AMONG the thirty-nine countries surveyed by the World Bank in sub-Saharan Africa to determine the most efficient power utilities when it comes to operational and capital expenditures, Uganda came out on top.
The World Bank study, titled Making Power Affordable for Africa and Viable for its Utilities, compared cash collected from bills sent out with the total costs of supply, broken down into operational and capital expenditures per kilowatt hour (kWh) billed.
‘The findings show that only Seychelles and Uganda fully covered both operational and capital expenditures,’ the report stated. It highlighted that inefficient utilities suffer from transmission and distribution losses, bill collection losses as well as overstaffing.
As such, these factors prevent power distributors from delivering reliable electricity to existing customers, let alone expand supply to new consumers.
The study cited Uganda’s power distributor Umeme as having reduced technical and distribution losses to 19 percent from the highs of 35 percent around 2008, and is now targeting to reach 14 percent by the end of 2018.
According to World Bank’s director of energy and extractive global practice, Lucio Monari, ‘Less than half of utilities cover operating expenditures while several countries lose in excess of $0.25 per kWh sold.
‘In this context, it will be difficult for utilities to maintain existing assets, let alone facilitate the expansion needed to reach universal access goals.’
The study also found that Uganda was one of those that did not suffer from under-pricing. ‘They have the fiscal space to charge better off, large-consumption customers more and cross-subsidise needy households,’ the study noted.
Researchers found that in most countries, unmetered consumption is concentrated in large consumers such as factories and others who are able to pay cost-reflective tariffs. ‘Households on prepaid plans do not risk disconnection for failure to pay and avoid reconnection fees, which can be considerable in some countries,’ the study noted.
By Uganda targeting better off, large-volume consumers, significant loss reduction is possible with little loss of welfare. Also, pre-paid metering has been key in ensuring that Umeme is able to reduce on the number of defaulters.
Meanwhile, the study also warned that ‘prepaid meters should not be made mandatory if grid electricity is unreliable, lest customers pay cash in advance for electricity they cannot get when they need it.’