Uganda Government set to increase power tariffs again, March 27 2013

The Electricity Regulatory Authority (ERA) board of directors meet today to decide on the increment of electricity tariffs by between five per cent and 15 per cent.

On the table are proposals to increase the tariff for domestic consumers by 10 per cent, 11 per cent for commercial consumers, five per cent for medium industries, nine per cent for large industries and 15 per cent for streetlights, sources told this newspaper yesterday.

The Daily Monitor could not immediately establish the justification for the proposed increments.

However, electricity tariffs are usually calculated to cover the recoverable costs of the power utilities.

Uganda now joins Kenya, which increased its tariffs early this month. Kenya Power, the utility responsible for the transmission, distribution and retail of electricity, attributed its decision to rising costs and the need to finance capacity expansion.

ERA last increased the tariffs in January 2012 after the scrapping of government subsidies for consumers. Then, tariffs for large scale consumers rose by 69 per cent to Shs312.8 from Shs184.8 per unit. Those of small scale consumers rose by 36 per cent to Shs458.6 from Shs358.6.

A plan to increase the base tariff earlier this year was temporarily stopped by the government to allow for extensive consultations. The plan was part of a two-fold proposal to restructure the country’s hydropower tariff setup.

On top of increasing the tariffs, the ERA had proposed pegging tariffs to variations in the inflation rate, exchange rate and fuel prices. Then, ERA said this was supposed to enable the Uganda Electricity Transmission Company pay the power distributors on time.

The High Court in Kampala has since stayed the implementation of the automatic tariff adjustment because the Uganda Manufacturers Association claimed it needs more time to study the impact of the proposal.
Sources however told the Daily Monitor that with increasing investment in the electricity network, end-user tariffs will inevitably change.

“If we want development, and the (power) utilities to invest in power infrastructure, we have to appreciate that the tariffs will change. They (tariffs) cannot go down while the volume of investments is increasing,” the source said.

Though seemingly modest, these price changes might end up being borne by consumers: industries can easily pass on their effect to the final consumer by increasing the price of their goods and services.

The Daily Monitor
Wednesday, March 27 2013 KAMPALA
By Raymond Mpubani & Nelson Wesonga