Electricity Regulatory Authority (ERA) in partnership with the Ministry for Energy and Uganda Development Bank (UDB) have launched a pilot program aimed at making connectivity to electricity affordable.
The program mainly targets those ‘No-Pole’ customers who cannot readily raise in cash Shs720,883 approved by ERA as connection fee.
The drive dubbed ‘The Hybrid Electricity Customer Connection Financing Framework’ has been launched by the Minister for Energy and Mineral development Ruth Nankabirwa at the ministry offices.
The minister says, one of the main obstacles to households getting connected to the national grid is the high cost of connection.
The cost of a No-Pole connection according to ERA is Shs720883 taxes inclusive, but excludes internal house wiring and inspection fees.
Nankabirwa said having realized the challenges linked to the cost of connection, government came up with the Electricity Connection Policy (ECP) targeting to increase annual domestic customer connections from 160000 to 300000.
Under this scheme also known as free connection policy, the customer is only supposed to pay for the cost of inspection of internal wiring and the initial units of electricity.
She said the scheme had been flagged off, but was affected by COVID-19 pandemic in 2020 as resources were diverted to the health sector. Nankabirwa said as a result, over 280000 applications for connection could not be effected.
She however, said that in August 2020, cabinet approved a hybrid connections program to allow consumers who could afford the full electricity connection cost to get connected as government mobilized resources to fund free connections.
“The free connections program was resumed in March 2021 with a target connection of at least 87000 free connections to address the backlog in the Umeme Ltd concession. However, over 200000 of these applications still remain not connected on top of new applications being received by electricity service providers” she explained adding that this number excludes silent figures of potential customers who have been discouraged from applying due to backlog or the high cost of connection.
The minister explained that government earlier came up with other projects such as GET ACCESS and EASP aimed at increasing connections but some still require resource mobilization.
“Some households cannot wait for this due to their immediate needs but at the same time they cannot raise the entire Shs720883 immediately. To bridge this gap, my ministry working with ERA and UDB is implementing a hybrid mechanism targeting No-Pole Customer Connections. This framework combines a customer contribution, a subsidy and a credit to the customer” she says.
Under this arrangement, the customer shall be required to pay only Shs200000 cash as contribution towards connection, ‘given an indirect loan’ worth Shs270000 and Shs250883 as subsidy totaling to the original approved Shs720883.
The beauty with this is that, UDB will top up the Shs270000 and only recover it through a 15% deduction from every electricity bill payment by the customer in a period not exceeding 8years.
“The program will be rolled out for Umeme Ltd and UEDCL customers as a pilot. Therefore, potential consumers are encouraged to take advantage of this program, make a down payment of Shs200000 and get connected to electricity. This framework is based on the 2020 No Pole connection (Shs720883) approved by ERA” she said adding that the program is sustainable since it combines resources from customers, government and the private sector.
The Global Energy Alliance for People Planet (GEAPP) working with Rockefeller Foundation have committed to providing a payment guarantee for the credit facility.
The function was attended by ERA board chairperson Dr. Sarah Wasagali Kanaabi and ERA CEO Eng Ziria Tibalwa Waako among others.