As a way of devising ways of accelerating electricity connections across the country, the Ministry of Energy and Mineral Development has launched a hybrid Customer Connection Financing Framework.
The Ministry is implementing the new initiative in partnership with Umeme, Uganda Development Bank, Electricity Regulatory Authority and the Rockefeller Foundation.
While launching the initiative at the headquarters of the Ministry of Energy in Kampala on Tuesday, the Minister of Energy Ruth Nankabirwa noted in the new framework the costs of a no-pole connection have been reduced from Shs720,883 to Shs470,000.
Hon. Nankabirwa revealed that under this new framework the electricity connection applicants have the option of paying the full Shs470,000 upfront or a minimum of Shs200,000 and access a credit facility of up to Sh270,000 availed under the Uganda Development Bank (UDB) financing scheme.
According to Minister Nankabirwa, the UDB credit facility is at zero interest rate and it will be recovered from customers at a minimum of 15 per cent of every electricity purchase over a period of up to 8 years but also there is an option of early payment.
The project is supported by many development partners who have guaranteed to pay for the credit line.
“The Global Energy Alliance for People and Planet (GEAPP) with their anchor partner the Rockefeller Foundation has committed to providing a Payment Guarantee for the credit line. This will also go a long way in reducing the risk associated with the credit line to the customer,” she said.
The new Hybrid customer connection framework comes in as a way of solving the problem of a backlog of 200,000 applications that have not been connected plus the new applications being received by the electricity utility providers.
It is recalled that in 2020, challenges arose in the implementation of the Electricity Connection Policy (ECP) occasioned by the COVID -19 Pandemic that required a diversion of resources and prioritization of the Health Sector and as a result, over 280,000 applications for a connection could not be affected.
To address this shortfall, in August 2020 the Cabinet approved a hybrid connections program to allow consumers who can afford the full electricity connection cost to get connected while Government mobilizes resources to fund free connections. The cost of a no-pole connection approved by the sector regulator – the Electricity Regulatory Authority (ERA) is Shs720,883. This cost includes taxes but excludes internal house wiring and inspection fees.
In March 2021, the ECP program was resumed with a target connection of at least 87,000 free connections to address the backlog in the Umeme Limited Concession. However, there is still a large number of unconnected therefore to solve the backlog and the related high cost of connection, a new program had to come in and according to Minister Nankabirwa, all these challenges will be solved by the new program.
She however clarified that projects like the ‘GET ACCESS project’ supported by KFW, and the World Bank Energy Access Scale-up Project (EASP) are still going on in order to support access to electricity for households, refugees and host communities under the ECP framework and this financing is aimed at achieving 1,360,000 connections.
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