The Uganda national regulator has approved an increase in the power prices by an average of 47 percent, to increase money to sustain the power sector.
However, the increase which was earlier scheduled to be announced on 11-Jan-2012 is still awaiting cabinet approval.
Under the new tariffs approved by the Uganda Electricity Regulatory Authority, the prices for households and business premises will go up by 36 percent.
A unit used for household lighting, ironing, listening to radio, and watching television will increase to UGX524 from the current UGX385.6 per unit.
Commercial consumers like shops and kioks will have to pay UGX458.6 per unit from the current UGX358.6.
The prices for small industries like artisans and fabricators will increase by 38 percent to UGX458.9 from the current UGX333.2 per unit.
Big industries will experience the biggest increase of 69 percent. They will be required to UGX312.8 from the current UGX184.8 per unit.
Power for street lighting will cost UGX488.7 from the current UGX 364 per unit.
In order to protect low income earners, the lifeline tariff (First 15 Units) remain unchanged at UGX100 per unit. This means that a consumer with two energy saver bulbs and a radio would on average pay UGX8,000 per month.
The current number of lifeline power consumers is estimated at 480,000 customers, which is about 23 percent of all electricity consumers in Uganda.
The decision will encourage the increase of private sector investment in the power supply sector and also enable the Uganda government to invest in large hydro power projects that can generate relatively cheap and sustainable electricity.
The power has been the major driver of electricity prices in Uganda as it depends on global fuel prices which are unpredictable. The power is believed to be three times more expensive than hydro power.
From 2006, the Uganda government has been subsidizing tariffs for power consumers. This intervention has managed to artificially keep the current domestic power tariff at UGX385.6 per unit.
It is estimated that since 2006, the government of Uganda has incurred about USD1Billion in power subsidies. The Uganda Government has spent UGX1,157Billion on power subsidies between 2005 and 2011.
Without the subsidy, the true cost of electricity in Uganda would be UGX845.8, meaning that the Uganda Government pays the balance which is UGX462 per unit.
The high tariffs were the result of procuring 200 Megawatts of thermal power to bridge the power shortage.