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No Relief As Electricity Charges Remain Unchanged

ERA announced today that between July and September 2020, ordinary Ugandans classified as domestic users will pay 750.9 Shillings per unit of electricity they use. This is the same price as what Ugandans paid between April and June 2020.
Ugandans will pay the same for electricity in July to September as they paid in April to June
Ugandans will not see the relief on the money they pay for electricity as Electricity Regulatory Authority (ERA), the industry regulator, has decided not to change the tariff for the period to the end of September 2020.

ERA announced today that between July and September 2020, ordinary Ugandans classified as domestic users will pay 750.9 Shillings per unit of electricity they use. This is the same price as what Ugandans paid between April and June 2020.

This effectively means that for six months from April 2020 to September 2020, Ugandans have only seen just 0.8 Shillings reduction in what they pay for electricity.  Between January and March 2020, Ugandans paid 751.7 Shillings per unit.

The tariff for commercial consumers and large industries for July to September have also stayed the same as in last quarter at 645.6 Shillings and 361 Shillings respectively. According to ERA, the current tariffs have been determined after the consideration of the international oil prices, the exchange rate of the Uganda Shillings against the US Dollar, and inflation.

Some of these parameters have changed since April 2020 when the price of electricity was last set. For instance, in April, ERA quoted the international oil prices at USD 55 per barrel. It has since dropped to USD 25.1 per barrel. This means that the country is now importing cheaper oil to run generators and transformers which would have helped in reducing electricity tariff

Also, the Uganda Shilling has gained value against the US Dollar since May but ERA relied on high rates, an indicator that they expect the Shilling to lose value in the coming months.

Another reason why the power tariff has not been reduced is because of the drop in consumption of electricity. This means that the few people who are consuming must pay for the redundant power that is not taken.

Last month, the Ministry of Energy Permanent Secretary Robert Kasande said electricity consumption had fallen below the average level and payments from some consumers, some of whom are government agencies and health facilities were not forthcoming.

Uganda’s electricity agreements are designed in such a way that it is a “take or Pay” which means that power generated must be paid for whether used or not.  The country has not fully opened from the coronavirus disruption and some of the factories, the biggest consumers of power, are majorly operating below capacity.

Selestino Babungi, the Managing Director of power distributor Umeme, said 67.7 per cent of their power consumers were factories and many of these were either closed or operating at a minimal capacity. This meant less power was used. 

He also said that such activities as entertainment, hotel services also consumed power yet many have been closed. Many of these remain closed more than 100 days after the lockdown was implemented. This means those consuming today will bear the cost of those not consuming.

For government facilities, Kasande indicated last month that the government would pay their power bills. A loan facility of 450 billion Shillings is being sought for this purpose.

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