Uganda to scrap power subsidy

2012-01-13 21:01

Kampala - Uganda's government will scrap subsidies to power producers, causing consumer electricity prices to jump by more than a third in a country already protesting over the soaring cost of living, an official said on Friday.

"The reason why we are raising the tariffs is because the government is not able to continue paying subsidies to the sector," Julius Wandera, spokesperson for the Electricity Regulatory Authority, told AFP.

The hike in power costs comes amid widespread discontent in Uganda over the spiralling costs of living in the country and follows unrest in Nigeria over a government decision to scrap fuel subsidies.

A three-day strike in the capital by shopkeepers over crippling interest rates has brought business to a standstill in the capital since Wednesday.

As of Sunday domestic consumers will have to pay 36% more for their power after the government decided to ditch annual hand-outs of around $170m to the sector, Wandera said.

At least 10 people were killed and hundreds arrested last April in a brutal crackdown by security forces on opposition protests over rising food and fuel prices.

The Ugandan government introduced the power subsidies after it was forced to bring in costly emergency generators to tackle major electricity shortages.

Wandera said that the government would invest the money being saved by ending subsidies into developing power infrastructure in the country, including the construction of a 600 megawatt hydropower plant.

Uganda's power price hike follows the announcement on Thursday by neighbouring Tanzania that electricity charges there will rise by some 40%, partially caused by a drought that has affected hydropower sources.