September 30, 2020

Court Quashes Ministry of Energy Statutory Instrument


Kampala – Court has quashed the newly established Statutory Instrument (S1 62 2020) by the ministry of energy which was meant to govern the operations of Rural Electrification Agency (REA). It among others scrapped the position of executive director.

The Friday, 25th September ruling was made after the Centre for Public Interest Law Limited, who were the applicants in the case, dragged the Attorney General to court. This was after the energy minister made and passed the Electricity (Establishment and Management of the Rural Electrification Fund) Instrument, S.I No. 62 of 2020 and repealed/revoked the Electricity (Establishment and Management of the Rural Electrification Fund) Instrument S.I. No. 75 of 2001.

The applicants filed an application for judicial review, seeking to quash the S.I No. 62 of 2020 (developed and gazetted on 30th April 2020)as ultra vires the Electricity Act 1999, Cap 145 and other existing laws, and for illegality, irrationality and procedural impropriety.

The applicants noted that the process of making and passing the statutory instrument by the energy minister did not comply with the constitutional requirement to consult and involve people in the formulation and implementation of development plans and programmes, pursuant to Article 8A (1) of the Constitution.

RULING

Court quashed the SI 62 2020 on the basis of three major key areas below: that the Minister for Energy breached sections 63 and 64 (3) (a) of the Electricity Act, 1999 when she passed the Electricity (Establishment and Management of the Rural Electrification Fund) Instrument, S.I. No. 62 of 2020 in violation of the Rural Electrification Strategy and Plan for 2013-2022. “When the Rural Electrification Strategy and Plan is made and approved by Cabinet, its implementation takes course and the sector is obliged to implement it because it is a mandate conferred by the Act. Undertaking any policy or legislative change contrary to it (without first amending it and having the amendment approved by Cabinet) would be illegal because such a person would be acting beyond the scope provided for in the parent legislation,” Reads the ruling in part.

The judge also noted that the exclusion of the Permanent Secretary of the Ministry responsible for Finance compromises the accountability of the Rural Electrification Fund which is a Vote.

“The exclusion of the Permanent Secretary for the Ministry of Finance also impedes financial access for the Fund. Such results do not better the operation of the Fund and are unreasonable. As such, the act giving rise to or proposing such a result is irrational. The exclusion of the Permanent Secretary for the Ministry responsible for Local Government disables effective delivery of services. The Ministry of Local Government is best placed to provide guidance on areas to which subsidies should be afforded since it is aware of the economic status of various rural communities. Additionally, the decentralised nature of the ministry enables it to assist in coordinating the implementation of rural electrification projects. As such, excluding the presence of the Permanent Secretary for the Ministry of Local Government only serves to cripple effective service delivery. It is both unjustified and unreasonable, and consequently irrational.”

Court also observed that the Minister for Energy also refused and/or failed to comply with the set procedure for the preparation of Statutory Instruments when she passed the Electricity (Establishment and Management of the Rural Electrification Fund) Instrument, S.I. No. 62 of 2020 without Cabinet approval. The Uganda Public Service Standing Orders, 2010 at Q–b details the legislative process. At paragraph 2 it states that: “Before instructions are given to the First Parliamentary Counsel for the drafting of Bills or Statutory Instruments, the instructing Ministry or Department must: a) seek Cabinet approval authorising the subject for legislation; or b) request through its Minister, the authority of the Attorney General or Solicitor General for the legislation to be drafted without prior reference to Cabinet. This approval will be given only in special circumstances.”

“The Respondent has not furnished this Honourable Court with any such proof of Cabinet approval that was sought and obtained prior to the drafting of the impugned instrument. The Respondent has also not presented proof of leave to draft the legislation without Cabinet approval,” the ruling further reads.

WHAT NEXT

While the SI was still in court, MEMD and REA continued to operate using the new SI. This included contracting for goods, works and services and appointment of new staff.
“Government will now have to deal with any financial losses that will arise from any financial and legal implications of these operations,” a top official from REA, but not authorized to speak to the press without the approval of the energy minister, commented.

THE INSIDE STORY

Sources say the instrument was quickly developed by the mother Ministry of Energy and Mineral Development (MEMD) during COVID 19 country lockdown. While everyone was under lockdown, the MEMD was busy working out modalities on how to benefit most from REA. Information received from the corridors of Amber House indicates that, the SI development had three key major objectives:

400M USD PROJECT

To ensure that REA does not manage the US$400million Electricity Access Scale-up Project (EASP) meant to connect over one million households under the free Electricity Connections Policy (ECP). Indeed, on page 3 of the SI, it is indicated that rural areas are areas beyond the main electricity grid and that’s where REA is supposed to operate. This means that REA’s mandate, without any justification, had been changed to that of an ‘off-grid agency’, dealing in such things like mini grids and stand-alone solar systems only.

The SI reportedly did not provide an alternative organization that would extend the grid from the existing grid, nor what would happen to the lease agreements REA had signed with operators of the grid networks outside Umeme’s footprint since REA had been kicked from the main grid. With this SI, MEMD was able to tell the World Bank that REA didn’t have the mandate to manage Government funded projects within the Umeme areas.

This has totally left the proposed US$400million in a complete limbo. Unfortunately, instead of the MEMD pursuing to get the new World Bank project approved, they went ahead to institute a premature review of the ECP to ensure that REA’s mandate of implementing the ECP was removed. In his letter dated 19th June 2020, the Permanent Secretary Robert Kasande instructed MEMD, REA and the Electricity Regulatory Authority (ERA) to embark on the review exercise of the ECP.

The MEMD under this review is proposing that customers meet their full cost of connection as opposed to getting a free connection under the ECP. In their draft Cabinet memo, they indicate that a customer who does not require an electricity pole will pay UGX600,000 and the one that requires one electricity pole will pay UGX2million. This money will be paid to utility companies across the country with Umeme being the major beneficiary. The EASP was supposed to become effective in 2019 and by now, Ugandans would be connecting for free.

OFFICIALS TARGETED

Sources also say, the plan was to kick out then Executive Director, Godfrey Turyahikayo whom we understand had become a stumbling block for the MEMD given that he had been against having Umeme implement the project and had also indicated that if Government procured connection materials in bulk, a saving of US$40million would be realized overall. The saving would connect close to another 200,000 customers hence benefitting about 1million Ugandans. He communicated in several letters to the MEMD. The MEMD was totally opposed to bulk procurement of materials and, therefore, did not care about the loss of the US$ 40billion which would accrue from this method of project implementation.

That the move was also to remove the 2 Permanent Secretaries of the Ministries of Local Government and Finance. An IGG report had been released earlier on in 2020 indicating massive corruption in REA, in particular regarding the quality of electricity lines which had been constructed.

The report majorly implicated Godfrey Werikhe and John Turyagyenda who were at the helm of technical operations and construction of lines. Under the new SI, the new board was to review their case and consider reinstating them in office. Unfortunately, this may not happen given that the board that MEMD had thrown out will now have to continue under the old statutory instrument, SI 75 of 2001.

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