Power subsidy scrapped in Uganda

Power_UgandaUganda’s minister of Energy and Mineral Development Engineer, Irene Muloni, has announced the scrapping of subsidy on power tariffs

The new tariffs were increased by 40 per cent. Speaking to journalists at Uganda Media Centre, she said the money will be used to construct other dams in the country.

“As a result of the subsidy provided to each of the consumer categories, government had spent a total of Ushs 1.532 trillion [US$660mn] since 2005 in subsidies to the electricity sub-sector,” Muloni said. “This level of subsidy is not sustainable. Government has therefore decided to eliminate subsidies to the electricity sub-sector when the Bujagali Hydropower Project is fully in production. Subsidies will only be provided until full production of Bujagali dam.”

Muloni said the money freed from the subsidies will be injected into the development of cheaper electricity sources. For example, construction of the 600 MW Karuma Hydropower Project, will commence this year using public financing.

The minister said, “restoration of the financial viability of the power sector will, encourage private sector companies which are willing to invest in different renewable energy projects, hence ensuring cheaper sources of electricity.”

Under the revised tariff regime, domestic consumers will pay US$0.23 up from US$0.17 per unit of electricity consumed. Commercial consumers will pay US$0.21 instead of US$0.15, medium industries US$0.20 up from US$0.14 per unit and large industries US$0.13 instead of US$0.08 for each unit consumed.

Mulone said that to cater for the low income electricity users, a charge of US$0.04 per unit will be maintained for the first 15 units of consumption.

Moses Kalisa Seruwagi

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