Uganda Development Bank(UDB) has committed shs148.5 billion to enable 550,000 households to access electricity around the country.
The commitment was announced on Tuesday during the launch of the Hybrid Electricity Customer Connection Credit Framework by UDB, Electricity Regulatory Authority (ERA) and the Ministry of Energy
The UDB Managing Director, Patricia Ojangole highlighted that the availability of sustainable energy is critical for economic growth, poverty reduction, as well as the social and cultural transformation of society.
She further noted that the bank is alive to the low level of electricity access in the country, as well as the high connection costs.
“The Bank has therefore partnered with players in the energy sector to promote the hybrid electricity customer connection credit framework which aims at enhancing electricity access,”Ojangole noted
According to the new plan to subsidize new electricity connections around the country, customers who require a no-pole connection will make a down payment of shs200,000 as contribution towards their connection.
The second proportion of shs270,000 will be taken as a credit line provided by UDB that will be recovered as a proportion of every bill payment / energy purchase by the customer.
Considering, the cheap and patient nature of funds provided by UDB, connected customers shall have up to eight years to pay off the credit facility of shs270,000 per connection.
The extended repayment period is aimed at minimizing the deduction every time a consumer makes an energy purchase or “yaka” token.
The last portion of shs 250,883 and the interest payable for the UDB financed credit portion shall be considered as a subsidy to the customers.
The funds provided by UDB shall be used to purchase connection materials and will be channeled through the electricity distribution companies.
Connection applicants will not be required to apply to UDB separately or directly for the connection credit facility but shall express their interest in the UDB credit connection facility upon making an application for an electricity connection and sign the necessary application documentation through their designated electricity distribution companies.
The program will be rolled out for Umeme Limited and the Uganda Electricity Distribution Company Limited customers as a pilot.
The Minister of Energy Ruth Nankabirwa Ssentamu, commended Uganda Development Bank for committing up to shs29.7 billion annually for each of the next five years, amounting to shs148.5 billion which support she believes will be pivotal in bridging the gap to electricity access.
Currently, almost half of Ugandans live without electricity, 95 percent live without clean cooking solutions, 50 percent of health centers and 80 percent of schools lack electricity.
According to a survey by the Uganda Bureau of Statistics in 2019 (UBOS,2019), one of the main obstacles to households getting connected to the national grid is the high cost of initial connection.