20 December 2007 – Ugandan power distributor Umeme and the Uganda Electricity Transmission Company (UETCL) have applied to the Electricity Regulatory Authority (ERA) for an increase in tariffs. Both cited a need to recover target revenue and a return on investment as the reasons for the request.
Electricity prices have increased from US$.0101 in 2005 to US$0.252 in 2006 and Ugandans are paying the highest electricity tariffs in the region.
Since 2005, when Umeme took over the distribution of electricity in Uganda, prices have soared due to "operating and maintaining costs," (payable in foreign exchange) and "local inflation, depreciation, return on assets, working capital and an allowance for bad debts and losses," a document released to the public explained.
"The revenue requirement of Umeme is made up of operation and maintenance costs. A portion of this is indexed to foreign exchange and the remainder is indexed to local inflation." Sam Zimbe, Umeme’s chief commercial officer said: "We have submitted our tariff adjustment documents. They stipulate our revenue requirements and targets. Fuel prices have gone up, maintenance and operation costs for the distribution network have also gone up. I cannot tell you whether the prices will go up or not. It is upon the regulator to decide."
"Applications for 2008 have been received. Tariff reviews of all the companies are done annually. Quarterly adjustments are mainly for changes in inflation, the exchange rate and fuel prices," said Frank Sebbowa, Chief executive officer of ERA explained.
"The request for adjustments will be carefully scrutinised. The authority is unlikely to agree upward adjustments except external costs such as diesel price increment, which the Government provided for in the Budget."
It was important to remember that tariff adjustments were considered by whether the revenue requirements of the operators were fair and reasonable for the continued supply of affordable power, Sebbowa stressed.