In February Ferdsult Engineering Services, a private firm active in electricity distribution, announced that it will no longer be involved in providing this service in Uganda due to the high cost of delivery. Ferdsult was distributing electricity to parts of rural western Uganda, including the Kibaale, Kyenjojo, Rukungiri, Kanungu, Masaka, Rakai, and Isingiro districts. Read more...
The company said it is too expensive to distribute power to rural areas, stating to have lost Shs1.4 billion ($389,438) as a result.
According to the Monitor, Ferdsult attributed the loss to 'non-technical losses', adding that vandalism of electrical transformers to extract either transformer oil or copper windings for resale was another cause of high financial losses.
UEDCL to take over electricity distribution
The Monitor reported that the state-owned power utility, Uganda Electricity Distribution Company Ltd (UEDCL), has assured residents that its services will continue as it will take over the role of distributing electricity.
Speaking during the handover from Ferdsult to UEDCL last week, UEDCL's chief technical services officer, Franklin Kizito Oidu, said it means the government trusts UEDCL.
"It implies government companies can serve better than private companies in service provision provided the government is willing to invest in that sector," Oidu said.
“And we are ready to take over from Umeme [Uganda Ltd] in case Umeme wants to move away,” Oidu added.
It is reported that Ferdsult's head of sales and marketing, Charles Byamukama said if the Electricity Regulatory Authority (ERA) had approved the company’s application to increase its end-user tariff from Shs511.19 ($0.142) to Shs705.66 ($0.196) per unit, they would have remained in the business. Read more...
Commenting on this, ERA director legal, Harold Obiga, explained: “We approve a tariff increment based on justification. We also approve basing on the cost being reasonable. So the onus is on the licensee to demonstrate that the tariff they want is justifiable and reasonable.”