Uganda: Minister Kyambadde links high electricity tariffs to liberalisation

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Trade minister Amelia Kyambadde has said it was a mistake to liberalise the electricity sector in Uganda.
Ms Kyambadde said many manufacturers are now being weighed down by high end-user electricity tariffs.

She becomes the second member of the Cabinet after President Museveni to regret the adoption of the policy.
Before the government liberalised the sector in the early 2000s, large manufacturers paid about Shs100 per unit compared to the Shs370.2 per unit they pay now.

This therefore has been linked to the higher costs of the manufacturers’ goods compared to goods manufactured in Tanzania, where the government controls the electricity distribution business.
“We have made mistakes. Number one, over-liberalisation or privatisation of our utilities, for example, energy and telecoms,” Ms Kyambadde said.

“[Now] you find the industries cannot afford to pay for the energy. I think we need to have a PPP (Public Private Partnership).”
Ms Kyambadde was speaking during a United Nations Development Programme (UNDP) Uganda dialogue about promoting Sustainable Industrialisation in Uganda on Tuesday.

Earlier, Dr Arkebe Equbay, the Special Adviser to the Prime Minister of Ethiopia, attributed Ethiopia’s very end-user power tariff to the government’s ownership of the generation, transmission and distribution utilities.

“Transmission and distribution is 100 per cent state-owned. It has to be because we cannot subsidise priority sectors if transmission and distribution is not under the government,” Dr Equbay said.

The liberalisation of Uganda’s electricity sector came on the heels of the World Bank’s recommendation.
The bank argued – in the late 1990s – that the Uganda Electricity Board (UEB), which was in charge of electricity generation, transmission and distribution, was inefficient.

It was against this backdrop that the government ‘unbundled’ UEB into three entities, Uganda Electricity Generation Company Limited (UEGCL), the Uganda Electricity Transmission Company Limited (UETCL) and the Uganda Electricity Distribution Company Limited (UEDCL).

UEGCL and UEDCL, however, concessioned the generation and distribution businesses respectively to Eskom Uganda and Umeme Uganda Limited respectively.

Yesterday, Uganda’s Prime Minister, Rukuhana Rugunda, said many African countries could not resist the liberalisation wave.
“The ‘wind’, often, was too powerful. If you tried to resist the wind, it would sweep you [away],” Dr Rugunda said.

“Some of you remember how Dr Suruma had to be dismissed from the chairmanship/managing director of the Uganda Commercial Bank because he was resisting the privatisation of that bank.”
Dr Rugunda commended the Ethiopians ‘for saying no to external forces and determing their own destiny’.

In 2012, Parliament recommended that the government terminates the Umeme and Eskom concessions.

The 20-year concessions, according to the agreements, will expire in the mid 2020s.
Parliament argued that the process of settling on the two companies was questionable.
The government has never implemented the recommendation.

For the case of Umeme, Energy minister Irene Muloni reasoned then that there is no other company that could manage the power distribution network.
She added that the termination of the concessions would keep away investors.

©Alleastafrica and Daily Monitor