This is contained in a communication of the decisions taken by the cabinet during its sitting on Monday at State House Entebbe. REA’s failure to reimburse distribution companies their costs resulted into Umeme suspending new connections in July this year The cabinet has put to a halt implementation of the electricity connections policy, popularly known as the free connections policy.
This is contained in a communication of the decisions taken by the cabinet during its sitting on Monday at State House Entebbe.
"Cabinet has agreed to a temporary halt the implementation of the provision of connection subsidies to consumers incognizant of the constraints of the budget and authorized the minister of energy and mineral development to issue a policy direction in the interim with effect from March 1st, 2021to authorize electricity connections to customers who have the capacity to pay for them," the notice issued by the Uganda Media Center reads.
The ambitious policy that was launched in November 2018 was touted as the silver bullet to increasing electricity consumption through subsidization of last-mile connections among the population.
It sought to subsidize connections fees from an average of half-a-million shillings, a figure that officials described a barrier to about sh20,000 only.
The 10-year project is estimated to cost $558m (over sh2 trillion) was to be funded by both government and development partners. Of this amount, sector sources say, the partners had committed $80m (about sh297 billion).
Implementation of the policy started in January last year intending to achieve 60% access to the utility from about 22% then by 2027. It is spearheaded by the Rural Electrification Agency (REA).
This was hoped to be achieved through increasing the number of connections made annually from averagely 70,000 to 300,000 annually.
An August report by the Electricity Regulatory Authority noted that only 201,116 connections were done under the ECP in 2019 alone, 88% of which were done by Umeme while the other distribution utilities on both the National – Grid and Off-Grid connected only 12%.
This meant that the 2019 connections constituted about two-thirds of the targeted 300,000 annual connections while there were reported 150,000 pending applications as at end of December last year.
"The low performance in meeting the ECP targets was a result of the failure of licensees (distribution companies) to further pre-finance the connections, as a result of the failure of the REA to avail connection materials or reimburse on time.REA’s failure to reimburse distribution companies their costs […]