Umeme seeks bonus for network
Posted Wednesday, March 12 2014 at 02:00
Power distributor, Umeme, has said if the government does not reinstate the bonus it was getting from excess energy sales, its 540,000 consumers will continue suffering with an unstable network.
The company said it needs the money to refurbish the network that has not had a major upgrade since 1962.
“The Electricity Regulatory Authority’s amendments will deprive us of money with which to improve the network,” Mr Stephen Illungole, the Umeme media manager, told the Daily Monitor on Tuesday.
“You will continue suffering a dilapidated and an unstable network,” he added.
The company is contesting a decision by the regulatory body which amended the distributor’s Supply of Power Licence in 2012, claiming the changes were not made in good faith.
ERA scrapped the bonus, through which Umeme was reportedly earning a free Shs16 billion annually as long as more power is generated.
The amendments also meant that the regulator had to reconcile the amount the power distributor might have.
Umeme tells ERA that it paid the Uganda Revenue Authority in income tax vis-a-vis what it actually paid.
However, the regulator insists that incurred costs are not reasonable since Umeme has nothing to do with increased generation of electricity.
When Umeme customers pay their electricity bills, they absorb the costs associated with the variables.
Recently, the power distributor asked the regulator to approve a tariff increment to help the company recover the Shs37 billion it has lost since August last year when ERA stated effecting the reconciliation.
For such an increment to be legally acceptable, the regulator has to consult the public about any proposal on the tariffs.
Mr Luka Buljan, a consultant for Actis, a subsidiary of the Commonwealth Development Corporation that owns Umeme, said Umeme should be able to choose which source of funds to use to invest in the network.
“Any business can decide how to fund its investments. It can be from debt, operating cash flows, equity and free cash...” Mr Buljan said.