6 December 2012

Uganda: UMA Rejects the Proposed Automatic Tariff Review

The Uganda Manufacturers Association has issued a statement opposing the Electricity Regulatory Authority's (ERA) planned move to review and implement the automatic power tariff scheme for the next seven years, the body said in a press statement published in a daily newspaper on Dec. 5.

"UMA is deeply concerned about the development as it comes against the background of an increase by 70% and 40% respectively for the large and medium sized industries that happened on Jan. 15," the association said, adding ERA seeks sanction for automatic tariff adjustments based on variables like forex fluctuations, inflation rates and fuel prices which shall translate into higher energy costs to industrialists, which impairs private sector business planning since there is no certainty in costs of production.

The association added that the last increase in power cost has already impaired Uganda's industrial sector competitiveness as indeed confirmed by credible publications like the "Annual Global Doing Business Report" by the World Bank which indicate clearly that Uganda is a high production cost business destination. It added that this situation is now even worsened with the recent joining of the COMESA Free Trade Area which will see low cost producers competing against local manufacturers in Uganda due to the lower power costs that they enjoy.

"UMA as a key power consumer is opposed to the proposed power tariff review and implementation and hereby notifies ERA to stay the proccess," it said, adding this will allow wider consultations on the matter given the centrality of power in driving not only industrial but overall economic growth and development in the country.

The Association added that it has commissioned a study on the electricity subsector to establish the basis for the proposals submitted to ERA so as to make an informed judgment and decision on the matter. The study is expected to be accomplished by June next year.

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