Uganda Electricity Regulator Tightens on Distributor

Tuesday, 9th August, 2011

The Uganda Electricity Regulatory Authority (ERA) is to tighten the grip on power distributor, Umeme, by setting new performance targets on losses and collection rates to ensure efficiency.

This comes after the expiry of the special provision period, which started in September 2006 at the height of acute load-shedding due to prolonged drought that reduced Lake Victoria water levels, affecting hydropower generation.

“With the restoration of relative supply in September 2009, we have moved out of the special provision period, which relaxed Umeme’s performance targets,” Dr. Benon Mutambi, the ERA acting head, explained.

He said the regulator was now in position to set the distributor more realistic performance targets on losses, collection rates, customer connections and investments to bring distribution costs down.

However, Mutambi acknowledged that distribution losses have reduced from 35% in the past two years to 27%, which was the target set this year.

He also observed that Umeme’s collection rates have improved from 92.5% in the last two years to 96.2%, while customer connections have increased from 37,000 last year to 51,000.

Mbaga Puzinde, the ERA economist, noted that a reduction of 1% leads to a saving of $3m every year.

“We need to further reduce losses so that we shall need less subsidies in the sector.

“There is need to increase distribution efficiency through reduction of losses and uncollected debts,” Puzinde said.

James Baanabe, the commissioner for renewable energy, called for public engagement to ensure that the available power is utilised effectively and efficiently.

“We need to engage the public so that they become more efficient in using electricity and work on unnecessary power losses,” he advised.

“If we continue to subsidise, the other sectors like health and schools will suffer. We need to see that the sector sustains itself.”

The Government owes sh207.5b to independent thermal power producers.

The payments are direct subsidies to shield the consumers from tariff shocks as electricity prices rose from sh215 per unit in 2005 to sh385.6.

By Ibrahim Kasita: The New Vision Newspaper