High energy cost affects flower export earnings
What you need to know:
The cost of diesel has jumped to Shs3,400 from Shs1,680, 10 years ago.
High energy costs, especially of electricity and diesel, have made the flower industry uncompetitive in the region.
Experts in the industry fear that if authorities do not come to their rescue, the industry is doomed for a setback yet it had recovered since the global economic crisis in 2008.
Ms Julie Musoke, the executive director of Uganda Flowers Exporters Association (Ufea), notes: “We are still using generators for more than 40 per cent of the time – at a cost of Shs15 million to Shs30 million a month.”
The cost of diesel has increased by more than 55 per cent in the last five years. In 2004, a litre cost Shs1,680 and now in 2014, it costs Shs3,400.
The prevailing price fluctuations, she said, have seen them incur high electricity bills, spending an average amount of between Shs20 million to Shs25 million monthly.
Sharing his experience, Mr Olav Boenders, the managing director Wagagai (U) Ltd— the producers of Chrysanthemum (flower cuttings)— says the increase in costs of energy and fuel is affecting the cost structure.
Mr Boenders says a lot of money is spent on diesel for the generators, especially when electricity is off.
“On average, we use about 30,000 to 50,000 litres in a month when power is off,” Mr Boenders says.
As a result, Ufea members want a tax waiver on diesel (duty free) and a continued 50 per cent subsidy on the electricity tariff.
At the flower firm level, some Ufea members are devising means of keeping in business by opting for other energy sources.
Mr Boenders says at Wagagai, in order to turn this trend around, they are incorporating many energy saving systems.
“We are going to do trials to move away from energy savers of 30W to LED light systems with 18W reducing our energy costs on lighting by about 50 per cent,” he noted.
The company is currently building 2,500m2 solar panels to heat their greenhouses and reduce on using electricity for heating the greenhouses-to cut on the large impact on their energy expenses.