Electricity Authority to hike tariffs today
SOURCE: THE NEW VISION, 11 JANUARY 2012
The Chief Executive Officer of Electricity Regulatory Authority Frank Sseboowa.
The Electricity Regulatory Authority (ERA) will today announce electricity power price increment, a direction that will ensure that the energy sector raise money to sustain its operations.
It is not clear the new rates will be but sources say that domestic consumers will have to pay about sh506 per unit up from the current sh385.6.
Maria Kiwanuka, the finance minister and Irene Muloni, the energy minister are expected to make the announcement at Uganda Media Centre today at 3 pm.
Thermal power has been the major driver of electricity prices as it depends on global fuel prices which are unpredictable. Thermal power is thrice expensive than hydropower power.
And from 2006, government has been buying down tariffs for power consumers. This intervention has managed to artificially keep the current domestic power tariff at sh385.6 per unit.
Without the subsidy, the true cost would be sh847.8, meaning that the government pays for the balance which is sh462 per unit.
The high tariffs were a result of procuring 200 megawatt (MW) of thermal power to bridge the power shortfall.
Fuel prices have been rising sharply.The continued weakening of the shillings against major foreign currencies especially the United States dollars and the euro has had a huge impact on diesel generated electricity.
This has eaten all the money the treasury budgeted for power subsidies because of rapid changes in fuel prices because up to 83% of the purchase costs are attributed to thermal supply costs, which are also denominated in foreign currencies.
And now government has scrapped power subsidies. “Subsidies are distortionary and affect the availability of funding to other equally important sectors of the economy,” Dr Benon Mutambi, the Electricity Regulatory Authority head, said.
“We cannot hide our heads in the sand and pretend that the tariff can stay at the current level when all other prices in the economy have increased; fuel prices, exchange rates, interest rates, commodity prices and even charcoal prices.”
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