This archive report was first published on 20 July 2021.
Uganda's energy sector regulator, the Electricity Regulatory Authority (ERA), has announced a reduction in end-user tariffs for electricity, effective July 9, 2021. The move is expected to ease the burden on consumers, with a two percent reduction in prices compared to the April-June period.
The reduction in tariffs is attributed to the appreciation of the Uganda shilling against the US dollar, which rose by 3.3 percent in the second quarter of 2021. The local unit appreciated from Ush3,665.78 as of February 26 to Ush3,546 as at the end of May.
Umeme executives fear that the low tariffs may trigger a decrease in demand for power, impacting revenues. 'I am yet to look at the numbers but with lockdown, demand in the city is down, because there is no activity. For domestic users, again, one may not have money in the pocket to buy electricity,' said Selestino Babungi, the Umeme MD.
The utility firm's revenues last year dipped by seven percent to Ush1.66 trillion ($466.5 million) compared with Ush1.77 trillion ($497.4 million) in 2019. The dip was attributed to reduced demand for power during the 2020 lockdown, which saw the cost of operations increase by six percent to Ush226 billion ($63.8 million) due to Covid-19 related costs and network maintenance expenses.
ERA said the impact of the current Covid-19-induced restrictions, imposed in June until the end of July, will have an impact on the sector. 'This time we will again see the impact of Covid restrictions, which are in force, hence demand will reduce, the sector will incur additional costs, and generation projects will delay,' said Vianney Mutyaba, manager of pricing at ERA.
