Reducing power tariffs can only be gradual - ERA
Massive investments in the distribution network have also had to feed into end-user tariffs.
What you need to know:
- Considerations. There have been considerations that power tariffs for small scale industries in value addition are reduced to five US cents but ERA says this can only be possible if it is done over a period of time.
Kampala. Electricity Regulator Authority (ERA) has said the five US cents per kilowatt hour Cabinet is proposing is possible but would need to be gradual.
In a telephone interview with Daily Monitor at the weekend, ERA said it is possible for the power tariffs for small scale industries in value addition to reduce to five US cents, if there is massive consumption.
“It is possible to have the five US cents per kilowatt hour but Ugandans would need to massively consume power,” Mr Julius Wandera, the ERA head of communications, said emphasising that it will be a gradual process and not instant. To effectively have the five US cents released, he said, demand for power has to increase massively with industries and enterprises such as schools starting to cook using electricity.
However, Cabinet is at the moment discussing with the view of reducing the tariff instantly.
Asked how government plans to effect the lower tariff during a press briefing in Kampala last week, Finance minister Matia Kasaija said they were searching for a ways to realise cheaper tariffs.
However, he eliminated subsidising power, saying it is not sustainable.
“We have already been doing it [subsidising] to a few companies but it is unsustainable. So, we have to find a way of bringing down the cost of the power,” he said.
Government has over the years been seeking for ways to increase power consumption such as encouraging rural electrification and creating industrial parks.
A number of industrial parks such as the ones in Gulu, Mbale and Fortportal have been created or are in the pipeline.
Last week Government Chief Whip Ruth Nankabirwa, told Daily Monitor that Cabinet had already resolved to lower tariffs for small scale industries engaged in value addition.
The proposal, she said, was to reduce electricity tariffs for such entities to five US cents to make it uniform with the one charged from extra- large industries.
There has been a persistent outcry from small scale industries asking government to lower power tariff, which they say is a deterrent to manufacturing.
The five US cents for extra- large industries during off peak hours, was achieved after government renegotiated the Bujagali debt refinancing.
The average monthly capacity payments to Bujagali Energy Limited reduced from $13m (Shs48.5b) to $10m (Shs37.3b) last year.
