Uganda News

Karuma electricity losses could be caused by concession delays — Umeme

Umeme, an electricity distributor, has petitioned parliament to examine regulations affecting the power sector, particularly those that directly affect power pricing to the final consumer.

Umeme, an electricity distributor, has petitioned parliament to examine regulations affecting the power sector, particularly those that directly affect power pricing to the final consumer.

Over the previous 15 years, power customers and leaders have expressed worry about the high cost of electricity and the unreliable supply. And these issues are likely to be the deciding factors in whether or not the company’s concession is renewed.

The 20-year deal will expire in 2025, and Umeme management has yet to decide whether or not it will be renewed. According to Umeme, the contract’s mode offers the Electricity Regulatory Authority (ERA) more authority in determining how much the final consumer will pay.

Electricity businesses research the various dynamics that influence the cost of service on a regular basis and give them to the regulator for consideration, following which the regulator sets or authorizes the price for the next period. The managing director of Umeme, Selestino Babungi, believes that the parliament should alter legislation that penalize power theft, for example, to make the act more costly to criminals.

He also asked MPs to help expedite the release of up to 500 billion shillings in funding to implement free power connections under the electricity connection program, which currently has a backlog of over 250,000 applications.

According to an officer at Umeme who spoke on the condition of anonymity, the policy was not well-thought-out when it was created by the government, which is why it is difficult to locate. According to the official, while the policy is sound, it was rushed and politically motivated.

However, the business claims that they have connected 150,000 people so far this year, and that if the money comes in on time, they will be able to erase the backlog this year.

The difficulty with the delay in closing the concession negotiations, according to Patrick Bitature, is not that time is running out, but that new power production projects are coming up and need to be planned for.

Bitature claims that the corporation needs to invest in the power evacuation process that will be created by Karuma, which is projected to be operational by the middle of next year. Many people are waiting to be connected, and the company has to expand its distribution network, he says, but funding for these projects will be contingent on the concession discussions, which stopped last year.

Some MPs expressed their displeasure with Umeme’s performance and expressed their desire for the concession not to be renewed. “If the government renews Umeme’s concession, it will be a tremendous disservice to regular Ugandans,” Kaaya Christine Nakimwero, a Kiboga woman MP, stated.

However, Emmanuel Otaala, the Chairman of Parliament’s Natural Resources Committee, stated that there are many things that MPs must grasp about the electrical industry before making a decision on the concession. He also claims they need to summon the electrical regulator, the Electricity Regulatory Authority, to answer some concerns, particularly about electricity price, which Umeme claims is largely in the regulator’s discretion.

The contract does not provide Umeme complete authority to levy tariffs, according to ERA senior project engineer Peter Kakeeto, because a full commercial tariff would be unaffordable to Ugandans. He also justified the service fee, which the MPs questioned, claiming that it is required because the service provided is consistent.

Dicksons Kateshumbwa, a committee member, cautioned the government that postponing the concession negotiations will result in a last-minute stampede. This, he argued, is likely to result in the government doing a terrible job since it might lead to the creation of even worse contracts than the current one, or the selection of the incorrect individual.

Meanwhile, even when the Karuma project adds another 600 megawatts to the current capacity of roughly 1,300 megawatts next year, Babungi assuaged fears about surplus electricity output. According to Babungi, what some refer to as extra power is actually reserve capacity, which is natural because output must always be higher than demand to avoid a shortfall.

Instead, he claims, the government should be seeking for contractors to begin work on another project because dam construction takes time, and the country risks returning to load-shedding or utilizing expensive thermal power.

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