ERA wants UMEME to cut losses
THE Electricity Regulatory Authority (ERA) has turned the heat on the power distributor, UMEME, to reduce energy loss, expand the network and improve customer care.
By Ibrahim Kasita
THE Electricity Regulatory Authority (ERA) has turned the heat on the power distributor, UMEME, to reduce energy loss, expand the network and improve customer care.
“Inspite of investing $76m, impact on losses is minimal, many complaints of poor service delivery, billing and connection still remain,†Frank Sebbowa, the ERA chief, pointed out.
“There is need to address system losses and reduce tariffs through re-negotiating UMEME allowed losses. (Current) system losses are at un-accepted level.â€
The New Vision has learnt that the regulator has told UMEME to cut down electricity losses to 28% by the end of the second quarter of this year from the current 32%, a target that has already been submitted to the Government.
However, UMEME has dismissed such a move calling it “shift of goal- posts. This will ot help to attract the much needed investment in the sector.â€
“We still have an agreement that stipulates us a target to reduce losses to 28% by year seven (2011). “I think this plot is pushed by mischievous and selfish politicians,†Charles Chapman, the UMEME managing director, explained.
“There is need to stick to the current regulatory framework and we believe that the independence of the regulator is key.†Statistics indicate that about 31.6% of the 361MW generated is wasted in the distribution process.
This is about 114MW, enough to power Kampala, Jinja, Entebbe and Mbale. According to the agreements signed between the Government and UMEME, the distribution loss allowance was to be determined in the basis of actual losses experienced in the previous quarter minus 1%.
Therefore, the current loss factor in the tariff is 31.7%. Sources in ERA disclosed that there were discussions to remove the special provision period (SPP) clauses that had unfavourable terms for the Government. This is because the Government had satisfied all the conditions that end the SPP. The conditions included the date on which UMEME, at its sole discretion, terminates the SPP; the bulk supply tariff has not increased in such a manner to result into an increase of more than 10% in the retail tariffs in any given year or an increase of more than 20% in any consecutive three years.
Sam Zimbe, the UMEME general manager, agreed that the conditions for ending the SPP have to be tested to confirm whether they have been met.
“UMEME expects the process to be carried out and the decision made in accordance with the mechanism laid out in the concession agreements,†he said.
“The concession agreements already provide mechanisms for reviews.†Zimbe said they had put in place a “a coherent loss reduction strategy†aimed at curbing commercial and technical losses in the distribution network.
Implementation of the strategy, he said, was thoroughly discussed and shared with ERA and the Government. Some of the strategies that UMEME has planned to do include combating power thefts, improve quality and consistency of billing, rehabilitate the network, improve quality of metering, and introduce pre-paid metering, safety campaigns and sensitisation.
Chapman added that UMEME was focusing on improving customer service, further ensuring safety minimising distribution losses and increasing efficiency. Energy losses are one of the key factors crippling the electricity sub-sector.
These losses are not only impacting the economy negatively but also hinder new investments. High electricity losses also contribute to high power tariffs.
No business or person would like to invest where close to 32% of revenue is lost in power thefts and distribution lines. The main sources of power losses are technical caused by poor and aged transmission and distribution network, while commercial losses stem from illegal connections and a poor billing system.
THE Electricity Regulatory Authority (ERA) has turned the heat on the power distributor, UMEME, to reduce energy loss, expand the network and improve customer care.
“Inspite of investing $76m, impact on losses is minimal, many complaints of poor service delivery, billing and connection still remain,†Frank Sebbowa, the ERA chief, pointed out.
“There is need to address system losses and reduce tariffs through re-negotiating UMEME allowed losses. (Current) system losses are at un-accepted level.â€
The New Vision has learnt that the regulator has told UMEME to cut down electricity losses to 28% by the end of the second quarter of this year from the current 32%, a target that has already been submitted to the Government.
However, UMEME has dismissed such a move calling it “shift of goal- posts. This will ot help to attract the much needed investment in the sector.â€
“We still have an agreement that stipulates us a target to reduce losses to 28% by year seven (2011). “I think this plot is pushed by mischievous and selfish politicians,†Charles Chapman, the UMEME managing director, explained.
“There is need to stick to the current regulatory framework and we believe that the independence of the regulator is key.†Statistics indicate that about 31.6% of the 361MW generated is wasted in the distribution process.
This is about 114MW, enough to power Kampala, Jinja, Entebbe and Mbale. According to the agreements signed between the Government and UMEME, the distribution loss allowance was to be determined in the basis of actual losses experienced in the previous quarter minus 1%.
Therefore, the current loss factor in the tariff is 31.7%. Sources in ERA disclosed that there were discussions to remove the special provision period (SPP) clauses that had unfavourable terms for the Government. This is because the Government had satisfied all the conditions that end the SPP. The conditions included the date on which UMEME, at its sole discretion, terminates the SPP; the bulk supply tariff has not increased in such a manner to result into an increase of more than 10% in the retail tariffs in any given year or an increase of more than 20% in any consecutive three years.
Sam Zimbe, the UMEME general manager, agreed that the conditions for ending the SPP have to be tested to confirm whether they have been met.
“UMEME expects the process to be carried out and the decision made in accordance with the mechanism laid out in the concession agreements,†he said.
“The concession agreements already provide mechanisms for reviews.†Zimbe said they had put in place a “a coherent loss reduction strategy†aimed at curbing commercial and technical losses in the distribution network.
Implementation of the strategy, he said, was thoroughly discussed and shared with ERA and the Government. Some of the strategies that UMEME has planned to do include combating power thefts, improve quality and consistency of billing, rehabilitate the network, improve quality of metering, and introduce pre-paid metering, safety campaigns and sensitisation.
Chapman added that UMEME was focusing on improving customer service, further ensuring safety minimising distribution losses and increasing efficiency. Energy losses are one of the key factors crippling the electricity sub-sector.
These losses are not only impacting the economy negatively but also hinder new investments. High electricity losses also contribute to high power tariffs.
No business or person would like to invest where close to 32% of revenue is lost in power thefts and distribution lines. The main sources of power losses are technical caused by poor and aged transmission and distribution network, while commercial losses stem from illegal connections and a poor billing system.