News
Pull the plug... and pay Umeme $65m fine
A special committee headed by Gen Salim Saleh has been set up to investigate power tariffs and recommend the method of termination of Umeme, a joint venture between South Africa’s Eskom and Globeleq. Photo/MORGAN MBABAZI
Posted Monday, October 19 2009 at 00:00
On the option of reverting to the former Uganda Electricity Board, officials said this would only be possible if the government were ready to pay a higher subsidy than it already is to keep tariffs down and deal with inefficiencies.
Under UEB, the government was subsidising costs heavily and the public was merely paying a token, said Mr Mugunga.
In a period of seven years, the government promulgated a new Electricity Act and established the Electricity Regulatory Authority, unbundling UEB into companies responsible for generation, transmission and distribution.
Meanwhile, details in the probe report show the consumer tariff was based on inflated fuel consumption figures for the thermal plants that were brought in to supplement dwindling hydro supplies, system loss figures and above market rates for money borrowed to meet working capital requirements.
The probe found that making adjustments on these heads and a number of other items could knock as much as Ushs 188 off the consumer tariff which would translate into a 44 per cent reduction.
At the time the energy sector was almost dysfunctional under UEB, whose operations were hampered by debt and operational inefficiencies.
The concessions were intended to attract badly needed investment, cut down the high level of losses and lower the tariff.
Mugunga argues that the concessions are long-term agreements and their overall impact on the sector may not be realised in the short term.
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