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Ugandan Manufacturers Warn Power Tariffs May Raise Output Costs

Ugandan manufacturers said further planned increases in power tariffs will raise costs for industrial consumers in the East African country.

Plans for automatic adjustments over the next seven years based on foreign-exchange rates, inflation and fuel prices will “translate into higher energy costs to industrialists,” the Uganda Manufacturers Association, based in the capital, Kampala, said today in statement published in the New Vision newspaper.

Uganda this year suspended electricity subsidies that cost the country 1.53 trillion shillings ($569 million) since 2005 and said it will use the savings to finance public infrastructure projects. Tariffs for large-scale electricity users were increased by 69% to 312.8 shillings per kilowatt hour in January, while household rates were raised by 36 percent.

Further tariff adjustments will impair the “private sector planning since there is no certainty in costs of production,” the association said.

Uganda’s Electricity Regulatory Authority has yet to determine the margin by which energy costs will be increased because it has yet to consult consumers and “evaluate the proposals by stakeholders,” Julius Wandera, a spokesman for the regulator, said in a phone interview today.

Uganda, East Africa’s third-biggest economy, has an installed capacity of 810 megawatts of power, while peak demand is estimated at 509.4 megawatts, according to the regulator. Large-scale users, including cement, steel and beverage producers, consume 43 percent of Uganda’s power, it said in January.

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