Power lines in Kampala. The high cost of electricity coupled with constraints in transmission and distribution systems remain the main barriers to maximising electricity access in Uganda. PHOTO/Racheal Mabala What you need to know:
A new report cites energy as one of the three sectors that can change the economy’s fortunes. Ismail Musa Ladu and Martin Luther Oketch examine this as government shops around for an alternative power distributor, a move that affects investor confidence.
Reliable and affordable electricity is a mandatory requirement for the country’s productivity and competitiveness, according to various economic sector players.
The World Bank Group in its analysis, titled: The Uganda Country Private Sector Diagnostic (CPSD) report, notes that affordable and reliable electricity serves as an important input to all other sectors of the economy, directly and indirectly affecting growth, jobs, productivity and competitiveness.
The energy sector contributes to the treasury resources from fuel taxes, Value Added Tax (VAT) on electricity, levy on transmission bulk purchases of electricity, licence fees, royalties and foreign exchange earnings from power exports.
Over the years, Uganda has advanced her energy sector. However, access to electricity coupled with high costs, constrain productivity.
As a result, the leadership of Uganda Manufacturers’ Association (UMA), part of the country’s industrial sector with over 700 corporate, large, medium and small firms, has expressed their displeasure over access and cost issues, the consequences of inaccessible and costly power on productivity and competitiveness.
All this is happening at time when the country generates surplus electricity. But due to the high cost of power coupled with constraints in transmission and distribution systems as well as their interconnection, remain the main barriers to maximising electricity access and achieving what the report refers to as “sector efficiency.”
In addition to agribusiness, which is important for productivity, employment, and export growth, and housing sub-sector, considering its role in fueling growth in the labour-intensive construction sector, the CPSD report also examined energy as one of the three sectors that can change the economy’s fortunes, given its function as an “enabler of overall productivity.”
According to the 2021/2022 buget speech, national electricity access stands at 51 per cent of which, 24 per cent is on-grid and 27 per cent off-grid. With the implementation of the free Electricity Connections Policy (ECP), 152,500 households have been connected to the grid.
Further, power generation capacity has increased by 38 per cent from 925 megawatts in 2016 to 1,274 megawatts in 2020. With the completion […]