Hundreds of customers will remain in the dark as power distributor Umeme Ltd has suspended free electricity connections under the electricity connections policy (ECP) over lack of funds.
A June 15 letter by Umeme managing director Selestiono Babungi indicates that the power distributor is demanding payment of $25m (Shs93.8b) from Rural Electrification Agency (REA) for completed connections.
“… REA expedites payment of outstanding amounts of $25m related to completed connections. If there is no funding for the programme, the (Electricity Regulatory Authority) should advise of alternating financing models including customer contributions,” the letter reads in part.
Government in 2018 launched the 10-year ECP stretching to 2027, with REA as the implementing agency through power distributors Umeme and Uganda Electricity Distribution Company Ltd, among others.
Through subsidising no-pole and one-pole-last mile connection costs to only Shs20,000 for inspection of customers’ homes, the goal was to connect 300,000 households annually. Grid electricity access was expected to increase to 60 per cent by 2027 from 24 per cent currently.
The Shs2.6 trillion ($700m) policy was to be funded with the help of international donors, including the World Bank, DFID – UK through ENDEV, German Development Bank, European Union through the African Development Bank and the French Development Agency, among others.
However, Umeme says as of May 28 it had connected 244,307 customers at $57.1m (Shs212.7b). Of that, $25m (Shs93.8b) for 105,412 connections remains unpaid, which the power distributor says is straining its cash flows since it is paid after the connections.
“$7.6m (Shs28b) is already verified and invoiced for REA payment. This has been pending for more than 184 days contrary to our implementation agreement which stipulates that payment to the implementing agency should be made within 90 days from connection date,” the letter adds.
Umeme also claims that the implementation framework agreement between itself and REA expired yet more than 163,415 customer applications were pending in May.
When contacted, the REA executive director, Mr Godfrey Turyahikayo, said: “No, I am not going to comment about that (funding). That is what I do not know, who has suspended it. ECP is still working.”