Umeme electricians recovering illegal materials from the network in Nyendo, Masaka during an anti-power theft campaign The Ugandan government has blocked new investments by power distributor, Umeme, as it searches for a new investor who will help in bringing down the cost of electricity and improve the quality of the distribution network as well as extend power to more homesteads.
The Minister of State for Energy, Hon Sidronius Okaasai Opolot, recently told MPs on the Committee of Environment and Natural Resources that as Ugandans demand for electricity infrastructure, that has got an impact on the final buyout of Umeme, there is a need to watch out for new investments made.
“To manage the concession buyout and minimise suffocating expenditure of the Government when the Umeme concession ends, it is important that additional investments by Umeme be regulated and or halted to reduce on the final buyout amount,” Okaasai told the committee.
The Ministry of Energy had sought Shs 256.2 billion as part of the money to start the buyout in phases but MPs recommended that the Government should focus on assessing the status of Umeme and its performance instead of looking for money for a buyout.
Umeme claims to have made total investments of US$547.5 million as of December last year with a recovery of US$331.94 million. It is reported that there is US$215.6 million outstanding.
Senior government officials have told ChimpReports that while Umeme’s contract ends in 2025, President Museveni has advised against the contract renewal.
Museveni’s main grievance is that power distributed by Umeme remains expensive, undermining efforts to industrialize the economy.
In Uganda, electricity is generated at a weighted average of Shs 250 per unit.
The electricity is sold to Umeme by Uganda Electricity Transmission Company Limited (UETCL) at Shs 288.8 per unit.
Umeme proceeds to sell power to the consumer at a staggering Shs 974 per unit.
The Electricity Regulatory Authority (ERA) allows Umeme to sell power to the end user for a rate between Shs 1,000 and Shs 1,300 per unit.This means that if Umeme sells a unit of power at Shs 974 to a consumer, the power distributor earns a margin of Shs 686 from every unit.Umeme sells 730 megawatts of electricity to its customers per month.Each megawatt produces 730,000 units of Yaka per month.This implies that every month, Umeme sells 532.9 million units of Yaka to its customers.For 532 million units of power sold at Shs 974 each, Umeme earns Shs 518bn […]