The report went on to point out that only
19 or about half of the surveyed utilities were able to meet their everyday
costs like salaries.
Essentially most of our power utilities on
the continent are technically bankrupt. This has far reaching ramifications for
the industry as a whole.
When you, the client, pays your bill, Umeme
then passes money up the line to pay the transmission and generation companies.
If Umeme does not collect the revenues due to it or does not price the power at
an appropriate rate, the pain will be felt up and down the sector.
The transmission company would not be able
to maintain and extend its network and the generation company would not be able
to generate efficiently or build new power dams.
To a large extent Uganda has got the
management of the power sector right.
Previously there was one giant utility
called Uganda Electricity Board (UEB) which did everything from generate,
transmission and distribution of power.
Given the low power coverage it was decided
to break up UEB into –generation, transmission and distribution companies and
create a regulatory authority for the sector. The reasons for this were mainly
two, to attract investment into the sector and to increase the efficiency of
the constituent companies.
The policy has paid of handsomely. Since
then Uganda has more than doubled generation capacity to the current 850MW, and
another doubling of this capacity due within the next 18 months, and Umeme has increased consumer accounts to
1.125 million from less than 200,000 when
Umeme took over the concession in 2005.
This would not have been possible without
Umeme increasing its collection efficiency – we now collect all the money from power
billed and a judicious pricing mechanism overseen by the Electricity Regulatory
Authority(ERA).
The increased collection has come in no
small measure due to our roll out of prepaid meters, three quarters of consumers
are now connected, which account for sh20 of every sh100 we collect.
Umeme has invested more than $150m in the
network during the period, a part of the almost $2b invested in the industry,
which would not have been possible if Umeme was one of those floundering power
utility companies the World Bank surveyed.
While we are proud of our record at Umeme
we are very aware pf the huge responsibility we have to the whole sector and the
overall economy.
We are doing everything within our powers
to ensure that power is distributed efficiently and to more and more people.
The World Bank figure of only 26.7 percent of Ugandans having access to power
in 2016, is unacceptable and a real stumbling block to our development
ambitions.
This number for neighbor Kenya is 56
percent, South Africa 84.4 percent and Mauritius 98.8 percent.
This points to the fact that a lot of
investment in the sector is required in coming years, which investments will out
of necessity feed into the end user tariff.
The government has pledged to lower tariffs
to industry to about $5 cents. We too are committed to this goal.
However there has to be a tradeoff.
We can allow the tariffs in the interim to
reflect the growing investment in the sector needed to increase coverage and
the reliability of power supply in the short term or force the tariff down now
and slow down the investment process in the sector. We cannot have it both
ways.
Let us not ignore the fact that our
relatively high power tariff is a function, in no small part, to a lack of investment
in the sector in the 1970s and 1980s and that we are playing catch up.
(AUGUST 2018)
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