According to local media, the Daily Monitor, the company’s planning and finance director, Bonny Kiiza, confirmed that the electricity distributor will not renew its contract at the end of this month.
Media reported that the company said it is too expensive to distribute power to rural areas.
FESL has been distributing electricity to parts of rural western Uganda, consisting of the following districts: Kibaale, Kyenjojo, Rukungiri, Kanungu, Masaka, Rakai, and Isingiro.
Explaining to media about what led to the company's decision to close this part of their business, Kiiza said: “One has to drive for long distances to serve one potential customer.”
Kiiza told the media that they have written to the Electricity Regulatory Authority (ERA) to inform the authority that his company would not renew its license to distribute power in the above mentioned districts.
Media further reported that ERA's manager of consumer and public affairs, John Julius Wandera, said in light of the news they have nominated the Uganda Electricity Distribution Company Limited to take over the distribution network in the FESL's service areas.
"The nomination is aimed at ensuring continuity of services after termination of the FESL licenses on 28 February,” Wandera said.
It is reported that Ferdsult's failure to connect more people to power was largely because of its costly connection fee.
The electricity distributor’s no-pole connection service are said to cost Shs1.1 million ($307), of which Shs49,000 ($13.647) is for the inspection fee, Shs492,000 ($137) the capital contribution fee and Shs560,000 ($156) the connection fee.
In comparison, a no-pole connection by Umeme, which distributes 97% of the electricity generated in Uganda, costs Shs147,000 ($41) (Shs49,000) inspection fee and Shs98, 000 ($27) connection fee, media reported.
Kiiza concluded that in light of the company exiting the power distribution business, it would focus on treating and selling electricity poles to the distribution companies.