Cabinet halts free electricity connections

The cabinet has put to a halt implementation of the electricity connections policy, popularly known as the free connections policy.  

This is contained in a communication of the decisions taken by the cabinet during its sitting on Monday at State House Entebbe.  

"Cabinet has agreed to a temporary halt the implementation of the provision of connection subsidies to consumers incognizant of the constraints of the budget and authorized the minister of energy and mineral development to issue a policy direction in the interim with effect from March 1st, 2021to authorize electricity connections to customers who have the capacity to pay for them," the notice issued by the Uganda Media Center reads.  

The ambitious policy that was launched in November 2018 was touted as the silver bullet to increasing electricity consumption through subsidization of last-mile connections among the population.  

It sought to subsidize connections fees from an average of half-a-million shillings, a figure that officials described a barrier to about sh20,000 only.  

The 10-year project is estimated to cost $558m (over sh2 trillion) was to be funded by both government and development partners. Of this amount, sector sources say, the partners had committed $80m (about sh297 billion).  

Implementation of the policy started in January last year intending to achieve 60% access to the utility from about 22% then by 2027. It is spearheaded by the Rural Electrification Agency (REA).  

This was hoped to be achieved through increasing the number of connections made annually from averagely 70,000 to 300,000 annually.  

An August report by the Electricity Regulatory Authority noted that only 201,116 connections were done under the ECP in 2019 alone, 88% of which were done by Umeme while the other distribution utilities on both the National - Grid and Off-Grid connected only 12%.  

This meant that the 2019 connections constituted about two-thirds of the targeted 300,000 annual connections while there were reported 150,000 pending applications as at end of December last year.  

"The low performance in meeting the ECP targets was a result of the failure of licensees (distribution companies) to further pre-finance the connections, as a result of the failure of the REA to avail connection materials or reimburse on time.  

REA's failure to reimburse distribution companies their costs resulted in Umeme suspending new connections in July this year.  

Umeme said in a statement that it had connected up to 245,000 customers and that it demanded $23 million (about sh85.5 billion) for new connections.  

"The delayed new connections process is affecting our collections and loss targets as customers are illegally connecting themselves," Peter Kaujju, Umeme's head of communications said in a statement.  

The company's managing director Selestino Babungi also said in July that they were in discussion with government to open up the policy such that it (Umeme) connects any consumer willing to meet the connection costs.  

He also said that the other option on the discussion table was that government allows them to deploy its capital expenditure allocation ‘to connect customers who have been in the queue for months'.  

Babungi on Wednesday said his company is pleased with the policy direction that allows capable consumers to pay their connections fees. 

Additionally, Uganda Electricity Distribution Company Limited (UEDCL) managing director, Paul Mwesigwa said the development comes at a time when over 10,000 potential customers have long been waiting for connection and that ‘keeping them waiting was not hygienic and orchestrated public anxiety'. 

"It provides an opportunity to serve customers willing to meet their connection costs without undue delays. We shall await regulatory guidance on this matter to proceed as in our approved budget 2020/21 this investment was not envisioned," Mwesigwa said in a response to the New Vision.