Effects of privatization reform on generation and distribution of electricity in Uganda, (1995 - 2013).

Abstract

This is an econometric study with the main objective of finding out the effect of privatization reform on electricity generation and distribution in Uganda for the quarterly periods from 1995 to 2013. Electricity generation in this study has been expressed as electricity generation per capita, electricity distribution has been expressed as electricity distribution per capita. The privatization independent variables for electricity generation and distribution used in this study are; type of asset ownership (private or government owned), national population growth rate, economic growth rate, total number of electricity consumers, the electricity price (tariff), electricity imports (electricity bought by Uganda from other countries) and electricity exports (electricity sold by Uganda to other countries). There are two variables specific to only electricity distribution that have been used in this study namely; the percentage share of the population that lives in the urban areas of Uganda and the electricity distribution losses which are obtained as the difference between the electricity that is generated per quarter and the electricity that is finally consumed by the end user customers in that quarter. The methodology for this study consists of two multiple regression models; both models are log-level models. The effect of each of the privatization variables on electricity generation per capita and electricity distribution per capita is measured by using each of their coefficients of regression. The major findings from this study are; a unit percentage increase in private ownership of electricity generation assets in Uganda during the review period led to a 3.8% increase in net electricity generation per capita, a unit GWh increase in the volume of electricity imported led to a 0.9% decrease in net electricity generation per capita, a unit GWh increase in the volume of electricity exported led to a 0.1% increase in the net electricity generation per capita, a one percentage increase in the amount of electricity lost led to a decrease in the net electricity distribution per capita by 17.3 GWh, an increase in the weighted average electricity tariff by 1 Uganda shilling per electricity unit (kWh) led to an increase in the net electricity distribution per capita by 0.01 GWh, an increase by one percentage point in the national population growth rate of Uganda led to an increase in the net electricity distributed per capita by 296.8 GWh and a one percentage increase in the economic growth rate of Uganda led to a decrease in the net electricity distributed per capita by 20.7 GWh.