Uganda’s main problem is not Museveni, Besigye, but Umeme

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By Jannette Mugisha
Evidence on how no economy can progress or employ its resources maximum without affordable electricity is overwhelming in Uganda. Our electricity distributer UEDCL signed off their primary role through a lease and management agreement to Umeme Ltd effective 2005.

In 2005, Peak demand was 380 megawatts while available supply was 190MW creating a deficit of another 190 MW megawatts leading to load shedding. Today in 2017, Peak demand has risen to just about 550 MW while available supply ready for consumption is 700 MW (We have more than 150MW of undemanded power). Karuma and Isimba will double available electricity to anything north of 1400MW
In 2005, total consumer connections was 298,000 while that figure is now 1,100,000 customers (Consumers more than tripled but consumption has failed to even double). During the same period interval, Uganda’s population rose from an estimate of 25 million to 40 million.

The proportion of the population using electricity for home cooking and cottage industries like bakeries has fallen flat. Evidence is found in the forest cover that has reduced from 4 to 1.8 million hectares between 2005 and 2015

The UBOS, Uganda National Household Surveys (UNHS) between 2005/06 and 2016/17 have clearly shown how as a country, we have lost the poverty battle to PRODUCTIVITY of our agricultural outputs.
The problem

Using the Q4, 2016 period, Umeme bought a kilowatt hour or a unit of electricity at Shs. 260.9/= and sold it to you on your yaka meter Shs.696.9/= for a domestic consumer (This figure excludes 18% VAT). This big margin between buying and selling price borders treason or what in Luganda they call okulya munsi yo olukwe.
The distribution tariff is so high that you will probably never get a publication of the Weighted Average Distribution Tariff in Uganda under the Umeme regime.

It’s no longer commercially viable to do agro processing without stealing electricity due to the tariff level. Maize our staple crop is sold by poor farmers at as low as Shs.500 as farm gate price because the value chain must factor in an affordable end user price that is affordable to all households including the urban poor.

Over to you the economists in Bank of Uganda and Ministry of Finance, Planning and Economic Development, Uganda to continue blaming the slowing economy on poor rains and our failure to re-export Chinese made merchandise to South Sudan.

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READ: Who exactly owns UMEME?- contract renewal is as treacherous as treason

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  1. I leave here a tariff adjustment methodology for Janette and her readers. Supply had never created its own demand. Put Money in people’s pockets( through employment), they will then afford the electricity.

    Janette will never explain how the energy sector should be financed, irrespective of who is at the reigns. Secondly, i challenge her to post the tariffs in areas that are not managed by Umeme. What tariff does UEDCL charge in the territories they are in charge of?

  2. Why are you comparing the bulk supply tariff to the domestic tariff? If over 60 percent of energy sold is taken by Industries, why then do you compare the average in one set of data( bulk supply tariff) to the largest figure in the other set of data (retail tariffs) Don’t you think you could be comparing apples with oranges?
    Secondly how much is needed to maintain and repair the grid? Where is this amount going to come from? Government Treasury? Donors? Churches and Mosques? If we can get a consistent and timely source of funds for grid maintenance then I will be very excited by your analysis.

  3. ERA is indeed in error to apply a uniform distribution tariff applying in Umeme and UEDCL areas as if they both face thesame energy losses, similar return on investment and similar income tax refunds. Put simply, ERA is in error to make it appear that Umeme and UEDCL have similar revenue requirements, whereas not

  4. David Birungi if you took time to understand the variables in the tarrif adjustment formula, you would establish that most of them were not but of the concession agreement as at 1st March 2005.

    You will establish the effects of the illegal November 2006 “amendments” contrary to the 1999 Electricity Act provisions that mandate ERA to understand regulation.

    If you have some average economic theory to refer too, you will establish the effect in terms of magnitude of electricity AVAILABILITY, ACCESSIBILITY and AFFORDABILITY on economic growth, jobs and household incomes generally

    • How much does it COST the distribution firms to serve the kWh where is it consumed? Why don’t you spew it here so that we of less economic theory can understand whether the margin between bulk tariff and end user tariff is unwarranted.

      Over to you.

  5. David, let me say that I don’t work for any of the licensed distribution companies or ERA. To respond to your question, I would refer you to the Electricity Act where you will find that ERA is supposed to answer such a privileged question.

    That not withstanding, I can refer you to the Lease and Management agreement between Umeme Limited and UEDCL. You will establish that that Umeme reports a 17% energy losses. Umeme has no pump somewhere in Uganda where megawatt hours or even a Kilowatt hour is pumped from.

    The infrastructure belongs to UEDCL not Umeme and any investment done by Umeme is unfairly compensated with the unprecedented 20% return on investment.

    Put simply, Umeme is not doing Uganda a miracle to distribute a kilowatt hour. It’s the consumer punished for all of Umeme selfishness and some times incompetency through the tariff


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