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ERA replies Jannette Mugisha breakdown of the weighted average distribution tariff excluding VAT & service fee

In reply Jannette Mugisha, Electricity Regulatory Authority for the first time revealed the breakdown of the weighted average distribution tariff excluding VAT & service fee. Here is the full reply from ERA;

Electricity Regulatory Authority For your information, the Saleh report was issued in 2011. We are in 2018 Jannette Mugisha. The Umeme Limited license was amended in 2012 and new targets were set for Umeme in respect to loss reduction, target non-collection debt factor etc. Tight quality of service standards were set not only for Umeme, but all distribution players. The Electricity Act is a guiding law, but the details of regulating utility companies is set out in their licenses. As part of consumer protection, ERA amended the Umeme license in 2012, this led to the recovery of up to UGX 104 billion from Umeme Ltd.

This money has been largely used to manage tariff spikes due to volatile macro economic factors. Umeme took ERA to court over these amendments and recoveries and later, asked for a consent agreement. All money accruing from HV sales is now invested by Umeme in priority (call it industrial growth) areas as directed by ERA. In 2015, ERA set tight Quality of service and supply standards for all operators aimed at protecting consumers, ERA has disallowed a number of Umeme investments that are not considered prudent and necessary for consumer value and therefore they are not added to the rate base. That is why there is a discrepancy between the Umeme stated investments and ERA published as approved investments.

All these has been done to manage the tariff, and protect consumers. When you talk about losses stagnating, the questions comes, who did that loss study and when? ERA has brought down losses from about 30% in 2011 to below 15%. Umeme’s 2018 loss target is now 14.7%, if they don’t meet that, they take the heat on their revenue. You can’t talk about losses during UEB days, it’s embarrassing right now. You have rightly talked about the poor network; but how should investments be done, if they have to be done by a private entity like Umeme, the company must earn a return for their money invested. Therefore as we yearn for an improved network able to uptake all our generation plants, lets support ERA in the careful acceptance of investments in the distribution network. If ERA/GOU wast mindful of that fact, the tariff wouldn’t have been able to manage the investment plans fronted by the utility every year. When you talk about Corporate tax, since the amendments to Umeme’s license in 2012, the company now has to file proof of tax payment to URA before it can be allowed for recovery through the tariff. As concerns public meetings, i assure you every concerned Ugandan makes effort to attend and make submissions. Stakeholders from all walks of life attend, they never leave it to ERA. Millers attend, carpenters attend, academics attend, the media attends, Corporates attend, the Police and military stakeholders attend, Manufacturers attend, small scale industrial traders attend, KACITA attends, and domestic electricity users attend tariff review hearings.

Its only Jannette Mugisha who chooses not to attend and understand the facts but takes to social media to mislead unsuspecting Ugandans. Even after the process is done, concerned Ugandans come to ERA and seek an explanation on what happened and why the tariff was reviewed the way it was done. They even read tariff review applications and the outcomes report. They don’t selectively look for outdated and reports that have been overtaken by time and events. I would like to request Jannette to disprove ERA in a discussion before you take to social media.

Let’s build our country instead of destroying it with misinformation and falsehoods. We are equally Ugandans like you, and concerned about our country like any other person, probably even more because we are in charge of a key growth service sector. On a daily basis, we work to advance the goals of the GOU first, ahead of anything obligation, but we must also be mindful that those who painfully invest their savings in our sector must recover it as per agreements. Let s separate trivialities from actual service delivery, at least expensive electricity is better than no electricity at all.

Southern Sudan will testify to this. There has been no power supply there for now over 2.5 years, why? GSS has no money to invest in the sector, and no private player is willing to invest there. What is the result then..? Every one burns their own diesel generator. Finally, here is the end user tariff distribution for those of you who won’t read the tariff report from www.era.or.ug

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