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Making the electricity sector viable

By Nicole Namubiru

Benon Mutambi (PhD) is the executive director of the Electricity Regulatory Authority.  He spoke to Nicole Namubiru about their mandate and other pertinent issues in the electricity sector.

What are the key elements of your management philosophy as a CEO?

Effective leadership is at the core of my role. I have to assemble the right team, motivate it and grow it in terms of competence, in order to deliver great results.

In terms of strategy and execution of its mandate, what has changed at ERA since you took over?

My goal was to give the organization a team with the right skills and competence. I had to make the recruitment process very competitive. This enabled us to get competent workers who were hired purely on merit.  By the time I joined, the ERA budget stood at just Shs 4.3 billion; it is now Shs 12 billion. Even the Auditor General had raised concerns, questioning the capacity of the organization to carry out its mandate given its small budget.  This improved our efficiency. Load shedding has significantly reduced. We also had to amend the license of Umeme in order to close the loopholes. This has saved the country over Shs 40 billion in a period of three years. We have also managed to reduce energy losses from about 32% to less that 20% currently having hovered around 32% for a period of five years. The collection rates have also increased from 95% to about 99% currently. This has saved the country over $32 million.

What is your assessment of the electricity sub-sector in Uganda currently?

We are doing well. There is a vast reduction in load shedding in the country. We have improved the distribution network of electricity.  We had to do this by restoring various networks. Though this caused some inconvenience to the consumers as electricity had to be off during those hours, at the end of the day it was for the better.  Uganda is one of the countries with a stable electricity sector in the whole of Sub-Saharan Africa. What we are working on now is to extend electricity to off grid areas. Though the tariffs are still relatively high, we are working to bring them down by reducing the cost of generation.

Which challenges does ERA face from a regulatory point of view?

As a regulator, my greatest challenge is to balance the interests of the stake holders in the sector. Some of the interests of the stake holders are at the expense of others.  So striking a balance amongst all the stake holders without completely pushing them to the wall is a great challenge. But we have overcome so far so we keep pushing on.

The portion of the population that has access to electricity is still very small and growing at a slow pace. What factors are responsible for this situation?

We are actually below the Sub-Saharan average of 30%. We are between 15-20%, which means we still have a long way to go. But this is because Ugandan population is scattered everywhere. But we are working on it by promoting off grid electricity systems such as solar electricity. We are increasing access to electricity in the off grid areas.

Power tariffs have been steadily increasing in Uganda over the last few years. Why is this so?

This is because the financial markets in Uganda are still narrow. Besides, it is a reality that the shilling has been depreciating against the dollar over time. Yet, all the transactions in the energy sector are done in dollars. It is amazing though that according to our figures; the price has been reducing in dollar terms. Nevertheless, we are working towards reducing the tariffs for Ugandans. On the other hand, the Bujagali cost of production is at 11 US cents/KW. It is at this rate that electricity is sold to industries, which consume 70% of the generated electricity.

How optimistic should Ugandans be that a time will come when the tariffs will actually go down?

Ugandans should be optimistic because the tariffs will reduce when Isimba and Karuma start to generate electricity. This is so because there will be cheaper generation of electricity. This will in turn reduce the tariffs.

How would you, as the regulator, assess the performance of power distributor UMEME in relation to the concession agreement it signed with the government?

I can only say it has improved over time. I am extremely happy with their performance.  The investments have drastically increased to over $70 million per year. Such investment would previously be done in a period of six years. The collection rates are at 99% and losses too have reduced.

The idea of a regional power integration project has been under discussion for some time. Any progress made so far?

There has to be a regional integration before there is a regional interconnection. But I am very happy with our progress. We are connecting to Rwanda, Kenya and Tanzania. This is positive.

Where do you see the power sector in Uganda in the next few years?

I see Uganda as a net exporter of power in the near future.  Isimba and Karuma will help to reduce power tariffs.  I see Uganda with one of the most-efficient electricity sectors in the Sub-Saharan region.

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