The New Vision newspaper in Uganda recently ran a story that Uganda Electricity Generation
Company Ltd (UEGCL) vows to bring down electricity tariffs with a 50% increase
in the quantity of electricity produced over the next three years. The story
indicated that Government has adopted a new energy policy direction, which
gives UEGCL the mandate of implementing agency for the construction of
Government flagship projects of Karuma (600MW) that will be 85% complete by
2017, Isimba (183) MW that will be completed by the end of 2017 and
construction of Ayago(600mw) slated to start by the end of 2016. UEGCL’S
commitment to bring down power tariffs that have haunted the electricity sector
for a long time is commendable.
The reality is that
power remains generally pricey for many in Uganda considering that more than
half of the populations live below the poverty line. Yet, increasing power
tariffs has become a common trend year after year. Even recently, power tariffs
were increased where domestic consumers now have to pay shs.531 for each unit
of power from the previous Shs.518.7. However, UEGCL should also be mindful
that increase in the power production alone will not bring down the tariffs.
Remember this was the same promise made during the building of the construction
of the 250mw Bujagali hydropower dam but on completion the tariffs
increased even after decommissioning of the thermal power that used to use
millions of litres of expensive fuel.
Government must first
tackle the issue of corruption, mismanagement and lack of transparency in the
power sector that remains the biggest reason for high power tariffs. The sector
has been marred with lack of transparency in deal making, profiteering and
shady contracts. Construction of dams in Uganda has had a history of inflated
costs, lack of commitment and unnecessary delays. For instance, the unit cost
of the Bujagali hydro-power dam is still the most expensive in the whole world
of power projects.
To date, the Karuma dam is still struggling to
take off and already the price is also the highest in the world. Secrecy
continues to surround the terms in the Karuma contract moreover endless
promises have been made on when this project will finally take off. Electricity
Regulatory Authority(ERA) has also proved an incompetent regulator. While S.16
of the Electricity Act guarantees the independence of ERA, the same law
subjects it to government policing.
These existing
weaknesses in regulation are the reason why under its watch, power tariffs have
more than doubled in the past few years. In 2006, for instance, the tariffs
increased by 35% in June and 41% in November and in 2012, the power tariffs
increased by 69% for domestic consumers and 56% for industrial users. ERA has
failed to find long term solutions to the high tariffs and the darkness that is
engulfing the country. The problem of high power tariffs in the power sector is
deep rooted and attempts to solve it and deliver affordable power to Ugandans
without tackling some of the above mentioned issues will only be futile.
dianakarakire@gmail.com
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