Dear UMA Member,

This is to inform you that on 15^th February 2023, a dialogue on industrial energy was held at UMA showgrounds to address electricity challenges facing the manufacturing sector.

The dialogue was presided over by the Minister of Energy and Mineral Development, Hon. Ruth Nankabirwa in presence of Chairman of Directors, UMA.

The discussion was between UMA members and the key power supply chain agencies including; Ministry of Energy and Mineral development (MEMD), Uganda Electricity Regulatory Authority (ERA), Uganda Electricity Generation Company (UEGCL), Uganda Electricity Transmission Company (UECTL), Uganda Electricity Distribution Company (UEDCL) and UMEME.

In attendance were other Government representatives from the Uganda Investment Authority, Committee of Parliament on Trade, Industry and Cooperatives; Delivery Unit, Office of the Prime Minister, Uganda Free Zones Authority, and Kampala Capital City Authority.

The key issues discussed included the unreliability of power supply,  increasing rate of vandalism of electricity installations, failure to streamline local content across the electricity supply industry, and the high cost of power.

On mainstreaming local content in the energy sector as a driver for increased power consumption, UMA members argued that the sector has the capacity to supply various products, including pylons, mono poles, steel poles, transformers, switch gears, and street lighting infrastructure.

The Minister guided that:

a)    Electricity Regulatory Authority works with the Public Procurement and Disposal of Public Assets Authority (PPDA) to standardize bidding requirements that support local companies with capacity to supply products to the Electricity Supply Industry (ESI).

b)    UMA profiles locally manufactured products that can be supplied to the Electricity Supply Industry (ESI).

c)    ERA works with other agencies in ESI to document the specifications and standards of all the products they use, and share those requirements with UMA.

On reducing the cost of power, four action points were agreed upon;

a)    The Minister pledged to fast track the implementation of the President’s directive to lower the tariff to 5 US Cents KWh, but pleaded with UMA members to appreciate that it will be gradual because sudden drop of price will make the sector collapse if it fails to meet its marginal costs.

b)    the possibility to amend the Electricity Act so that industrial power consumers can purchase power directly from generation. This will ensure that the costs associated with third parties are eliminated, the Minister guided it will be considered in the new Act and incoming directives.

c)    the Minister pledged to add her voice to the Minister of Finance to reduce revenue requirements from the Electricity Supply Industry, and where applicable to reconfigure the return-on-investment payable to the leading licensees in the sector. Once these two components in the tariff reduce, then the final tariff paid by the consumer reduces as well.  

d)    The discussion on lowering tariff by expanding electricity consumption base through mineral beneficiation especially domestic processing of iron ore be enhanced. It was underscored that the Amendment of the Mineral Act to facilitate mineral beneficiation through production sharing agreements between the Government and the manufacturers be given priority attention.

On the unreliability of power supply, which has derailed manufacturers’ efforts to achieve optimal productions and affected their supply timelines. The Electricity Regulatory Authority confirmed that 90% of outages were caused by vandalism of transformers, pylons, and other infrastructure.

The Minister retaliated that vandalism of electricity infrastructure is an act of terrorism and that both the culprits that cut down the installation and the companies that buy those materials as ‘scrap’ are culpable before the law. She warned that whereas buying scrap is okay, the factories have full responsibility to ensure that they don’t transact in illegalities, otherwise they risk being closed and owners prosecuted. 

On way forward, it was agreed that;

a)    Given the fruitfulness of the event, it is necessary to dialogue at least every year to recap on the agreed upon actions and capture other emerging issues;

b)    A non-committal Memorandum of Understanding (MoU) between UMA and MEMD be signed to formalize the relationship of the two institutions.

Special appreciation to Hon. Ruth Nankabirwa for accepting to preside over the dialogue and reaching on such important action points that were delivered on behalf of all UMA members by the Chairman Advisory Board of UMA, Mr. Abid Alam.