Electricity users get govt subsidy, to pay connection fees in instalments

New electricity users are set to enjoy a connection fee subsidy starting 14th December 2022 after the government and partners on Tuesday launched the Hybrid Electricity Customer Connection Credit Framework. 

The partners include Electricity Regulatory Authority, Uganda Development Bank (UDB), Rockefeller Foundation, Umeme Limited and Uganda Electricity Distribution Company Limited. 

The Framework allows Hybrid Financing Scheme for the No-Pole Electricity Connections program that will also see electricity customers pay their share of the connection fee in instalments. 

The Minister of Energy and Mineral Development, Dr Ruth Nankabirwa Ssentamu while launching the program said that customers are required to pay Shs720, 883 to be connected to the national grip by the electricity distributor, the government will pay Shs250, 883 for the customer as a subsidy.

Thereafter, the customer will make a down payment of Shs200, 000 and the remaining Shs270, 000 will be paid by the customer in instalments over eight years through a credit line financed by Uganda Development Bank. 

This means that UDB will pay the Shs270, 000; then the bank will recover this money from the customer in eight years by deducting 15% of every power purchase made by the customer (energy bill).  

The Minister said the program will be rolled out for Umeme Limited and Uganda Electricity Distribution Company Limited customers as a pilot.

Quoting a 2019 Uganda Bureau of Statistics (UBOS), the Minister said the main obstacle to households getting connected to the national grid is the high cost of initial connection/connection cost.

To mitigate this challenge, the government launched the Electricity Connection Policy (ECP) to increase annual domestic customer connections from 160,000 to 300,000. Under this scheme, a customer is only required to meet the cost for the inspection of internal wiring and the initial units of electricity.

But because of the COVID-19 pandemic, the program failed as the country focused and diverted the resources to the health sector. The Minister said that as a result, over 280,000 applications for a connection could not be effected.

The Minister explained that to address this shortfall, in August 2020, Cabinet approved a hybrid connections program to allow consumers who can afford the full electricity connection cost to get connected while Government mobilizes resources to fund free connections. 

“The cost of a no-pole connection approved by the sector regulator – the Electricity Regulatory Authority (ERA) is UGX 720,883. This cost includes taxes but excludes internal house wiring and inspection fees,” the Minister said.

The Minister revealed that the Hybrid Electricity Customer Connection Credit Framework is based on the 2020 connection costs of a no-pole connection (Shs720, 883) approved by the Electricity Regulatory Authority.