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Uganda: UMA Cries Foul Over Diesel Duty
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New Vision (Kampala)
2 July 2008
Posted to the web 3 July 2008
Ibrahim Kasita
Kampala
THE SCRAPING of the waiver on excise duty for manufacturers' diesel generators will increase production costs, the Uganda Manufacturers Association's (UMA) chairman has said.
Gideon Badagawa said the high costs of production would be due to high costs of power and would lead to an increase in the prices of locally-made goods.
The waiver on excise duty for diesel generators was terminated in this year's budget. Since 2005/06, manufacturers' diesel generators have been exempted from excise duty. The termination took effect on July 1. The Government expects to raise sh18b.
"This measure shall greatly cost industrial production and value addition especially now that even the anticipated 50MW shall not be here until October."
"The minister or Parliament should stay the decision to remove the waiver until the 50MW are on the grid," Badagawa appealed.
"This is in view of the high cost of fuel and electricity and also in consideration that Aggreko is already proposing to increase power tariffs."
He added: "Our neighbours in Kenya and Tanzania are producing over 1,000 MW each."
Badagawa said the power problem puts local industries at a competitive disadvantage and the Government and Parliament should be sensitive.
The UMA chief added that the Government and the private sector must promote and encourage investment in renewable energy sources, especially solar.
"For instance, we are asking the Government and Parliament to enact a law that requires approval of housing licences to be based on inclusion of solar installation plans," he said.
"This will help free up power (hydro and thermal) to the industry sector. If countries like Spain have instituted such policies, what about us who enjoy the sun all year round? This potential is not being exploited."
A source said: "The Government must ensure sufficient and reliable electricity at an affordable price."
"We have been facing the problem of power insufficiency and regular tariff rises, which has affected our business by reducing our competitiveness regionally and internationally."
The source said scraping off the tax waiver on diesel would erase the gains manufacturers had attained.
"These high costs will have to be passed to the consumers in order for the manufacturers to survive."
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In his budget speech, the finance minister, Ezra Suruma, said since 2005/06, the Government had been undertaking measures to end the power crisis.
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