Regulator explains impact of tax waiver for Bujagali

Environmentalists have often argued that high tariffs keep would be users off electricity, but not off charcoal, which means the felling of trees to produce charcoal. FILE PHOTO

What you need to know:

  • Uganda has an installed generation capacity of 900 megawatts (MW)
  • During the 6pm to 12am peak hours it consumes about 620MW

Kampala. The Electricity Regulatory Authority (ERA) has said the five-year corporation tax (CIT) exemption for Bujagali Energy Limited (BEL), which operates the Bujagali hydropower plant, has lessened this quarter’s retail tariffs.

According to ERA management, had the government not granted BEL the waiver – last year, power users would be paying a weighted average of 11 per cent more than they are paying now.

Households and shopkeepers would be paying Shs787.7 per unit instead of the Shs718.9 they are paying currently.

Relatedly, commercial consumers would be paying Shs703.2 per kilowatt hour instead of 648.3.
The retail tariff for medium industries would be Shs647.3, not the Shs592.5 such users now pay for each unit.

Large industrial consumers would be paying Shs429.8, which is 15 per cent higher than they are presently paying.

Kampala Capital City Authority and municipalities would pay 14 per cent more than they are spending on each unit of power they use for street lighting.

The impact of a CIT exemption for BEL is contained in a brief the regulator presented to Parliament’s Committee on Natural Resources.

Members on the committee took a nine-day field visit to nine power plants scattered across the country.
During the visit, Ann Maria Nankabirwa, one of members said the government should work towards lowering retail power tariffs.

Environmentalists have often argued that high tariffs keep would be users off electricity, but not off charcoal, which means the felling of trees to produce charcoal.

Other members expressed concern about the many power generation plants the government is constructing and yet constrained demand is low.

To that, Ms Ziria Tibalwa Waako, ERA’s Chief Executive Officer, said the objective of increasing generation capacity is to boost industrialisation.

“You will appreciate that if a big industry is to make a decision on whether to come to Uganda, power supply must be guaranteed,” Ms Tibalwa said.

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