Demystifying extra electricity tokens myth

Saturday March 06 2021

Nelson Wesonga


The first day of every month creates a Pavlonian reaction among many pay-as-you-go electricity consumers. 

Scores top-up their accounts on that day, believing they will get extra units than they would were they to pay on some other day of a month.
Consequently, the requests to payment platforms take a toll on the vending system’s processing capacity.

So, the power distribution company Umeme started the process to implement a new Utility Customer Information system, which will accommodate four million customers with both post-paid, prepayment,  time of use and automated meter reading capability. 

This commentary, though, seeks to unmoor many pay-as-you-go consumers’ habit of waiting until first day of every month to pay for electricity. It will unpack a domestic consumer’s bill. Whatever amount one pays for electricity at any point of the month, first, 18 per cent of it is Value Added Tax (VAT).

Second, from the balance, Shs3,360 is service fee, which is currently used to take care of some of the electricity sector’s maintenance costs. Anything left after VAT and service fee are subtracted is what then caters for the units of power.

Now note, every first electricity purchase in a month comes with 15 lifeline units charged at a discounted cost of Shs250 each.  Any additional units above the 15th unit, will be charged that quarter’s prevailing tariff. 


That said, for January through March, the price for each of the units above the 15th is Shs750.9. The rate is revised by the regulator on a quarterly basis. 

If you do not purchase units for many months, service fee accumulates and will be recovered from your next purchase. The same applies for the 15 monthly lifeline units. 

For other purchases within the same month, the discount rate and standard service fee do not apply, but all purchases are subject to VAT of 18 per cent.

If one makes multiple transactions for 30 days, he/she earns discounted units once, and service fee is levied once. These affects the units you get in each transaction hence variation in tokens received.

A homeowner will get those subsidised units (lifeline tariff) regardless of whether he or she pays for power on the first , fourth or last day in a calendar month.

Take Web Ndyabahika, for instance. On December 7, 2020, he made his first and only payment for electricity in that month.

In January, he similarly paid once, on the fourth day while in February, he made his payment on the 26th day, just two days to the end of the month. This month (in March), he paid on the second. During each of the above transactions, he received 15 subsidised units, which cost Shs250 each. 

While some believe 30 days must elapse between two sequential payments for a customer to get the lifeline tariff, Ndyabahika made his disbursements less than 30 days apart and still got the 15 units.
What counts is that the payment should be the first in a calendar month.
Over a five-year span starting 2020, Umeme will connect an extra 2 million to the national power grid. 

This is in line with the government’s programme to increase the proportion of Ugandans accessing electricity from 29 per cent (2019), according to the International Energy Agency World Energy Outlook 2020, to 60 per cent by 2027.

Consumers have the utility’s managing director Selestino Babungi’s assurance that once the new system is fully implemented, they will have a better experience. It will permanently address the problem of delayed token generation.

While the novel retailing system will have the capacity to handle four million customers, electricity consumers should not wait until the beginning of each month to pay for electricity.

Mr Wesonga works with Umeme.