State minister of Energy and Mineral Development Simon D’Ujanga has attributed the increasing electricity tariffs to the weak Uganda Shilling against the dollar.
D’Ujanga also attributed it to the reduction of exports of electricity to Kenya by Uganda Electricity Transmission Company Limited (UETCL) by over 50% and an increase in the international petroleum prices by 22%.
Electricity Regulatory Authority (ERA) recently announced that they will increase power tariffs this quarter something which has chagrinned legislators, who last week asked Speaker Rebecca Kadaga to summon Muloni for an explanation.
According to ERA new power tariffs, domestic, commercial, medium and large industrial consumers of electricity will pay averagely Shs31 more for power they consume this quarter. The domestic consumers will pay Shs52.6, commercial users Shs39.4, medium industries Shs23.8, large industries Shs9.4 more whereas each unit used for street lighting will cost Shs51.3 more.
While presenting the report on the floor of Parliament, minster D’Ujanga said that the benefits of refinancing Bujagali Hydropower has resulted in reduction of the generation tariff for Bujagali from an average of US cents 9.61/kwh to an average of US cents 7.91/kwh for the period 2018 to 2032. But this reduction has been affected by the weak Ugandan Shilling against the dollar.
“The impact of the implementation of the Bujagali Hydropower refinancing has resulted in reduction of the electricity tariffs for extra-large industrial manufacturers by 15% from an average tariff of US cents 10.1/kwh to an average of US cents 8.3/kwh and US cents 5.0 during the off peak period,” D’Ujanga said.
He added, “The 3rd Quarter tariffs increased by about 1.7% weighted average due to the depreciation of the Ugandan Shilling against the dollar by 3.5%, the reduction of exports of electricity to Kenya by UETCL by over 50% and an increase in the international petroleum prices by 22%.
“The depreciation of the Uganda Shilling against the United States Dollar is one of the major challenges affecting the financial sustainability of the Electricity Supply Industry. 85% of the total electricity industry revenue requirement is denominated in United States Dollars. This is attributed to among others; The need to provide for debt Service obligations for the Independent Power Producers in USD and Provision for procurement of network equipment that is imported in USD,” he said.
In July 2017, Parliament approved the waiver of Corporate Income Tax for Bujagali Energy Limited for the period 2017/18-2022/23. The CIT waiver decreased the Bujagali Tariff from an average of US cents 13.83 per kWh to an average of US cents 10.62 per kWh.
In June 2018, Financial Close for the debt refinancing of Bujagali Hydro Power Project Costs was achieved. Following the refinancing, the Bujagali generation tariff reduced from an average of US cents 9.61/kwh to an average of US cents 7.91/KWh for the period 2018 to 2032. As a result, the average monthly Capacity Payments to Bujagali Energy Limited also reduced from US$ 13.0 Million to US$ 10.5 Million.