KAMPALA — Grain millers want the government to reduce power tariffs and abolish a number of nuisance electricity charges imposed on their factories which balloons production costs and render their goods expensive.
Speaking to PML Daily on Monday afternoon, Jacob Kabondo, the Director, Wondermeal Grain Millers Ltd in Kawanda —Bombo Road said they are struggling to compete citing a hike in power tariffs coupled with the price increase in the inputs.
“Many people are dropping out of this business because of the electricity issues. The tariffs are very high and we are asking the government to reduce the burden by bringing them down,” Mr. Kabondo who is also the National Coordinator of Wealth Creation, an umbrella organization of grainmiller in Uganda said.
Mr. Kabondo whose factory pays upto UGX. 20m – 50m per month in power bills alone accused both the power sector regulator ERA and the Umeme of subjecting their factories to hidden and unfair power charges, key among others, Reactive charge, KVA, inflation adjustments, fuel charges, Value added Tax among others.
“When ERA is publishing tariffs, there some charges you will never see in the papers but they will appear on the electricity bill. Take an example of reactive charge. That is something you can’t even calculate or even can’t even attach to the final product. KVA, inflation, fuel adjustments,” he said.
He says most agro processing businesses incur over 30% as energy cost of the total production, leading to a surge in prices of the final products to the consumers.
He says the high electricity prices especially at this critical stage are dealing a heavy blow to the growth of the agro processing industry—rendering closure of several industrial units.
“This [electricity issue] is a very big factor that constrains people in the agro processing sector,” he said adding that:” I can tell you that many people have left the business because of accumulated bills that they couldn’t pay and ended up being disconnected by Uememe”.
President Yoweri Museveni at a recent event pledged to lower electricity tariffs from $11 cents to $5 cents, saying that this will ease the burden that is currently being felt by the manufacturing sector.
Museveni said: “Power from Nalubale Power Station is $1 cent while Bujagali Power Station is $11 cents. I negotiated with Bujagali owners when I was in New York and they have agreed to bring it down to $7 cents. But through my own tricks, I will bring it down to $5 cents.”
However, Museveni did not specify when this new promise will materialise.
The President emphasised that “this tariff is only for manufactures and maybe people in the hotel industry and not for preachers at night, Nsenene (grasshoppers) hunters and dancers in night clubs.”
The President had previously encouraged the manufacturers to consider using power during off-peak hours because the costs are lower and would favour them.
ERA, the company mandated with setting the price of electricity supplied in the country, recently released tariffs that determine the price of electricity sold by Umeme from April to June 2021.
In the new tariff, Commercial users, who include small scale industries, fuel pumps and millers among others, pay UGX. 639.8 while medium industrialists are charged pay UGX. 556 per unit.
Manufacturers say the cost is still very high.