Umeme Says Subsidised Power Connections Resume, but Customers Say Not Yet

Electricity distribution company, Umeme Ltd on Wednesday commenced receiving and processing applications for the subsidised electricity connections.

This follows the conclusion of the “hybrid” financing deal between Umeme, the Ministry of Energy and Mineral Development and the Rockefeller Foundation, which is providing connection at 470,000 shillings, if no pole is required.

It is expected to realise 1,360,000 new connections.

The full connection costs 720,883 shillings excluding house wiring charges, which most Ugandans cannot afford, according to the ministry. The Hybrid Financing Scheme also provides for those who cannot afford to pay the entire amount in a lump sum, to make an initial payment of at least 200,000 shilling and get credit for the rest.

This balance will be paid back each time a customer pays for power (Yaka) over a period of eight years, and it would account for 15 percent of the bill amount. Ruth Nankabirwa, the Minister of Energy and Mineral Development says that the customer will not be charged any interest when repaying the credit, adding that they also have the option to pay back earlier. The credit component of 270,000 is the portion that UDB has contributed to the financing.

This, according to the ministry, means that of the total 720,883 shillings the government is giving a subsidy of 250,883 plus the credit interest as well as any bad debt.

However, customers who have the ability will be free to pay the full amount at once according to the minister.

Umeme said the customers were free start applying through the Umeme app or the web portal and take advantage of the scheme. However, at some Umeme offices in Kampala, applicants were turned away with officials telling them to return next week.

Reason; the new scheme, while they are aware of it, was not yet uploaded onto the Umeme programs. For those who had already recently paid for free connectivity, Umeme is in consultation with the ministry and ERA about how to handle them.  

The Global Energy Alliance for People and Planet (GEAPP) with their anchor partner the Rockefeller Foundation has committed to providing a Payment Guarantee for the credit line.

This program will be rolled out for Umeme Limited and the Uganda Electricity Distribution Company Limited customers as a pilot. “This framework is sustainable given that it combines resources from the consumers, the Government, and the private sector relieving the heavy burden on the Government,” says a statement signed by minister Nankabirwa.

She says this scheme should help them clear the more than 200,000 applicants from the  free connection exercise, especially if applicants under it can apply to benefit from the hybrid financing scheme. This does not exclude applicants of the free connections scheme who are able to meet the initial payment  according to the statement.

The government launched the Electricity Connectivity Policy in 2018 with plans to connect at least 300,0000 customers per year, up from the 160,000that were connected the earlier year.

The long-term aim was to raise the level of access to the grid from 28 percent to at least 60 percent by 2027. However, the policy ran into problems in 2020 when the Covid-19 outbreak meant that the resources meant for the program had to be diverted to the fight to contain the pandemic.

As a result, over 280,000 applications for connection could not be effected

Under the original scheme, a customer is only required to meet the cost for the inspection of internal wiring and the initial units of electricity.

In August 2020, cabinet approved a hybrid connections program to allow consumers who could afford the full connection cost to get connected while the government mobilized resources to fund free connections.

In March 2021, the ECP program resumed with a target connection of at least 87,000 free connections to address the backlog chocking Umeme.

However, more than 200,000 of these applications still remain not connected on top of new applications being received by the electricity utility providers, according to the Electricity Regulatory Authority, ERA.

“This number does not reflect the component of consumers who have been discouraged from applying due to the backlog and the related high cost of connection,” it said. 

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