Kampala- Uganda Electricity Transmission Company Limited (UETCL), the government agency responsible for buying electricity from generators lost Shs27.3b in energy losses between 2014 and 2018.
Transmission losses (TLF) is energy lost as UETCL moves electricity from power generators to distributors.
UETCL operates under an incentive-based regulation regime meaning the company makes a revenue earning or loss based on its performance against loss targets set by Electricity Regulatory Authority (ERA).
According to a report authored by ERA, the transmission company has consistently performed above target for losses meaning the surplus cannot be recovered through the tariff.
“UETCL lost Shs18.23b [between] 2016 and 2018 for not achieving the loss targets,” the report reveals in part, highlighting loss targets set at 3.3 per cent in 2016, 3.38 per cent in 2017 and 3.37 per cent in 2018.
However, UETCL registered 4.2 per cent in energy losses in 2016, 3.9 per cent in 2017 and 3.8 per cent in 2018.
Not yet commissioned
The losses were attributed to unrealised growth in demand because of the industrial loads which had not yet been commissioned as well as failure to complete some projects.
“UETCL set out to undertake 37 projects. Six projects representing 16.2 per cent were completed on schedule. This had an impact on the set loss trajectory,” ERA says in the report.
Since UETCL is a wholly government owned company, the losses are covered by tax payers.
The recent Auditor General report in which UETCL was mentioned, revealed that more than half of Uganda’s public enterprises are costing taxpayers heavily in losses and would be better managed under public-private partnerships.
ERA has also introduced an incentive mechanism based on energy not supplied by the transmission company to improve power reliability.
“The Authority approved to modify the bulk power supply licence to provide for an incentive-based framework in respect to the minimum standards of reliability and quality of electricity supply, and or unserved energy,” the report read in part.
Energy not supplied is described as the volume of energy to customers (MWh) that is lost as a result of faults or failures on the network.
The report explains that the system, which was benchmarked from the United Kingdom shall prescribe a target for energy not supplied by UETCL for a given calendar year.
If UETCL meets the target, ERA says, the company will be financially rewarded and penalised for non-achievement of set targets.
According to the document, the goal of the framework is to improve reliability, reduce power outages, facilitate increased demand and increase productivity for consumers among others.
The development comes after the regulator noted a decline in reliability of the transmission grid manned by UETCL.
For instance, there was a significant increase in energy not served in 2017 and 2018 as compared to other months in 2015 and 2016 in addition to drop in reliability.
Energy not supplied was mainly attributed to network shutdowns and faults.
However, there has been growth of energy not supplied attributed to load shedding since 2017 albeit minimal.
Uganda between April and May experienced two power blackouts with one on account of a fault on the transmission network. To improve Uganda’s transmission network, which is currently 2890km, ERA is toying with the idea of permitting private investors into power transmission.
In addition, ERA last year introduced an incentive based system for distribution company Umeme, which takes effect in July 2020, to improve supply reliability.