Energy PS Defends Multiple Companies in Electricity Sector

All companies involved in the electricity sector are vital, Fredrick Kabagambe Kaliisa, the permanent secretary ministry of energy has said. There have been numerous calls for government to restructure and reduced the number of companies involved in the electricity sector.

umemeDickens Kamugisha, the director Africa Institute for Energy Governance says it is a total wastage of resources to have six companies doing generation, transmission and distribution which he says can be done by one or two companies.

Kamugisha argues that it does not make economic sense to have all those companies to run a sector that doesn’t produce even 600 MW of electricity. He says that work in the sector is duplicated which he says has led to the signing of the bad concession agreements in the sector because the companies know they can easily pass blame to one another. An official from the ministry of finance also said that all those companies are not necessary adding that, the reason electricity tariffs will never go down is because government has refused to cut unnecessary costs in the sector.

Like Kamugisha, the official who did not want to be named thinks that these companies are a burden to the consumer who foots the costs of administration of these companies through the tariff and taxes. While power consumers and advocates say the companies are too many and redundant, Kaliisa says each of the companies has a role to play. Kaliisa says that the sector cannot be run by investors like UMEME and Eskom saying that there should be someone to supervise them. He says the private companies use government assets, which requires that they are supervised by a government agency.

Kaliisa further argues that what government had in mind when it was unbundling Uganda Electricity board in 1999 was the bigger picture. He claims the sector has grown saying Eskom only generates power at Kiira and Nalubale while Uganda Electricity Generation Company Limited will be in charge of generation at the upcoming projects- Karuma, Isimba and Ayago.

Kamugisha says the regulator- Electricity Regulatory Authority would play most of these roles adding that the reason it is not doing its job is because so many companies are interfering. However Kaliisa says that ERA is just a regulator which doesn’t do operations. After the sector was privatized in 1999, UEB was unbundled and three companies; Uganda Electricity Generation Company limited, Uganda Electricity Transmission company Limited and Uganda Electricity Distribution Company limited were created.

UEGCL was to be in charge of generation, UETCL to handle transmission while UEDCL would handle distribution. However foreign private companies; Eskom and Umeme were in 2004 hired under what a couple of investigations have called unfavorable deals to carry out generation and distribution respectively but UEGCL and UEDCL still exist.

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