Manufacturers to buy electricity directly from power generators – Energy Minister Nankabirwa

By Sierra Ruth Arinaitwe

The Minister of Energy and Mineral Development Hon Ruth Nankabirwa has announced that manufactures who qualify will be able to purchase electricity directly from the power generators effective January 2023.

According to the minister, a tariff of 5 US Cents per kilowatt hour will be implemented for industrial parks that are willing to increase production capacity to maintain their monthly billing invoice without affecting the financial sustainability of the electricity supply industry.

While addressing journalists at the Uganda Media Center in Kampala on Friday , Nankabirwa explained that under this framework, the government has reduced the cost of a no-pole new customer connection through a subsidy of UGX 250,883. In addition to the subsidy, the Government of Uganda, through the Uganda Development Bank, has provided a credit line of UGX 270,000 for those who are unable to pay a lump sum of UGX 470,000.

“Therefore, a customer that is located near an electricity pole can now make a down payment of UGX 200,000 to get connected to electricity and clear the balance of UGX 270,000 through a 15 percent charge on their energy purchases over a period of eight years,” she added.

The minister said this is part of the programs that the government has packaged to accelerate electricity connections and enhance access to power supply in the country in its aspiration of accelerating electricity access to 80 percent by 2027, as provided in Vision 2040 and National Development Plan.

Furthermore, the government with funding from the German Federal Ministry for Economic Cooperation (BMZ) and the European Union (EU) through the German Development Bank (KFW) is working on a project consisting of 150 Mini-Grids to provide clean energy to areas far from the main grid with approximately 5 to 6 MW total installed capacity across Uganda.

According to Nankabirwa, this EUR 35 million Get-Access Project which will be implemented for a duration of seven (7) years is to commence in 2023.

Additionally, the government of Uganda, with support from the World Bank, is to implement the Energy Access Scale-up Project (EASP) project to support over 1,360,000 households, industrial Parks, SMEs and refugees and host communities to get connected to electricity under the Electricity Connection Policy (ECP).

Nankabirwa further stated that once the 600 MW Karuma Hydropower Plant is commissioned ,it help reduce the overall weighted average cost of generation. This will lead to a reduction in the end-user tariffs which is an enabler of industrialization for social and economic transformation in the Country.

“The commissioning of the Karuma Hydropower Plant  will not only enhance the country’s power generation capacity but will also strengthen and improve the stability of the power supply grid,” the minister said adding that with this, the West Nile region will be connected to the transmission grid by March 2023.

The  Board Chairperson of the Electricity Regulatory Authority Dr. Sarah Kanaabi Wasagali  said the government decision to allow industrialists purchase power directly from the generating companies followed-  the receipt of number of applications for tariff review from UEGCL, UEDCL, UETCL, Eskom Uganda Ltd and Umeme Ltd.

“With reference to Regulation 5(a) of the electricity Tariff Code, ERA is determined to reduce electricity tariffs for 2023  following a number of assumptions  among which include; the expected  increase of electricity demand  estimated at a rate of approximately 8:31% in 2023.”

Among other assumptions include: “ the implementation of the domestic cooking tariff to encourage domestic consumers to cook  using electricity and institutional cooking tariff of UGX 451 that targets to support over 500 institutions such as schools to transition from use of biomass energy sources to using electricity,” Dr. Wasagali pointed out.

This tariff reduction speaks to the government’s efforts for progressive gradual end-user tariff reduction to support industrialization for socio-economic transformation and improved welfare of society.

This follows introduction of the hybrid customer connection financing framework under which there was a reduction of the no pole connection fee from UGX 720,883 to UGX 470,000, a framework that is expected to enable more Ugandans to get connected to electricity in 2023.

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