13 January 2013

Uganda: Power Tariffs to Reduce After 15 Years - Mutambi

With the completion of the 250MW Bujagali power dam last year, many Ugandans had hoped that the time of reduced power tariffs was near, but officials now say the country may have to wait another 15 years.

Speaking at a consultative meeting on impediments to manufacturing, Benon Mutambi, the executive director of the Electricity Regulatory Authority (ERA), said Uganda still had to repay loans that financed the $900m project.

"Though the construction of Bujagali was a public-private partnership, the government's contribution was very minimal with more private sponsorship, which meant Uganda had to pay back the loan," Mutambi told the meeting organised by the Uganda Manufacturers Association (UMA).

Mutambi said servicing such a loan would take between 10 and 15 years. Until then, Ugandans will have to make do with high tariffs, after the government scrapped the power subsidies last year. While power cuts have reduced, Uganda's tariffs remain among the highest in East Africa. Domestic consumers pay Shs 524.5 per unit while commercial consumers pay Shs 487.6. Small industries pay Shs 458.9 per unit while large industries pay Shs 312.8 per unit.

At the meeting, UMA Executive Director Kigozi Ssebaggala named high power tariffs as one of the biggest challenges of doing business in Uganda. He said the situation could be further aggravated if, as ERA recommends, power tariffs are pegged to fluctuations in inflation, the exchange rate, and fuel costs, known as the Automatic Tariffs Adjustment (ATA) scheme.

Manufacturers want ERA to at least allow a six-month period for a comprehensive study on the energy sector. They consume about 70% of the electricity, according to Mutambi. Nevertheless, Mutambi looks at ATA as a more accurate reflection of the power prices.

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