KAMPALA – The government is in advanced stages to secure 1.4 Trillion Shillings from the World Bank to support the free Electricity Connections Policy (ECP).
According to the Minister of Energy and Mineral Development Mary Goretti Kitutu, the money expected to be obtained at the beginning of the financial year 2022/2023 is one of the interventions to ensure smooth electricity connections in the country.
Kitutu presented a statement on the floor of parliament on Wednesday regarding the Electricity Connections Policy. The statement follows issues previously raised by legislators regarding the suspension of the free electricity connection policy.
The Government on 7th December 2020 gave power distribution companies a go-ahead to charge the full price of connection due to strained government resources. The costs for domestic consumers range from 720,883 Shillings where no pole is required, to 2,387,472 million Shillings where one pole is required, with uninsulated cables, on top of the 41,300 Shillings in inspection fees.
Before the introduction of free connections in 2018, it would cost one between 90,000 and 400,000 Shillings for no-pole and one-poll connections respectively. Even with this, the government was heavily subsidizing the sector, especially connections to help more Ugandans access electricity.
The ECP was aimed at increasing access from 20% to 26% by 2020 and 60% by 2027. This would be achieved by increasing the number of connections made annually from the average 70,000 before the policy was made to 300,000 customers a year at full implementation.
In her statement, Minister Kitutu says that the suspension of the free Electricity Connectivity Policy was informed by the high number of applications for new connections which required a high budget.
According to Kitutu, the backlog of electricity connections due to funds constraints by end of July 2020 stood at 200,000 countrywide.
She added that besides the backlog of 200,000 electricity connections, as at 10th July 2020, Government was in arrears for connections made by Service Providers amounting to 103.409 billion Shillings.
“As an interim measure, Government opened up the implementation of the Electricity Connections Policy with effect from 7th December 2020 to allow consumers that were willing to pay for their connections and had funds to do so to be connected on time while those who had no funds were advised to wait for Government to mobilize the necessary funds,” said Minister Kitutu.
She added that before the introduction of the ECP, the cost for new connections was highly subsidized and paid for by other consumers through the tariff. However, the cost according to the Minister became unbearable as Government efforts were now geared towards reduction of the end-user tariff, especially for the large and extra-large manufactures.
“When the cost of 300,000 new connections is financed and recovered through the end-user tariff, about 250 billion Shillings per year would be required. This additional cost would increase the end-user tariffs by 6% per annum. The impact on the annual tariff increase would negatively affect the Government’s efforts to lower the tariffs for manufacturers to make their products more competitive and incentivize them to increase production and grow demand,” she explained.
Now besides funds expected from the World Bank before free connections resume, Kitutu told parliament that Government has imported connection materials worth 87,000 no pole connections financed by African Development Bank to resume the No Pole connections.
She said that these materials will arrive in the country this month to enable the Electricity Supply Industry-ESI to commence free no pole connections starting 1st March 2021.
Kitutu also said that Government has also released 42 billion Shillings for the financial year 2020/2021 towards the implementation of Electricity Connections Policy out of which 27.8bn has been allocated to partly pay for the already made connections by Umeme and the balance 14.2bn given to Uganda Electricity Distribution Company Limited- UEDCL and Small Service Providers to partly pay for already made connections and commence new connections in March 2021.
Agnes Ameede, the Pallisa Woman MP asked the government to subsidize the cost of gas and electricity to enable the majority of the Ugandans to afford as a long term strategy to protect the environment.
Kawempe North MP Latif Ssebaggala also asked the government to ensure that the cost of electricity is affordable as it also plans to ensure that electricity reached all parts of the country.
Minister Kitutu said that the high cost of electricity is due to the low electricity demand.