Uganda manufacturers hit a milestone in electricity tariffs cuts

The Energy Minister Ruth Nankabirwa revealed the new direction in her address yesterday during a dialogue between Uganda Manufacturers' Association (UMA) and Electricity Regulatory Authority (ERA).

The dialogue was of the view to increase electricity uptake among local manufacturers.

Nankabirwa said that the cuts have been in the works with a directive from President Museveni to supply power to Industrial Parks at 5 cents/KWH.

However, the cuts will be installed gradually because according to the minister, abrupt cuts could result in shortfalls in the energy sector.

“My industry is self-reliant, I sell electricity to survive. I have been talking to the President about this, that we are reducing the tariff slowly,” Nankabirwa said.

The ERA sided with the minister stating that cutting power tariffs for value addition in small-scale industries is only possible over time.

According to Electricity Retail Tariff rates for January to March 2023, large industrial manufacturers pay Shs3.86.3 per unit of electricity during peak hours, and large industrial consumers pay Shs431 as the base tariff.

Minister Nankabirwa said ERA will soon announce the revised tariffs but they will not be 5 cents/KWH.

The base end-user tariff is adjusted every quarter in relation to fluctuating international prices of fuel, exchange rate, inflation, approved investments of power players and the generation mix.

The exchange rate between the Uganda Shilling against the dollar also affects the cost of power because a big portion of costs incurred are in foreign currency yet tariffs are in the local currency.

After the dialogue, UMA Chairperson Deo Kiyimba said the new direction is welcome as a sign that local content is being prioritised.

He said that a Memorandum of Understanding is in the works to direct their collaborative efforts.