Willingness or ability to pay? Expanding electricity access with cost sharing and financing

Access to electricity in Uganda remains low, and was estimated to be around 15% in 2012 (UBOS, 2013), with a stark rural-urban divide. Lack of access to electricity represents a large impediment to achieving higher income levels. The Government of Uganda has recognised this both in Vision 2040 and the National Development Plan, and set the goal of achieving universal electrification by the year 2040. In the medium term, the Government wants to increase rural electrification access from the current 7% to 26% by 2022, as set out in the Rural Electrification Strategy 2013-2022. The current draft connection plan aims to increase the number of connections by 476,595 per year.

These goals are ambitious, and the circumstances challenging. Energy access goes beyond simply providing the population with access to an energy source; in order to benefit, the population also needs to be able to afford the electricity. This is doubly important, because not only does an unused connection mean a lower number of beneficiaries, it also increases the cost of serving the remaining consumers. Furthermore, high electricity prices increase the incentives for customers to tap into the network illegally or bypass their meters. It is therefore crucial not only to measure electrification success by the number of new connections, but also to understand the relationship between prices, consumption and theft.

We are working together with the Ministry of Energy and Mineral Development, Umeme Ltd., the largest electricity utility in Uganda, and other stakeholders to plan a large-scale randomised control trial. The envisioned study will administer different versions of an electricity expansion programme to subsets of identified beneficiaries. As such, close coordination between the researchers, policy-makers who design the programme and organisations that implement the programme is key.

As we work to finalise the study design and implementation plan, we are collaborating with the stakeholders to analyse existing data. Below are some of the intermediate outputs of policy merit that are being generated during the pilot stage of the study:

• A mapping of the spatial distribution of electricity usage in the country
• A study that compares electricity usage patterns of subsidised connections with connections that have been paid for by the consumer
• A study on the price sensitivity of Ugandan consumers
• A review of existing electricity theft reduction programs