PAY UP OR SIT IN DARKNESS
Parliament was once again told by the energy minister earlier this week that the country would continue to suffer extensive power rationing until at least December this year, when units 1 and 2 of the new Bujagali hydroelectric plant are expected to be fully on line and in production. The country has for weeks now been suffering nightly black outs, often extending until late in the morning in the affected areas, after parliament had withheld funds to pay pending subsidies to independent electricity producers using heavy fuel oil and diesel propelled plants. Current fuel prices have not helped to resume full production due to the sharply risen input cost and experts claim that the current charge per unit of about 426 Uganda Shillings could rise to 1.000 Shillings if subsidies were removed as government has threatened.
Ugandans, already suffering from double digit inflation, were intrigued by the intensity of the arguments in parliament earlier in the week when several politicians demanded that UMEME’s contract be reviewed with the aim of cancelling their concession for non performance. Yet, the fact was not lost on the public that it was in fact parliament which caused the crisis by not approving funding for the delayed subsidy arrears, which in the end prompted several independent power plants to be switched off. In addition, one 50MW plant was permanently decommissioned already, as it was using the more expensive diesel, as opposed to heavy fuel oil, to run and the loss of this generating capacity could not be made up by releasing more water to turn up hydro production at the Jinja Kiira and Owen Falls plants by 40 MW, leaving the country with a peak demand deficit of over 120 MW.
UMEME was also blamed for failing to reduce the rampant power thefts and other system losses, still in the high 30 percent range and recent attempts to get higher tariffs approved fell on deaf ears with the Electricity Regulatory Authority.
Economic analysts have said that the combination of job losses, high inflation, sharp devaluation of the local currency, rising interest rates and lack of electricity are having a devastating effect on the Ugandan economy. Meanwhile is the tourism sector also struggling with visitors staying away due to negative publicity, likely to fail reaching its key target this year of bringing more than a million visitors to the country for the first time ever. Stakeholders blame this partly on a lack of funding for an aggressive marketing campaign, the sudden rise in various fees for the national parks and the fear by potential visitors of further political violence on the streets. Embassies and High Commissions in Kampala have also been quietly telling their citizens to become more vigilant as higher crime rates could be fueled by the current trend of inflation, which leaves many ordinary Ugandans struggling to make their salaries last beyond the middle of the month.
Watch this space.
