Ministers to discuss new power tariff, taxes

What you need to know:

  • According to the ERA, of Shs520.3 weighted average retail cost of electricity in the last quarter, BEL accounted for Shs200.3 (38.6 per cent) while Umeme Uganda Limited accounted for Shs181 (34.8 per cent).

  • The thermal diesel generators, co-generation from sugarcane husks, imports net of exports) accounted for Shs67.1 and Uganda Electricity Transmission Company Limited accounted for Shs29.

  • Eskom Uganda Limited accounted for Shs19.3, rural electrification levies Shs17.1 while the Uganda Electricity Generation Company Limited Shs3.6.

  • The Uganda Electricity Distribution Company Limited accounted for Shs2.

Kampala. 

The Energy ministry will Monday explain to the Cabinet why end-user electricity tariffs remain high despite government’s interventions to check them. 

Once cabinet is informed, the ministry will then later next week explain the same to Parliament. 

Last week, the Speaker of Parliament, Rebecca Kadaga, and the Kassanda North Member of Parliament, Patrick Nsamba accused the government of having obtained “by fraud” Parliament’s approval – last fiscal year – for corporation tax exemption for Bujagali Energy Limited (BEL) to check an increase of BEL’s generation tariff. 

Ms Kadaga and Mr Nsamba’s strong words came on the heels of an increment, by the Electricity Regulatory Authority (ERA), of the retail tariffs for domestic, commercial, medium and large industrial consumers. 

ERA though reduced the retail tariff for the extra-large industries – as a benefit of refinancing of BEL. 

The authority’s explanations for the increase of the tariffs were the depreciation of the Shilling against the Dollar and the increase in the price of crude oil. 

The Shilling had weakened from Shs3, 634 to Shs3, 763 for each dollar due to increase in demand whereas the price of crude oil rose from $60.74 (Shs227, 934) to $74.11 (Shs278, 107) on the back of cuts in production by the Organisation of Petroleum Exporting Countries and Russia to shore up the price. 

Most of the electrical equipment used by the power utilities is imported; it is paid for using dollars. 

When the shilling weakens against the dollar, the utilities use more shillings than before to get dollars. 

On crude, 7MW of the 640MW on the national grid is from heavy fuel oil generators. 

Last year, Parliament exempted BEL from paying corporation tax for the five financial years – starting 2017/18. 

The government, in persuading Parliament to approve the exemption, argued that it would ensure the BEL’s generation tariff, and, consequently, the retail tariffs do not increase. 

 Table showing the old and new tariffs

Consumer category

Old tariff

New tariff

Domestic

718.5

771.1

Commercial

647.6

687.0

Medium industries

591.5

615.3

Large industries

374.4

383.8

Extra-large industries

369.5

314.1

Street lights

701.5

752.8

Source: Electricity Regulatory Authority