The African Development Bank electricity regulatory index for 2021 gave Uganda a score of 0.823, the best among the 43 countries ranked.
In a statement, ERA expressed its “sincere appreciation to H.E the President for prioritizing the Electricity Sub-sector, and the minister of Energy and Mineral Development for providing policy direction and support to ERA in the execution of its mandate.”
ERA has been credited for creating a conducive and predictable environment for the electricity supply industry. ERA insists that the days of speculators and rent-seekers in Uganda’s electricity supply industry (ESI) are over, and that investors must show technical and financial capacity to handle the projects they are bidding for.
Electricity being a critical factor in Uganda’s industrialization journey, powering businesses – both small and big – ERA ensures that the developers of power projects can prove they can pull them off.
ERA draws its power of receiving an application, granting and denying one a license from Section 29 of the Electricity Act, 1999.
Considering Uganda’s electricity licensing regime is by application, and not competitive bidding, ERA has employed a number of strategies to ensure that investors have the capacity to undertake a project. One strategy that ERA has used is the request to investors to post performance bonds.
Investors who pass this test are then awarded a license. While issuing these licenses, ERA places performance parameters that the investor needs to meet. Failure to meet these targets leads to a modification of the license. Usually, investors find challenges in getting financial close for the project, which then requires them additional time to shore up the capital.
ERA’s most critical component is, however, setting power tariffs. ERA has made tremendous progress in ensuring that the tariffs consumers pay reflect the near actual costs of the electricity supply industry.
Due to ERA’s tariff setting mechanisms, the sector has attracted more credible investors into the industry, all of which have contributed to the drop in power tariffs over the last 10 years.
The award for the best regulator in Africa is expected to attract more countries to come to Uganda to learn how the regulation is done. Already, countries such as Zanzibar Utilities Regulatory Authority (ZURA) has been to Uganda to benchmark against the country’s electricity regulatory system.