Regulator cuts power tariffs by 10 percent

Dec 28, 2009

THE Electricity Regulatory Authority (ERA) yesterday announced a 10% reduction in electricity prices in a move to ensure competitiveness and make power affordable for Ugandans. The prices take effect from January 1.

By Ibrahim Kasita

THE Electricity Regulatory Authority (ERA) yesterday announced a 10% reduction in electricity prices in a move to ensure competitiveness and make power affordable for Ugandans. The prices take effect from January 1.

Domestic consumers, meaning households, will have to pay sh385 per unit, down from the previous sh426. Tariffs for street lighting have dropped to sh364, down from the previous sh404 per unit.

For commercial use, which includes business premises, electricity consumption will cost sh358 per unit, down from the previous sh399.

Medium industrial consumers will have to pay sh333, down from almost sh370 per unit. Large industries will see a reduction of only 1% since they are already paying less than other consumers. Their tariffs will now be about sh185 per unit, down from sh187.

Announcing the price reduction at the Uganda Media Centre, ERA boss Frank Sebbowa, explained that reasons for bringing down the tariffs included increased energy generation by new entrants and lower loss targets set for Umeme.

The loss target for 2010 will be 28%, down from the current 31%.
Other factors are improved collection targets, reduced working capital allowances for Umeme and a stronger Uganda shilling against the US dollar, he noted.

“The above tariffs require a subsidy of sh8b in the first quarter of 2010 for the large industrial category. This excludes the subsidies paid to the Aggreko Mutundwe plant and the payments to other thermal plants,” he explained.

He noted that tariffs would go down further, by 27%, if the Government accepted to waive the debts left by the defunct Uganda Electricity Board.

Sebbowa explained that the Jinja hydropower complex will continue to deliver 135 megawatt, the Aggreko Mutundwe plant between 45 and 50 megawatt and the Namanve heavy-fuel thermal plant 50 megawatt.

He said the Kiira thermal plant will remain operational until Invespro installs its 50 megawatt heavy-fuel thermal plant in Jinja. Kakira Sugar Works, which generates power from sugar waste, is supplying another 12 megawatt.

Hilary Onek in his speech read by his deputy, Simon D’Ujanga, said additional reduction in the tariffs will be undertaken after the Cabinet has reviewed and renegotiated the Umeme concession agreements.

He noted that as much as investors needed to be protected, they should not make consumers of electricity pay for “non-existent or exaggerated costs”.
To ensure further reductions in tariffs, the electricity sector needs to minimise its inefficiencies, he noted.

Onek said the Government was committed to helping Umeme fight power theft. He called upon Ugandans to fight vandalism of electrical equipment such as wires. He welcomed Umeme’s decision to introduce pre-paid meters next year.

“This reduction, though still small, is a beginning of the efforts of the NRM Government to ensure that electricity, being a basic need and a lubricant in the production process, becomes not only affordable to the majority Ugandans but also available,” he concluded.

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