ERA) for an increase in power price per unit to recover sh37.827b, which it lost in the change in the electricity supply contract.

Last year, the regulator modified the supply of electricity licence by ‘removing the undue benefits that Umeme enjoyed’.

The ‘undue benefits’ came from the difference between the forecasted energy purchases and the actual energy purchased by Umeme in a given year.

Another source of ‘undue’ benefit was the difference between projected corporate income taxes and the actual income taxes paid by Umeme in a given year. However, Umeme protested the changes and the matter is still in court.

Umeme has now applied to ERA to increase the cost of electricity per unit consumed to recover the sh37b shortfall. In a February 14 letter, Sam Zimbe, the Umeme manager in charge of regulations, stated that the modification in its supply licence was ‘a change in law event’.

He warned that Umeme reserved the right, under the concession agreements, to apply for remedies relating to a deficiency amount in circumstances where ERA ‘fails’ to approve tariff increases consistent with Umeme’s calculations.

However, Benon Mutambi, the ERA chief executive officer, said a decision had not been made regarding Umeme’s applications.

“We shall consult the public because the law requires us to conduct a public hearing to get comments and feedback,” he said. “We shall also analyse the results and come up with a decision.”

Umeme’s application for tariff adjustments comes hardly a month after electricity prices were marginally slashed.

ERA announced a reduction in domestic consumer prices to sh520.4 from sh524.5 per unit. A unit price for commercial power consumers went down to sh474.4, from sh487.6. The unit price of small and medium enterprises reduced to sh452 from 458.9.

The unit price for the large industry power consumers went down from sh312.8 to sh310.4. However, the cost of street lighting per unit remained at sh488.8.

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Business community reacts to expected increase

By Brian Mayanja

Umeme’s plans to hike power tariffs has caused concern among the business community and manufactures.

Everest Kayondo, the chairman of Kampala City Traders Association told Saturday Vision that if power tariffs were hiked, the small scale businesses would be most affected.

He said it would force some people to start using it illegally.

“Already, the tariffs are high, affecting the costs of production. Internet cafés and printing businesses are closing because they cannot afford to pay the current tariffs,” Kayondo said.

He also argued that if the power tariffs were hiked, the prices of Uganda’s manufactured goods would increase.

Meanwhile, Uganda Manufacturers Association is waiting for communication from Umeme before it can comment on the matter.

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