Prime
Factories can now directly buy power from generation firms
Previously, bulky consumers have been accessing electricity through intermediaries such as Umeme. PHOTO / FILE
What you need to know:
- Electricity Regulatory Authority says it is implementing a shift through which bulky consumers will no longer need intermediaries to buy electricity.
The Electricity Regulatory Authority (ERA) has introduced new regulations under the Electricity Act that will allow manufacturers and bulky electricity consumers to buy power directly from generation companies instead of going through intermediaries such as Umeme and Uganda Electricity Transmission Company Limited.
The regulations are part of the shift under the Electricity (Supply of Electricity in Bulk to Specified Consumers) Regulations that had previously provided for intermediaries in electricity sales.
In a public notice published on Monday, ERA highlighted three key points on eligible consumers and bulk electricity purchases, noting that for a customer to be considered a bulky consumer, he or she must have an average demand of at least 1,500 kVA.
The notice further noted that consumers connected to the notional grid must purchase up to 30 percent of their energy in bulk from eligible sellers, while isolated consumers (not connected to the grid), must purchase 100 percent of their electricity in bulk from an eligible seller.
To put this in perspective, Mr Julius Wandera, the ERA director corporate and consumer affairs, said on Tuesday that government is pushing for direct electricity purchases - a move championed by President Museveni to attract manufacturing investors.
Under the current system, UETCL and Umeme act as intermediaries, which President Museveni has previously argued, introduces extra costs to the end user, thereby inflating tariffs, and making production more expensive for manufactures. Thus, the shift will allow factories near power plants to buy electricity directly, skipping intermediaries such as UETCL.
“If a factory is near a power station, like Bujagali, it shouldn’t have to go through UETCL or Umeme, which would only hike its electricity costs,” Mr Wandera said, noting that the amendments were operationalising what is already in the law.
“The goal is simple - encourage industries to set up near power stations, reduce their electricity costs, increase production, and ultimately boost the country’s GDP. Cutting out the middlemen means lower energy costs for manufacturers,” he said.
Government is also moving in to cap electricity tariffs at 5 cents per kilowatt-hour, targeting local generation plants such as Nalubaale, Kiira, Isimba, and Karuma.
Currently, Uganda’s electricity generation companies charge an average of 6.3 dollar cents per kilowatt-hour.
However, this has been a reduction from 8 dollar cents before Karuma came on-board, which now generates power at under 4 dollar cents per kilowatt-hour.
Eng Ziria Tibalwa Waako, the ERA chief executive officer, said the changes will bring down transmission and distribution costs, making power more affordable.
“Right now, major factories can tap directly into high-voltage power sources. This fuels production, creates jobs, boosts the economy, and increases electricity consumption,” she said, noting “more demand allows us to lower tariffs for domestic consumers.”
ENERGY LOSSES
Installed capacity
The power sector makes money from the electricity it generates - but a significant chunk of it is lost through transmission and distribution inefficiencies, primarily involving intermediary companies such as UETCL and Umeme. According to Umeme’s interim financial results for the 2024 first half, energy losses were 16.1 percent, which was however, lower than 16.7 percent in 2023.
UETCL, on the other hand, posted a profit of Shs94.4b during the year to June 2023, thanks to a 7 percent increase in energy sales, reaching 5.4 gigawatt-hours and generating Shs1.3 billion in revenue. However, transmission losses rose to 4.79 percent, surpassing the ERA’s 4.6 percent target. Uganda currently boasts an installed electricity generation capacity of just over 2,000 megawatts, with 1,496 megawatts coming from large hydropower dams.
