UMEME A RECOGNISED SUCCESS BUT …

 Recently the World Bank did a survey of the power utilities on the continent. Of the 39 utilities surveyed only two, in Uganda – Umeme and in Seychelles, were able to cover their operating costs and capital expenditures – maintenance and expansion of the grid.

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)