What lies ahead as government agency takes over electricity distribution in the Rwenzori territory
Kampala, Uganda | JULIUS BUSINGE | Bundibugyo District and its neighbourhoods have had frequent electricity outages for many years, leaving Bundibugyo Energy Cooperative Society’s (BECS) staff running up and about to fix the problem.
For that, BECS executives found themselves in collision with the electricity regulator – Electricity Regulatory Authority – for failing to meet the set benchmarks. Luckily, for some reason or the other, the two parties related well amidst their bitter-sweet relationship.
But recently, things turned sour as ERA swiftly suspended BECS license and its operations handed over to the Uganda Electricity Distribution Company Limited (UEDCL) effective April 01, 2021.
The company’s executives were accused of poor corporate governance, surging debt and lack of technical competence among its staff and management to generate and distribute electricity to consumers.
BECS owes Shs5.5bn to the Uganda Electricity Transmission Company Limited – the bulk seller of electricity to distributors.
Licensed in 2011, BECS mandate was to generate and distribute electricity to consumers in Bundibugyo and Ntoroko districts.
The move was supported by government through the Rural Electrification Agency (REA) to enable local communities under the cooperative to manage power distribution themselves in a bid to create jobs and related opportunities to the local population.
The new development now means that UEDCL will take charge of electricity connection lines, transformers and related equipment, personnel and investment into the network to ensure stable electricity supply to consumers.
Prior to the take-over, BECS supplied electricity to slightly over 8000 domestic and commercial customers.
James Guma, the Chairperson, Board of Directors at BECS told The Independent in an interview on March 03 that indeed the company lacked effective management right from the apex.
“We are ready to handover the facility to UEDCL,” he said adding “why should we stay with something we cannot operate properly?”
However, Guma added that they should have been allowed to institute a new BOD and management and leave the company to operate without government interference.
However, Julius Wandera, the director corporate and consumer affairs at ERA told The Independent that BECS had been given enough time to correct their mistakes but failed and that is why they had to swing into action.
“They thought it was a granary where they would just pick money as they want and use it forgetting that the money being paid by consumers is electricity being bought from a generation company,” Wandera said.
He said BECS executives are poor managers and electricity is not part of the business that they can manage.
When asked why it took so long for the regulator to swing into action, Wandera said, BECS is a community entity and that ERA supported the company in improving its corporate governance, financial accounting but in vain.
In relation to settling the Shs5.5bn debt, Wandera said BECs should devise means to clear the debt since UEDCL is inheriting only assets.
Wandera said ERA’s expectations are that UEDCL will carry out an appraisal to asses current challenges on the network alongside its owner – REA – and provide a diagnosis of the issues and the changes required to improve the service.
He said UEDCL will thereafter submit a license amendment request for them to cover the Rwenzori service territory in their current operational license. And, once a request has been granted, UEDCL will inspect all the metres, transformers and the entire network before formally taking over.
UEDCL is ready
Meanwhile, UEDCL’s Managing Director, Paul Mwesigwa and the senior Corporate Affairs and Public Relations Officer, Jonan Kizza said the distribution firm is ready to take over operations of BECS and expand the service territory.
Currently, UEDCL operates in 61 districts mainly rural areas, outside the Umeme network. Currently, UEDCL has more than 88,000 both domestic, commercial and other consumers countrywide.
Mwesigwa said UEDCL is bringing on board innovations including mobile billing system contrary to the manual one that is being used.
Presently, power consumers have to visit BECS offices to pick tokens after paying for electricity in the bank, which according to UEDCL executives is tedious, time consuming and not friendly to customers.
The company, like in other places where it currently operates, will also embrace full customer care experience where it will be at service 24 hours.
This, however, is not the first time that UEDCL is taking over assets of a failed electricity distribution company.
In 2017, it took over operations of Ferdsult Engineering Services Limited, a private company that was distributing electricity in seven districts of western Uganda.
This followed Ferdsult’s decision to quit the business after it made a Shs1.4 billion loss.
To-date, Mwesigwa said, this territory has registered great improvement and has become economically viable and self-sustaining.
“By the time we eventually takeover, we ensure that we have in place the right personnel, infrastructure, fleet and other logistics,” Mwesigwa said.
The company reported a sharp rise in revenue from Shs54bn in FY2017/2018 to Shs70bn in FY2018/2019 citing increased electricity network and power consumption in rural areas.
However, it had a power distribution loss of 20%, which is 2% above the 18% loss target set by the regulator during the FY2018/19.
Local leader’s voice
Ronald Mutegeki, the chairperson LCV for Ntoroko District said they now expect improved service delivery spearheaded by UEDCL given that power consumption in Ntoroko and generally the Rwenzori territory is expected to increase with the establishment of an industrial park.