Umeme wants review of free electricity connection policy

Monday July 27 2020

Rural eletricfication was halted due to lack of money to finance the project. Photo | File

Umeme has proposed a revision of the Electricity Connections Policy (ECP) to allow capable customers shoulder the full payment for connection since government ran short of funds for the policy.

Speaking during a briefing organised by the power distributor at on the weekend, Mr Selestino Babungi, the Umeme managing director, said the energy sector is in the process of reviewing the Electricity Connections Policy .

“The original policy which we have proposed to be revised didn’t put a safety valve saying if you can afford, do not wait. There is a likelihood that they [government] will open that valve such that those who can , and there are many who can, should not wait for government. They should pay,” he said.

Government at the end of 2018 launched ECP with the view of subsidising last mile electricity connection to connect more than 300,000 customers annually.
The project was created because of complaints by customers of high power connection fees charged by power distributors, which range from between Shs98,000 and Shs2m.

Under ECP, customers pay only Shs20,000 for inspection while government caters for the rest of the connection fees.
However, the 10-year project spearheaded by Rural Electrification Agency hit some headwinds earlier this year after running out of money.

The $700m (Shs2.6 trillion) project was meant to be financed by a consortium of international donors and government but, according to the policy document, some donors had committed only $80m funding at the time.
A document authored by Umeme in June revealed that the power distributor was pausing connections under ECP over failure by government to pay $25m for 105,412 connections out of the 244,307 target valued at $57m, made by May.


To achieve the 300,000 connections annually, Umeme had estimated a revenue requirement of $80m.
Speaking to Daily Monitor, Mr Robert Kasande, the Energy ministry permanent secretary, said government is still searching for finances.
“We have written to Ministry of Finance, we are looking for the money,” Mr Kasande said, noting he did not know at the amount of money the ministry was searching for.

Financing options
Commenting on financing options government could take in case of failure to acquire money, Mr Babungi said connections can be included into the tariff through, regulatory financing where the extra revenue from electricity sales from the added customers is used to pay for the connections.

The other option is through Umeme taking up the connections as capital investment which is recouped through the tariff.
Uganda’s electricity access rate is around 25 per cent yet expensive dams are coming on board with even more power to be consumed.