A commentary on Uganda’s electricity sector flaws

Uganda’s electricity sector has for a long time needed reform. Effectively addressing energy needs has developmental implications on an economy like improving standards of living, creating employment and building infrastructure like schools and hospitals.

A few years ago, Uganda’s government embarked on an overhaul of its power sector in bid to ensure improvement .The changes included enactment of new laws and establishment of an Electricity Regulatory Authority (ERA), to create utility companies; Uganda Electricity Distribution Company Limited  (UEDCL), Uganda Electricity Generation Company Limited  (UEGCL) , Uganda Electricity Transmission Company Limited (UETCL) and UMEME.

Despite this structural overhaul, the sector is still grappling with problems of high losses, high tariffs and inconsistent rates and blame games as Electricity Regulatory Authority (ERA) which is responsible for regulating the supply of electricity in the country decries UMEME’s inefficiency in its operation. UMEME, a private company responsible for power distribution signed a twenty year contract with Uganda’s government five years ago. ERA officials have informed Ugandans that UMEME cannot be replaced since a contract cannot be breached. Ugandans, thus, must bear UMEME’s incompetence for 15 more years. How can ERA that is supposed to protect the citizens from a poor service provider evoke such an unfair contract yet electricity is the back bone of development of any economy?

UMEME is also planning to levy a flat rate for its domestic consumers starting July 1st 2010. According to UMEME, all consumers who use between 0 and 50 units per month will pay UGX12000per month while those who use between 50 to 75 units will pay UGX26,000 whether they use all the units or not. A public hearing was conducted recently where consumers rejected flat rates but UMEME officials stood their ground defending the institution’s decision. This flat rate will retard the development of rural electrification since most rural dwellers cannot use that much electricity much less afford the lowest charges suggested.

Uganda’s power sector was entrusted to profit making companies at a young and underdeveloped stage. The companies prioritize profit making over accessibility, affordability and availability and contracts signed between the government and these companies favour the companies at the expense of citizens.

As a way forward, UMEME needs to withdraw its currently faulty meters and consider adopting a prepaid meter system as opposed to the flat rate. Further, to ensure efficient delivery, a free trade market should be put in place to enable competition and put inefficient companies out of market. The Commission report into UMEME’s service delivery should be implemented by a reduction of tariffs from UGX 385 per unit of electricity used to UGX 288.

By Doreen Katusiime

An energy advocate

Article source: http://energyadvocate.wordpress.com/2012/04/13/a-commentary-on-ugandas-electricity-sector-flaws-2-2/

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