By Matsiko Godwin Muhwezi
The introduction of Yaka prepaid metering a few years back was received with mixed reactions. While Umeme and government argued that the new technology would ease efficiency and curb electricity theft, some consumers argued that Yaka was a ploy to raise revenue for financing Umeme’s business. Yaka has since grown on us with its annoying warning chimes if ones units fall below the safe zone. Load shedding has not stopped and the tariff is still too high for most urban and peri-urban Ugandans.
For those still dreaming about their first electricity connection, the situation is more harrowing. Arguably Uganda’s aspirational energy source for domestic use remains the grid; with talk of an energy mix and alternative sources such as solar yet to be truly embedded in our society. Last year at a very inconvenient time, the government suspended implementation of the Electricity Connections Policy (ECP) for lack of funding. At a time when most people were encouraged to work from home, and the government was championing home study for all levels of learning, this sudden change of goalposts could not have been more surprising.
It should be recalled that the ten year ECP project spearheaded by the Rural Electrification Agency was created to address access challenges. Despite subsidization from government, it has always been difficult for households to be connected to the grid for cost and transparency challenges.
Through the ECP project, government had an ambitious target of increasing annual connections from 70,000 to 300,000 new customers. The Government would shoulder the entire cost of connections for one pole or no pole applications save for inspection fees of about UGX20,000. In the ECP problem statement, it was noted that despite the vital role that electricity plays in the social economic transformation of the country, national electrification rates continued to be low at 15% on the grid and 20% with all forms of electricity included. Some of the notable reasons for this were; high upfront connection costs, inability of Service Providers (SPs) to pre-finance and stock enough connection materials, high wiring costs incurred by households, existence of sparsely populated settlements and excess electricity supply expected in the medium term.
It was therefore sad to see such a project falter and halt abruptly two years into its implementation due to change in funding priorities. Notably, in the financial year 2020/2021, the UGX42 billion released towards implementation of ECP was largely used to pay for already existing connections by Umeme, Uganda Electricity Distribution Company Limited and small service providers. This snapshot implies that government is still scraping around to make this ECP facilitated access to energy agenda come to life on schedule. Will it suffer the same fate of “first oil”, whose deadline keeps changing?
Companies Rise or Fall on How Well They Renew Their LeadersFor the economics of energy supply to make sense and reduce blackouts, demand must be at scale and consistent not just for peak hours. With the suspension of ECP as part of the energy highlight, there was unsurprisingly no increase in electricity demand in Uganda for the year 2020! This, in a country where less than 30% of the population has access to the grid. We remain long stretches away from our target of 60% by 2027, 80% by 2040 and universal electrification by 2050. Our neighbours in Kenya who have historically relied on Uganda for part of their electricity supply, have managed to increase their coverage from 27% in 2013 to now 60% of the population in 2021.
Ultimately, for us to make progress on this UN Sustainable Development Goal 7, our energy regulators must get their act together at some point. Like any other company whose business was hit hard in the last year, Umeme might not be the scapegoat this time. The distributor under partial concession for the catchment cannot be expected to perform magic in solving our access problems in the post pandemic era. Experiencing losses of up to 17.4 % last year alone means that the Umeme’s priorities will be to prevent the hemorrhage, iterate for efficiency and make good on the dividend for its investors. Even if Umeme boasts of a repository of over USD 80M available for long term development in the sector, this capital’s unlocking is contingent on having the company’s concession extended for at least 15 years. If for performance or other reasons, Umeme is not so lucky, another player may enter the market onto whom we will unload the usual tirade to no avail. Besides, it is not always a distribution problem, every player on the value chain must diligently do their bit if more Ugandans are to get connected to the grid.
In March 2021, the government resumed implementation of the ECP. Dr. Mary Gorette Kitutu, the Minister of Energy and Mineral Development, in her launch address revealed that the African Development Bank and the Exim Bank of China were shoring up the burden of the required procurements to get the ECP back on track. With an imminent need to conclude a facility of USD 400m from the World Bank, it remains to be seen whether the Buy Uganda Build (BUBU) component delaying the negotiations will be navigated in time. Revamping the project by mere directives does not clearly cater to legacy issues which arose during the period when ECP implementation was in limbo. Before suspending ECP, there was a backlog of 200,500 completed applications and over UGX103 Billion unpaid bills to service providers. One wonders if these companies are in position to promptly resume their contractual obligations to execute new connections at this point. Are we able to implement such important policy merely by directives in absence of proper mitigation plans.
Like disillusionment on when Uganda will declare its first drop of oil, like the ongoing battles on taxation of solar equipment, LPG for cooking and fuel; grid energy access dents whatever progress is parroted by government. Load shedding consistently leads to industrial losses, tariffs frustrate our demand appetite and now ECP is proving to make new connections another pipe dream. Are we to dust our notes on lighting the pressure lamp?
The Author is the Managing Partner at Cymbell Advocates
