German firm avails Shs80b for new power connections

Thursday June 16 2016


Kampala. Germany’s Kreditanstalt für Wiederaufbau (KfW) is availing €21m (Shs79.6b) in concessional funding and grants to connect more Ugandans to the electricity grid.
To access the money though, Uganda has to contribute counterpart funding, much of which from the excess energy sales revenue.
The excess is the difference between projected energy sales and the actual sales.

Between 2012 and 2015, the Electricity Regulatory Authority earned Shs65b from excess energy sales.
KfW’s grant will be spread over three years, and, it is the electricity distribution companies, to which people who want to get connected to electricity apply, that will implement the roll out of the connection projects.

Currently, according to the Uganda Bureau of Statistics 2016, 20 per cent of Ugandans have access to electricity, up from 7.8 per cent in 2002.
The improvement is due to the increase in the length of the high voltage transmission lines from 1, 427km in the mid - 2000s to 1, 627km now.
Over the same period, the medium voltage distribution line increased from 6, 242km to 15, 178km whereas the low voltage distribution line increased from 8, 448 kilometres to 18, 000km.

The government intends to extend these to increase access to electricity to about 40 per cent by 2040.
Besides the lines, the other reasons cited for the low access to electricity are new connection charges, which are between Shs98,000 and Shs326,000 for those seeking to be connected by power distributor, Umeme. And that excludes the Shs41, 000 inspection fee.
Yet others blame the comparatively ‘high end–user tariffs’ for discouraging some users from switching to other forms of energy for cooking as well as lighting.
Currently, Umeme’s household consumers pay Shs640.2 for each unit.

The tariff
The projects that will be financed using KfW’s grant and excess energy sales revenue will not be entitled to a return on investment. This, other factors remaining constant, should mean a low retail power tariff.