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CABINET APPROVES THE PRINCIPLES TO BE EMBODIED IN THE ELECTRICITY ACT 1999, AMENDMENT BILL 2015

PRESS STATEMENT ON CABINET DECISIONS

The enactment of the Electricity Act 1999 was a major step in the restructuring process of the electricity sector that was dictated mainly by the need to create large investments in the sector, and for better service delivery to electricity consumers. It was also designed to encourage private sector investment especially in the generation and distribution segments of the electricity sector. The electricity Act 1999 ushered in a new legal, institutional and regulatory framework to meet the challenges the sector was facing at that time.
After the introduction of the Electricity Act 1999, the Uganda Electricity Board (UEB) was unbundled into distinct Generation, Transmission and Distribution business units. The Generation and Distribution business components were liberalized to allow for the participation of the private sector. This unbundling of UEB, allowed clarity of input, costs for the sector, revenue requirements and thereby setting a transparent tariff methodology. The unbundling of the sector allowed for private sector participation into investment and operations, of the Electricity Generation and Distribution business components.
The Electricity Act established the Electricity Regulation Authority (ERA) as the independent sector regulator. The ERA among its functions: is charged with the responsibility to regulate the generation, transmission, distribution, sale, export and import of electricity in Uganda.
The Act also established the Uganda Electricity Disputes Tribunal to hear and expeditiously determine disputes related to the sector among key players.
The Act also established the Rural Electrification Fund and provided broad guidelines on the fund’s source of revenue and utilization to enhance rural electricity distribution.
Under the Act the Government of Uganda, through the Uganda Electricity Transmission Company Limited (UETCL), retained a monopoly on electricity transmission and bulk energy trading business.
Some provisions of this law have created operational challenges which have serious implications for the effective performance of the electricity sector. These challenges range from issues pertaining to institutional responsibilities and efficiency, land matters, enforcement of compliance, offences, penalties and sanctions
For example, the Electricity Regulatory Authority found difficulty in enforcing some provisions of the law due to lack of sufficient powers to impose adequate penalties and sanctions on license holders. Currently the only significant remedy provided under the law is revocation of licenses (section 42). This would ideally be the last resort when all other means of obtaining compliance have been exhausted and the harm that can be caused is threatening and overwhelming.
There is therefore, a need for the introduction of an adequate regulatory enforcement regime that matches the sanctions with the breaches. The regime should provide for suspensions, fines, and other administrative sanctions that correspond with the gravity of the breach.
Cabinet therefore approved the principles to be embodied in the electricity Act, 1999 (Amendment Bill) which includes:-
•    Establishment of a new institution- the Rural Electrification Commission (REC) to handle Rural Electrification.
•    Introduction of service territories or rural concessions to supply electricity service in rural areas.
•    Introduction of stringent penalties for power theft and damage to electrical installations.
•    Exemption of electrical equipment in the possession of a third party as well as from attachment through Court Orders
•    Increase membership of the Electricity Tribunal to 7 members.
•    Increasing the maximum levy that the electricity Regulatory Authority (ERA) can receive from 0.3 to 1% of the electricity generated
•    Introduction of a maximum levy that the Electricity Disputes Tribunal can receive of 0.1% of the electricity generated
•    Authorized embedded generators or small power plants to sell electrical energy in bulk to customers.
•    Designation of other power buyers on application and approval by the Authority
•    Empowering licenses to use land in emergency situations
•    Provision for the Minister to issue all statutory instruments, save for regulators which deal with industry regulation and compliance
•    Successor Companies of Uganda Electricity Board and all sector institutions to report to the Minister responsible for the Electricity sub-sector
•    Providing for Environment Impact Assessment concerns
•    Providing for the funding of Infrastructural developments under the sector
Cabinet authorized the Minister of Energy and Mineral Development to issue drafting instructions to the First Parliamentary Counsel to draft the Electricity Act (Amendment) Bill.
It also directed the Ministers, of Health, of Energy and Mineral Development, of Information and National Guidance and Office of the President (PRESIDENCY) and Kampala Capital City Authority to prepare and submit a Cabinet Paper on the dangers posed to the population through the practice of living under high voltage power transmission lines.
FOR GOD AND MY COUNRTY

Jim K Muhwezi MP
MINISTER OF INFORMATION AND NATIONAL GUIDANCE.