The Ugandan government has announced a reduction in electricity tariffs for commercial and medium-sized industries during the first three months of 2024. The Electricity Regulatory Authority (ERA) highlighted a 1.8 percent tariff reduction for commercial and a 2.8 percent reduction for medium industries, with the goal of supporting small and medium enterprises (SMEs). This move is expected to result in an estimated annual savings of Shs40.32 billion for over 5,000 businesses across various sectors within these industries.
The weighted average cut of 1.6 percentage points will benefit commercial enterprises, medium industrial, large industrial, and extra-large industrial consumers. Dr. Sarah Kanaabi Wasagali, the chairperson of ERA, emphasized that the tariff adjustments align with pre-determined demand growth targets for 2024, projected to rise by 9.53 percent.
While maintaining tariffs for domestic consumers and street lights, the government aims to foster economic growth by focusing on SMEs. Domestic energy buyers purchasing more than 15 units of electricity have also been approved for a 1 percent reduction in tariffs.
The tariff adjustments were informed by applications for reviews from key entities, including Uganda Electricity Generation Company Limited (UEGCL), Uganda Electricity Transmission Company Limited (UETCL), Uganda Electricity Distribution Company Limited (UEDCL), and Umeme Limited, submitted starting September 2023. This regulatory process is mandated by Section 10 (f&g) of the Electricity Act 1999 (As Amended) and corresponding licenses, requiring an annual review of electricity tariffs based on applications from industrial stakeholders.
Dr. Wasagali clarified that the tariff determination considers the costs of power acquisition from generation plants based on projected power quantities required for end-user consumers and generation prices outlined in respective licenses and Power Purchase Agreements.
Under the government’s plans, industrial consumers with potential power consumption growth will maintain billing at US 6.85 cents per unit during peak and shoulder hours. The government’s broader vision includes connecting an additional 1.5 million homes to the grid, raising the electrification rate from 28 to 50 percent, and ensuring electricity for every home by 2030. The completion of the Karuma dam is expected to increase the country’s installed capacity to at least 2000 MW.
In October last year, the government unveiled the Energy Policy 2023, aligning with Uganda’s Vision 2040 and aiming to facilitate socioeconomic transformation by expanding electricity access for homes, commercial businesses, industrial parks, and refugee/host communities.
