Ugandans woke up to the stark reality of electricity tariffs rising sharply, after government negated on their contract with the people and shelved power subsidies, forcing the Electricity Regulatory Authority to approve an immediate rise in tariffs. The delay of the Bujagali power plant going on line, inexplicably accompanied by stubborn silence from the promoters over the true causes and the length of the delay, clearly is now taking its toll as expensive diesel plants continue to remain in operation, unless the country would be plunged into darkness again, at least more than it already is every other night. Inflation, which went below 30 percent again in December, is expected to get another accelerating boost from the tariff increase, not just for the immediate month of January but for some time to come as goods manufactured in Ugandan will also become more expensive as the factories electricity bills will sharply rise.
Power theft, already a major problem in the country, is expected to go up immediately following the new tariffs coming into effect in two days time, with honest consumers who pay their bills also having to foot the bill of the thieves through the higher tariffs, since electricity distributer UMEME seems near powerless, pun intended, to bring that problem under control.
Hotels and restaurants, already struggling under the onslaught of inflation, have already indicated that prices will have to go up to compensate for the expected massive increase in cost, and the current strike by traders over the equally risen cost of finance, through interest rates going up to near 30 percent too one leading bank now offers a 20 percent interest rate on fixed deposits for a year is indicative of the now deeply rooted disenchantment with the measures employed by government to bring the economic crisis to a halt.
While the long term prospects for Ugandas economy remain positive, based on the eventual coming on line of oil and gas production, it is the immediate future of the economy and its impact on all segments of society, worst for the poor, bad for the middle class and challenging for the business community, which marks the current debate.
Whichever way, the start of 2012, once the fireworks in the skies over Kampala had ended, is now duller than was expected and the fallout continues across society for the foreseeable future.