The Ugandan government is set to reduce the wholesale price of electricity for commercial and medium-sized industries in the first three months of 2024 in a bid to foster economic growth and prevent company insolvencies caused by high energy operational costs. The Electricity Regulatory Authority (ERA) approved a weighted average cut of 1.6 percentage points, benefitting commercial enterprises, medium industrial, large industrial, and extra-large industrial consumers.
The tariff reduction, prioritized at 1.8 percent for commercial and 2.8 percent for medium industries, aims to support small and medium enterprises (SMEs). The move is part of ongoing measures to reduce electricity end-user tariffs, aligning with pre-determined demand growth targets for 2024, projected to rise by 9.53 percent. Over 5,000 businesses across various sectors within these industries are estimated to save Shs40.32 billion in electricity bills annually.
Domestic energy buyers purchasing more than 15 units of electricity will also benefit from a 1 percent reduction in tariffs, aligning with the government’s focus on small and medium-sized industries. Dr Sarah Kanaabi Wasagali, the chairperson of ERA, emphasized that the tariff adjustments were informed by applications for reviews from key entities, adhering to regulatory processes mandated by the Electricity Act 1999.
The initiative maintains tariffs for domestic consumers and street lights while addressing the costs of power acquisition from generation plants. Industrial consumers with potential power consumption growth will continue to be billed at US 6.85 cents per unit during peak and shoulder hours. Cooking tariffs for both domestic and institutional purposes will also be sustained to promote electricity usage for cooking.
The government’s broader vision includes connecting an additional 1.5 million homes to the grid, raising the electrification rate from 28 to 50 percent, and ensuring electricity for every home by 2030. The completion of the Karuma Hydro power plant is expected to contribute to this vision, increasing the country’s installed capacity to at least 2000 MW.
The Energy Policy 2023, unveiled in October last year, aligns with Uganda’s Vision 2040, aiming to facilitate socioeconomic transformation through expanded electricity access for homes, businesses, industrial parks, and refugee/host communities.