In Uganda, the auditor general’s 2014/15 report has identified government’s unnecessary power purchases from the Uganda Electricity Transmission Company Ltd (UETCL) as the reason for escalating electricity rates.
Low electricity demand
The report indicated that as of 30 June 2015 the country was generating 685MW, however the demand stood at 550MW.
Auditor general John Muwanga said in the report: “I also further noted that for the two thermal plants, with a capacity of 1,18MW government continues to pay capacity charges amounting to approximately Shs68 billion ($19.512 million) annually for the last two financial years, through UETCL, yet they are only contributing 7MW power to the grid.”
According to local media the two thermal plants mentioned in the auditor’s general report are Jacobsen and Electromaxx, which are supposed to have been switched off as they generate unnecessary excess supply.
The auditor general’s report further highlighted low demand together with limited distribution and transmission networks as the contributing factors for the unused capacity of 135MW.
Increased electricity rates
In addition, Muwanga stated that committing government resources without thorough analysis on the feasibility of demand would result in increased power tariffs.
“Committing government into investment projects without adequate analysis of demand limitations may lead to government failure to pay off the loans (through the tariff), hence the possibility of increase in subsidies further draining the government meagre resources,” he stated.
For the Ugandan government to settle payments owed to companies generating power it is required that every three months electricity consumers receive increased power rates.
However the report said: “In addition, some power plants are not generating electricity at full capacity, yet this idle capacity (also known as deemed energy) is paid for through tariffs and government subsidies.
“For the last two years, government has on average paid Shs11.57 billion ($33.2 million) annually for deemed energy purchases.”