Govt Must First Pay Its Umeme Bill, Then Revise Contract [opinion]

So, power distributor Umeme and government’s rapport seems to be turning sour, as the latter finally realises that the former’s electricity rates are un-payable and the Power Sales Agreement unconscionable!

This is a fact that Parliament and organisations such as Africa Institute for Energy Governance (AFIEGO) have been pointing out since 2004, when the contract was signed.

Suddenly, Uganda Electricity Transmission Company Limited (UETCL), a government agency, wants the PSA reviewed.

This will allow UETCL to get back the money Umeme owes but is withholding, pending payment of some Shs 116 billion that government units owe in power bills.

Like a faithful friend, government has, for a long time, stood by Umeme against disgruntled citizens and a Parliament outraged by a contract that benefits Umeme at the expense of everyone else. In 2009, government ignored the Salim Saleh report, which recommended that the Umeme contract be revised.

In 2010, AFIEGO and communities filed a public interest litigation suit to challenge the Umeme contract. The same issues raised then are still haunting Ugandans (now including government). Government defended Umeme, even after Parliament asked that the contract be cancelled for being unfair – with unreasonable terms like government having to compensate Umeme if the contract is terminated, regardless of who terminates it.

Section 5.3 (d) of the PSA also allows Umeme to pay itself from the money due to UETCL in cases where government departments fail to pay their outstanding power bills within two months of receiving the notice to pay. Umeme is, therefore, acting within its government-given mandate by withholding the money it owes UETCL.

And government should stay as silent about the issue as it has always been when ordinary Ugandans complain about high power tariffs, electrocutions due to Umeme negligence, load shedding and all numerous Umeme maladies.

For UETCL to come out for the first time to say that the PSA that government signed with Umeme should be revised is hypocritical. The hunter is now being hunted. There will be no dirges of sympathy for government. Certainly not from the estimated 75 per cent of Ugandans who have no access to electricity: Nor from the minority who access it at prohibitive rates.

For government units not to pay their power bills for fourteen months is embarrassing. It speaks a lot about our culture of corruption and impunity. The Defence ministry that tops the list of defaulters owes Umeme Shs 54.582bn. Never mind that Defence and Security was allocated over Shs 1 trillion in the 20132014 budget, putting it among the three best-funded sectors.

One wonders why government institutions, which are annually allocated money for paying utility bills, would fail to clear them. Government should punish those who misappropriated the money, and recover every cent, and remit it to Umeme. When you make a pact with the devil, you give him his due, and do not complain.

Granted, it is a good thing that government is now realising that the Umeme contract is unfair. But even if government managed to get it amended, what is due is already due. Maybe government will finally ask itself the question: If an entire government cannot afford to pay its power bills, what about the impoverished citizens that it governs?

If government does not pay its bills, the citizens stand to lose even more – for Umeme, a business entity, has to make money from somewhere. It can decide to raise the electricity tariffs (which have already been steadily rising) for other users so as to make up for the money it loses when big government entities fail to pay their bills.

Also, if government owes billions for electricity generation, there is a likelihood of reduced generation. With reduced generation, load shading will worsen. Less electricity supplied at very high tariffs will force the few Ugandans who had access to electricity to go back to living in darkness. It will also increase the cost of production in local industries and generally worsen the economic situation.

Further, government’s failure to pay power bills will impact on the independence of the Electricity Regulatory Authority (ERA) as a watchdog over the generation, transmission, and distribution of electricity. There is no way ERA, a government body, will direct Umeme to comply with the licence if government has not paid money it owes.

ERA has in the past proved an incompetent regulator. While section 16 of the Electricity Act guarantees the independence of ERA, the same law subjects it to government policing. These weaknesses in regulation will only worsen if government continues to put itself in this compromising situation – at the mercy of Umeme.

With the electricity sector unregulated, investors will further be discouraged and consumers will suffer. Let government pay Umeme and then we can restart the conversation on reviewing their contract.

The author is in charge of AFIEGO’s electricity programme.

Source : The Observer

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