Uganda removes power subsidies

Posted by admin Africa & World Politics, Headlines Thursday, January 12th, 2012

The Ugandan government on Thursday abolished electricity subsidies paid to power generators to cushion consumers, a move that will see tariffs rise by an average of 42 per cent.

Consumers and analysts said it was likely to stoke further public anger over the high cost of living and possibly lead to an escalation of a strike by traders over a spike in interest rates, Reuters reports.

Traders and shopkeepers in the Ugandan capital Kampala closed on their businesses on Wednesday for a three-day strike to try to press commercial banks to stop raising interest rates.

“To be sure I can’t think of a worse policy miscalculation by this government. The move is both ill-timed, because already the public is angry over high interest rates and imprudent because it will make electricity fall beyond the affordability of even more people,” said Dickens Kamugisha, executive director of African Centre for Energy Governance, which conducts research and advocacy on electricity sector.

Energy minister Irene Muloni said the money freed will be used to expand generation capacity in east Africa’s third largest economy.

-Punchwp_posts