Uganda has implemented its steepest power price cut in two decades, driven partly by a strengthening currency that has lowered the cost of imported fuel and power plant components.
- Uganda implements steepest power price cut in two decades.
- Electricity tariffs reduced by an average of 14% for the quarter ending June 30.
- Ugandan shilling appreciated 6.1% over the past year, making it Africa’s best-performing currency.
Uganda has implemented its steepest power price cut in two decades, driven partly by a strengthening currency that has lowered the cost of imported fuel and power plant components.
The Electricity Regulatory Authority (ERA) announced on Tuesday that electricity tariffs have been reduced by an average of 14% for the quarter ending June 30, Bloomberg reported.
The Ugandan shilling has appreciated 6.1% over the past year, making it Africa’s best-performing currency among 23 tracked by Bloomberg.
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This currency strength has helped ease the cost of oil imports, with Uganda spending $2.4 billion on petroleum products in the 12 months leading up to June.
According to Julius Wandera, spokesperson for the power regulator, a stronger shilling has also lowered the cost of imported components used in power generation, further supporting the price reduction.
Uganda’s power prices also dropped because, following the end of the private distributor’s concession this week, the government no longer has to factor in Umeme Ltd.’s fees, according to Julius Wandera.
He noted that this marks the largest tariff reduction since Umeme took over electricity distribution.
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Challenges ahead
The Ugandan shilling’s strength has been fueled by a surge in commodity exports, including coffee, helping to slow inflation and allowing the central bank to maintain stable interest rates.
However, potential reciprocal tariffs proposed by U.S. President Donald Trump could reverse these inflation gains in Uganda and other affected nations.
While hydropower remains Uganda’s primary source of electricity, the country still relies on fossil fuels for part of its energy production.
