Don’t renew UMEME Contract-Museveni

Just as you thought the Umeme issue is long dead and one of those very many governance storms that raise only to die with the wind, President Museveni has written a missive asking the IGG to look into the Umeme contract and the controversies therein.

President Museveni also tasked the ministry of Energy to explain the incessant cost of power, with tariffs charged by UMEME remaining astronomical despite significant reduction in technical and commercial losses incurred by the power distribution company.

In March 12, 2018 letter to Energy Minister Irene Muloni, the President accused certain ministry officials of inflating the magnitude of the technical and commercial losses incurred by UMEME so as to keep tariff rates high.

“The Auditor General had calculated the two categories of losses to be at 28% in 2005. Then all of a sudden, a certain delegation of Ugandans went to the USA and mysteriously, together with the investors, hiked the magnitude of the technical and commercial losses to 38%,” the President’s letter reads in part.

He adds that whereas commercial losses have shrunk to 1% and UMEME claiming to have invested $500m in the distribution infrastructure, the power tariffs have remained high.

“When Gen Salim Saleh wrote his investigative report in 2009, then again mysteriously, the losses parachuted back to 28%. Of the 28%, about 15% were technical losses caused by old wires, 13% were commercial losses caused by non-collection of debts by Uganda Electricity Board (UEB). Since that time, technical losses have shrunk to 1% while commercial losses have climbed back to 17.3% yet the investors claim to have invested $500m in the distribution infrastructure. If they have invested so much, why the technical losses not decline?” he adds.

The President also wonders why UMEME continues to charge for technical losses from the tariff.

“Then there is the incredible provision of guaranteeing the profits to the investors of 20%, which again must be collected from the tariff. The alleged investments account for 22% of the price of electricity and the losses account for the 26% of the price. Were the technical losses not supposed to have been eliminated? Why is the consumer being penalized for that?”

“I am now directing you to furnish me with an explanation on all these matters. In the meantime, there should be no question of renewing Umeme’s contract,” reads the President’s letter that is also copied to the Attorney General, IGG, Auditor General, the Vice President and Prime Minister.

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