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Consumers reject Umeme plan to hike power tariffs

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Workers at a power plant. Consumers say Umeme has no justification for increasing power tariffs. FILE PHOTO. 

By NELSON WESONGA

Posted  Sunday, March 30  2014 at  17:43

In Summary

Mr Lameck Wesonga, Uganda Manufacturer’s Association’s assistant policy analyst, said raising the tariff would go against the policy of not increasing rates by 2.5 per cent

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Kampala.

A section of the public has urged the government not to accept a proposal by power distributor, Umeme, to increase electricity tariffs by between Shs33.7 and Shs8.2 per unit.

Mr Lameck Wesonga, Uganda Manufacturer’s Association’s assistant policy analyst, said raising the tariff would go against the policy of not increasing rates by 2.5 per cent.

“One of our recommendations on the pricing was that after the introduction of quarterly adjustments in April, power tariffs would not be increased by more than 2.5 per cent than the previous quarter,” Mr Wesonga said. “Now, does the proposal by Umeme [not] conflict with the provision on the 2.5 per cent?”

He was speaking on Friday in Kampala at a public hearing on Umeme’s proposal.
UMA consumes 60 per cent of the electricity distributed by Umeme.

The proposal
Umeme had in January proposed that the sector regulator increases the tariffs to enable it recover the Shs37.8 billion it “lost” when the Electricity Regulatory Authority amended Umeme’s Power Supply Licence.

ERA amended the licence to ensure that when hydroelectricity generation increases, the electricity users benefit – through lower power tariffs as it happened in 2009 and again in January this year.

It was also meant to ensure that when power generation falls below projected levels, Umeme would be ‘insured’.
Umeme, which ERA had invited to the public hearing to justify its request, was absent.

But Mr Sam Zimbe, Umeme’s general manager corporate and regulatory affairs, said through a March 27 letter to ERA, the issue was not for public debate.

“Umeme Limited regrets that it will not be in position to attend the public hearing scheduled for 28 March…its application for tariff adjustment is based on a pre-approved condition precedent in the Supply Licence, which has materialised and a contractual obligation which is not subject to a public debate,” Mr Zimbe said.

No justification
Ms Joan Kyokutamba, an official from the Uganda Consumers Protection Association, said since Umeme last week declared a profit of Shs84 billion, it cannot convincingly argue its revenue sources have been compromised.

She said ERA should “be more vigilant” in regulating the power utilities because electricity is an essential commodity.
The public hearing came against a backdrop by a resolution by Parliament to terminate the Umeme concession agreement, which should otherwise end in 2025.

The House said the concession agreements had not been drafted by Uganda’s Attorney General’s Chambers as required by the Constitution.
The Cabinet is yet to meet to address itself to the recommendation by Parliament.

The regulator should within the next 30 days have decided on whether to accordingly adjust the tariffs.