The Minister of Energy and Mineral development Hon. Dr. Ruth Nankabirwa Seentamu has today officially launched the hybrid electricity customer connection credit framework.
During the launch, Nankabirwa revealed that the Uganda Bureau of Statistics in 2019 (UBOS, 2019) conducted a study and it was observed that one of the main obstacles to households getting connected to the national grid was the high cost of initial connection cost.
She added that the government launched the Electricity Connection Policy (ECP) commonly referred to as the Free Connection Policy, targeting to increase annual domestic customer connections from 160,000 to 300,000.
“Under this scheme, a customer
is only required to make a down payment of UGX 200,000, the cost for the inspection of internal wiring and the initial units of electricity and get connected to electricity,” Nankabirwa revealed.
She also noted that in 2020, challenges arose in the implementation of the ECP where over 280,000 applications for connection were not effected. She says this was occasioned by the COVID -19 pandemic that required a diversion of resources and prioritization of the Health Sector.
Nankabirwa said that, “To address this shortfall, Cabinet approved a hybrid connections program in August 2022 to allow consumers who can afford the full electricity connection cost to get connected while Government mobilizes resources to fund free connections.”
The minister added that there are a number of programs to accelerate electricity access in the country packaged by the Government of Uganda, with support from development partners such as the GET ACCESS project supported by KFW, and the World Bank Energy Access Scale-up Project (EASP).
The proposed EASP will support access to electricity for households, refugees and host communities under the ECP framework and the financing will achieve 1,360,000
connections.
Additionally, 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 and this will also go a long way in reducing the risk associated with the credit line to the customer.
The hybrid electricity customer connection credit framework is based on the 2020 connection costs of a no-pole connection (UGX 720,883) approved by the Electricity Regulatory Authority (ERA) and will be implemented as follows:
(i) The customer will make a down payment of UGX 200,000 as a contribution towards
their connection.
(ii) The second proportion of UGX 270,000 will be taken as a credit line that will be recovered as a 15% proportion of every bill payment by the customer.
(iii) The last portion of UGX 250,883, the credit interest, and any bad debt is to be considered as a subsidy to the customers.
(iv) The Uganda Development Bank (UDB) will finance the UGX 270,000 and allow for the recovery of this money in a period not exceeding 8 years.
Under the Ministry of Energy and Mineral Development, The program will be rolled out for Umeme Limited and the Uganda Electricity Distribution Company Limited (UEDCL) 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 Government,” Nankabirwa believes.
