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Energy Services Among Urban PoorHouseholds in Uganda

By

Joan Kyokutamba


EXECUTIVE SUMMARY

Uganda recorded impressive economic achievements in the past decade.  This growth has however been marred by a persistent high level of poverty at household level especially in urban areas.  One specific area that has been affected by poverty is the accessibility and consumption of modern energy services.

The study of “Energy Services for the Urban Poor” set out to understand different energy demand patterns of urban poor households and the causes of energy problems for poor urban residents.  The study also attempts to establish methods through which these problems could be addressed.  The contention of this study is that availability and better delivery of energy services can bring about equity on the social economic front and improve the standard of living of the urban poor by augmenting investment in informal sector activities.

Three major, but interrelated hypotheses were developed and tested to give validity to the study.  The hypotheses were as follows:

  • The energy expenditure of the poor is not sufficient to cover the cost of modern energy service.

  • Energy initiatives aimed at the poor have not been pursued because of lack of political interest.

  • Energy initiatives have been inappropriate due to lack of participation of the urban poor.

Total household income and expenditure on energy was used to determine energy demand patterns and to test the hypotheses.  Specific household categories were juxtaposed with costs of various modern energy items to establish indicators of sufficient ability to afford.  Expenditure was also used to gauge the adequacy of domestic energy and energy used in micro-enterprise activities to meet the cost of modern energy.  Annual household expenditure on energy was applied to the cost of upfront costs and appliances so as to draw inferences on the possibility of households to afford total fixed and recurrent costs of modern energy.

According to data from Uganda National Household Survey (UNHS), 1999/2000 up to 43% of urban households are poor and their monthly incomes range between Ushs. 0 and 150,000.  For this study, households were divided into three categories as indicated below.

Income (Ushs.)

Category

0-50,000

Extremely poor

50,000-100,000

Very poor

100,000-150,000

Poor

Using the three household categories, the Poor were estimated to spend Ushs. 13,000 (10%) the Very poor, Ushs. 10,000 (14%) and the extremely poor spend Ushs. 5,500 (22%) of their total income on household energy.  Average energy consumption for poor households, which is usually made up of traditional energy sources was established to be Ushs. 11,880 (about US$ 6.7)[1].  While the main expenditure on energy for the poor is on traditional energy sources, kerosene is what they normally use for lighting.  Their kerosene purchase is however in small quantities and it is often used in open wick lamps (tadooba).

Although very few households have access to electricity, on average poor households spend about Ushs. 8,000.  Despite the subsidy attached to the cost of connection and the lifeline price of electricity, most urban households are not connected due to the high up front costs.  Amortisation of upfront costs could offer a possible solution to the not–so–poor households to have access to electricity.  Their current energy budget share plus possible increased informal sector activity could enable them pay off the loan and the recurrent energy bills.     

If poor households had electricity, their projected modern energy usage on lighting and other energy needs would be Ushs. 6,180 (US$3.5).  Such houses would however use charcoal for cooking because cooking with electricity would still be unaffordable.  UShs. 6,854 (US$ 3.9) would be needed for cooking if an improved charcoal stove is used.  Those who use traditional charcoal stoves would need more money for charcoal.

No projections were made for households using kerosene or LPG.  They were found too costly for poor households to use either exclusively or even with other energy forms.  Even after the initial costs of equipment, the related recurrent costs of LPG and kerosene are unaffordable and less appropriate for the poor compared to electricity.

The study noted that energy initiatives meant to benefit poor households in the past had been poorly designed and targeted and ended up with leakage to non-deserving household consumers.  While for example, the improved charcoal stove initiative has remained unknown and inaccessible to most poor households, low kerosene prices can only be accessed by those who buy kerosene in large quantities from service stations.

Whereas profit making was less emphasised as an objective for the national utility UEB, which offers a social service, there has been poor targeting of the subsidy on electricity.  As a result of poor targeting, more than 37% of the utility customers limit their consumption only to the amount of energy offered at the lifeline tariff.  About 60 % of the utility’s income is from such consumers.

Like elsewhere in the world, it has been noted that massive grid extension cannot be carried out in Uganda simply as a business venture.  Electrification can best be carried out as a deliberate Government policy to serve more households.  Investigations carried out on the media didn’t comprise any articles on energy for the poor during the review period.  Information from most Government officials articulated lack of motivation in extending power to poor households.  They gave the cause as limited energy consumption levels, which made the idea unprofitable.  The labour commissioner, who analysed energy needs of poor households in terms of production, maintained a different view and advocated for it.

The study highlighted a need to use participatory methods to introduce new initiatives if new designs were to register success.  New initiatives become difficult to popularise if stakeholders are not involved.  The energy initiatives covered during the review were largely inappropriate due to poor understanding of stakeholder needs.

The study did not establish any significant distinction between consumption in male-headed households and female-headed households.  Limited income ability equally affects the energy consumption budget for all households to a similar extent.

The following policy recommendations were made from the study:

  1. Develop expanded access to grid electricity for urban poor households by amortising upfront connection costs.
  1. Encourage construction of kerosene distribution points in areas where the poor reside.
  1. Review the Improved Charcoal Stove initiative.
  1. Prioritise the formulation of the energy policy for the benefit of the urban poor.
  1. Sensitise politicians about Energy Issues.

Use participatory methods to initiate development programmes.

[1] Using the exchange rate where 1US$=Ushs. 1750.



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