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Uganda: Power Tariffs Reduce By Shs8

CategoryPress Releases
TagsElectricity tariffs, Regulatory and Governance

Electricity consumers across the board will in April and June pay less by an average of Shs8, according to the new tariff schedule released by the Electricity Regulatory Authority (ERA).

For instance, domestic consumers will pay Shs8.8 less than before for each unit above the 15 units.

Each of the first 15 costs Shs250.

Commercial users will pay Shs9.4 less while medium industrial consumers will pay Shs8.5 less. 
Large and extra-large industrialists will pay Shs6.5 and Shs4 less, respectively while street lights will pay Shs8.3 less. 
The new tariffs shall apply from April to June after which they will be reviewed.

Domestic consumers will now pay Shs760.2 per unit compared to Shs769 paid in the first quarter.
Commercial consumers will pay Shs675.4 down from Shs684.8 while medium industrial consumers will pay Shs604.7 from Shs613.2. 
Large industrial consumers will pay Shs371.2 down from Shs377.7.

The 37 extra-large industrial consumers, who consume 24 per cent of Uganda’s power, will pay Shs307.9, down from Shs311. Street lighting will cost Shs742.8 from Shs751.1.

Changes in performance parameters

According to ERA, the new tariffs were arrived at due to changes in the performance parameters of Eskom and main power distributor, Umeme that are both in last leg of their concessions. 
Umeme’s 20-year power distribution concession, which started in 2005, will expire in 2025 while Eskom’s power generation concession will end in 2022. 

ERA has also approved new performance parameters for Umeme running in the period between 2019 and 2025. 
The new Umeme performance parameters principally touch on distribution, operation and maintenance costs, collection targets and distribution losses.

While Umeme requested for Shs235b, in distribution, operation and maintenance costs for 2019, Shs255b in 2020, Shs274b in 2021 and Shs287b in 2022 among others, ERA set rather stringent targets.

The power distributor was awarded $41.8m (Shs155.8b) for 2019, a difference of Shs79.2b from what it had requested, which only reduces even further in 2020 to Shs152b, Shs156b in 2021 and Shs163b in 2022. 
Customer connections, which in turn require more staff, were down played with Ms Ziria Tibalwa Waako, the ERA chief executive officer, during a stakeholder engagement, saying additional staff were not necessary since most Ugandans had been connected on the prepaid system. 

A number of factors, including exchange rate, core consumer price index alongside international price of fuel and producer price index, which stands for materials manufactured outside Uganda are factored into the final price of electricity.

For the second quarter of 2019, tariffs were set based on an exchange rate of Shs3,687.5, indicative of the shilling appreciation against the dollar from Shs3,728.21 last quarter representing a 0.43 per cent change in consumer price index. There was a 0.88 per cent change in imported products while the price of fuel dropped by $1.5 per barrel from $65.33 in the first quarter to $63.83 in the second quarter.

Impact of recently launched Isimba dam 

Government has in the last five years indicated that power tariffs need to come down. 

However, they continue to be high despite launch of addition generation capacity. For instance, the recent launch of 183.2 megawatt Isimba dam, whose power is sold below US 5 cents, is yet to have a major impact on tariffs. Only three units of Isimba dam out of the four units can be run regardless of an increase in demand because of the danger they would pose to the Shs3b Mbulamuti ferry. Consequently, the average price of electricity bought from all the dams which has a bearing on the tariff has not yet dropped. An adjoining bridge, connecting Kamuli and Kayunga districts, whose construction is underway, ought to be completed for Isimba dam to fully run its four units, subject to increased power demand.