Delayed rationalization impacting energy sector

Summary:

• The delayed merger of three electricity companies in Uganda has disrupted service delivery, as revealed by officials. Challenges include staff retention and technical expertise. Legislators are seeking justification and transparency regarding the merger’s cost-saving measures and efficiency improvements.

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The Ministry of Energy and Mineral Development revealed disruptions in service delivery due to the delayed merger of three electricity companies. This was disclosed by high-ranking officials during a meeting with the Committee on Environment and Natural Resources concerning the government’s plan to merge Uganda Electricity Generation Company, Uganda Electricity Distribution Company, and Uganda Electricity Transmission Company into one entity called Uganda National Electricity Company (UNEL).

Led by Minister of State for Energy and Mineral Development (Energy), Hon. Sidronius Okaasai, and Permanent Secretary Irene Bateebe, ministry officials highlighted the adverse effects of the delayed merger on staff retention and technical expertise.

Okaasai emphasized that delaying the mergers has led to staff departures, posing challenges to maintaining technical proficiency. To mitigate this, the ministry is offering short-term contracts to affected staff while awaiting the merger. However, this temporary arrangement is insufficient for retaining staff.

The proposed UNEL will encompass the functions of the three companies and Umeme, the country’s largest electricity distributor. Okaasai estimated that UNEL will require a workforce of at least 3,000 employees for effective operation, with regional offices facilitating coordination.

Bateebe assured MPs that the ministry plans to absorb a majority of the staff from the merging companies. However, MPs raised concerns about the ministry’s readiness for the merger and requested justification for rationalization, including cost-saving measures and efficiency improvements.

Hon. Eddie Kwizera sought evidence of cost savings and lessons learned from past operations to justify the merger, emphasizing the need for transparency to gain the committee’s confidence.

Committee Chairperson Hon. Emmanuel Otaala requested the ministry to provide wage bills for both the merging companies and the proposed national electricity company. Otaala stressed the importance of avoiding duplication of roles and reducing wasteful expenditure through rationalization.

Legislators expressed dissatisfaction with the handling of the Rural Electrification Agency (REA), noting significant delays in its operations. Concerns were raised about the lack of progress in REA’s projects, leading to ineffective electricity infrastructure in some areas.

The committee urged the ministry to conduct a comprehensive assessment of the merger, considering previous and recent reforms in the electricity sector to ensure effective implementation.

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