The Energy Generators and Distributors Association of Uganda has rejected a proposal to increase funding to the Electricity Regulatory Authority (ERA) from 0.3 per cent to 0.7 per cent of the electricity sold.
The association made this demand on Tuesday, 01 March 2022 while presenting their proposals on the Electricity (Amendment) Bill, 2022 before the Parliamentary Committee on Environment and Natural Resources chaired by Dr Emmanuel Otala.
The committee is scrutinising the bill which among other things amends the Electricity Act, Cap. 145 to provide for a staggered term of office for the members of the authority and to provide for additional functions of the authority.
The bill also seeks to prescribe the circumstances under which a holder of a generation license or transmission license may supply electricity to persons other than a bulk supplier, to provide for deterrent penalties for theft of electricity and vandalism of electrical facilities among others.
However, as they made their submissions to the committee, the Association of Energy Distributors and Generators opposed the proposal to increase funding for ERA saying it will increase the cost of electricity.
The proposal to increase the funding for ERA is aimed at improving the performance of the Authority. However, according to the new proposal, the funding is not adequate to run the activities of the authority.
According to Thozama Gangi, the Chairperson of the Association who also doubles as the Managing Director, ESKOM Uganda Limited, said that the increase is over 150 per cent which will have an effect on the tariff charges on the end user.
Dr Otala tasked the team to explain how the increase of funding for ERA would make the tariff go up.
“How will the increase on levy automatically make the tariff go up because ERA says that for them to operate efficiently, they should be funded well to do their work,” he said.
The Chief Financial Officer Bujagali Energy Limited, Josephine Ossiya, said that all the costs within the sector are passed through to the tariffs which then come back to the consumer. She says that to keep the tariffs down, additional costs need to be reduced.
“Any costs that you load, you will inevitably pass it to the tariff and pass it to the consumer; that is just our fear. We are talking about keeping the tariffs down to keep the costs of electricity moderate,” she said.
Selestino Babungi, the Chief Executive Officer, Umeme Ltd said that the increase by over 100 per cent is not rational and will reflect on the end users since it is a pass-through cost.
On the proposal to prohibit the construction, ownership or operation of a generation station with a capacity of or exceeding 0.5 megawatts without a generation license issued, the team proposes that the minimum wattage should be increased to two megawatts.