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Uganda National Policy Seminar Proceedings

By

Joan Kyokutamba


Executive Summary

The African Energy Policy Network (AFREPREN/FWD) brings together 97 researchers and policy makers from Africa with a long-term interest in energy research. AREPREN supports appropriate policy research in the field of energy in East, Central and Southern Africa.  They sponsor professionals to carry out research on important themes with an objective of strengthening local research capacity and to harness planning and policy making in the particular countries. The network is supported by the Swedish International Development Association (SIDA).

In order for the researchers to share their findings with policy makers and also to garner for more focused identification of research strategies, national policy seminars were proposed.  They are to take place in the participating countries at least once a year during the research period 2000-2002.

The first national seminar was based on the findings of the research carried out by Eng. John Mugyenzi as principal researcher and was assisted by Dr. V. B. A. Kasangaki and MS. Joan Kyokutamba. The research, “Restructuring the Energy Sector in Uganda; The Privatisation Question.” has also been published by Zed Books Ltd., London & New York. with others carried out elsewhere in Africa in the book “ Reforming the Power Sector In Africa” (1999) Edited by Dr. M. R. Bhagavan. The government of Uganda’s Power sector strategy together with the on going process of restructuring and privatising the power sector provided a good setting for discussion.

The principal researcher indicated the evolution of reforms in the power sector in Uganda, some of which were already implemented like corporatization and commercialisation.  Others like unbundling, competition and out right privatization were still being planned.  Elsewhere, management contracts could be one of the many options considered as a method of reform.  During the process, certain changes in ownership and management are inevitable and major structural reforms have to be experienced that could bring about conditions of unbundling, IPP’s, IPD’s and wholesale distributors. Reformed systems demand new legal and regulatory framework and a regulator in place.

Reforms are normally driven by 

  • Changing Industrial performance

  • Changing trends of Investment Capital

  • Economic and political motives and bi-lateral and multilateral organisations
     

Some advantages could be brought about by reforms like the removal of poorly placed subsidies, promotion of and improvement of efficiency, increased mobilisation of private investment capital, enhanced skills and technology transfer and promotion of rural electrification. At the same time, certain risks pertinent to efficient maintenance of the reformed institution could include politics, power supply failure, tariff hikes and limitations of rural electrification.

The following policy conditions are basic for institutional reforms:

¨      Government-sector arms length relationship

¨      Preceding Legal reforms before other sector reforms

¨      Reforms should be based on a country’s social/economic conditions

¨      System size and Institutional Capacity should be critically considered and provided for.

For them to be effective, reforms should generally be acceptable to all stakeholders and aim at commercial tariffs. They should be well coordinated to enhance capacity for regional interconnection where possible.

In his recommendation, the researcher highlighted the need for institutions to have a legally independent regulator that should be able to maintain standards and provide operation-guiding rules. A fair tariff should also be ensured to guard against the development of a monopolist player and inflationary measures.

Policy objectives of the power sector are laid out in the “Strategic plan and Implementation Plan” of June 1999.  It is aimed at ensuring that the power sector is financially able to perform without subsidies from the government budget

  • Increasing the sector’s efficiency

  • Improving the sectors commercial performance

  • Meeting the growing demand for electricity and increasing area coverage

  • Attracting private capital and entrepreneurs and

  • Taking advantage of export opportunities

The methods used were in many ways similar to those identified by the researcher. Overall reforms were preceded by UEB internal reforms to prepare for the right size of the utility.  Improvement of revenue collection has been stressed for efficiency together with reduced non-core business and subsequent losses.  Other forms of reforms include, establishing the regulator for the energy sector, The Electricity Authority (ERA). 

The representative from the Utility Reform Unit carried the participants through a step by step procedure and chronology of the power sector restructuring and privatization process and the basis of their action.

Seminar participants deliberated the restructuring and privatisation issues based on the presentations made while analyzing the adequacy of the current policy. They also made proposals on the way forward as in the recommendations as is indicated at the end of this document.


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