The Minister of Energy and Mineral Development, Ruth Nankabirwa has announced changes to the Electricity Tariff Structure for customers under UMEME Limited, effective January 2022.
The amendments to the Tariff Structure were made by the Electricity Regulatory Authority (ERA).
The tariff re-structuring will include the introduction of a Pilot Tariff Category to supply power to industrial parks, introduction of the Declining Block Tariff for domestic consumers (cooking tariff) to encourage cooking with electricity at home, and re-categorization of the beneficiaries of the lifeline (social) tariff.
TARIFF FOR INDUSTRIAL PARKS
Nankabirwa said that effective January 2022, two industrial parks located in Buikwe and Kapeeka will be supplied with power at 5 cents per kWh.
“In a bid to improve competitiveness of Uganda’s manufacturing sector, the Government will effective January 2022 pilot the supply of electricity to industrial parks at 5.0 United States cents per kWh,” said Nankabirwa.
“The piloting project will commence at two industrial parks namely; Lao Shen in Kapeeka and MMP industrial park in Buikwe district,” she added.
During the piloting project, Nankabirwa said the consumption of electricity in the two industrial parks is expected to increase to help offset the revenue shortfall that would result from supplying electricity at 5 cents per kWh.
In the event that the shortfall is not covered by the increased consumption of electricity, Nankabirwa said Government will provide the necessary financial subsidies.
DECLINING BLOCK TARIFF FOR DOMESTIC CONSUMERS (COOKING TARIFF)
“The introduction of the cooking tariff is a deliberate strategy by the Government of Uganda to displace charcoal and other biomass sources of cooking lower than the cost of cooking using charcoal in homes. This will be associated with health benefits for communities, cost savings and the convenience of clean cooking,” Nankabirwa said.
The cooking tariff is being introduced under the Declining Block Tariff Structure which allows for differentiated tariff levels based on the amount of energy consumed, whereby the units of electricity consumed by a domestic consumer beyond a set monthly threshold has been announced by ERA are charged at a lower tariff.
It is expected that, with the lowered costs of electricity for cooking, many customers will need electric cooking equipment.
Accordingly, Nankabirwa said her Ministry is considering targeting big to medium sized financial institutions to partner with power distributor to finance household needs for electric cooking equipment.
The financing model, she said will emphasize the durability and efficiency of cooking equipment, and therefore the need for financiers to enroll and screen the suppliers of the equipment.
