Uganda waives taxes on fuel to curb power shortage

The Ugandan government has announced that it is waiving taxes on fuel for industrialists to run heavy commercial generators as a short term measure to address the country's acute power shortage.

According to a statement from the Prime Minister's Office quoted by local press on Friday, it was agreed that the excise duty on fuel used by all large scale commercial users to run registered commercial generators of 100 KVA be waived and Uganda Revenue Authority (URA) and Uganda Manufacturers Association (UMA) will work out modalities of implementing these measures with in one week.

This was agreed after a meeting chaired by Prime Minister Apollo Nsibambi on Thursday. The meeting was attended by Finance Minister Ezra Suruma, Uganda Revenue Authority Commissioner Allen Kagina and James Mulwana who represented UMA and the private sector.

Value Added Tax for generators of 100 KVA and above used for commercial purposes was put off till the power situation normalizes and the import duty on generators of 75 KVA and above was scrapped although VAT is still payable.

It was also agreed that since generators were not previously part of the machinery to benefit from the accelerated depreciation, imported generators would be now depreciable separately from the general machinery currently provided for under the law.

"Enterprises procuring generators and using them for the first time in their business will be allowed accelerated depreciation in the double-declining balance method up to three years, 50 percent of the initial capital will be written off in the first year and 25 percent in the following years," the statement said.

Meanwhile, local reports said on Friday that the current diesel crisis the country is facing might persist as oil companies battle with logistical problems compounded by the increased consumption.

Shell's Country Director Ivan Kyayonka was quoted as saying that oil companies were not getting enough diesel from terminals in Kenya because of the limited transport capacity.

"At the moment, the problem is not limited availability of diesel, but a logistics difficulty. The pipeline capacity is stretched to the limit yet the Kenyan government does not allow us to transport oil products by road," Kyayonka said.

"We have not fully recovered from supply problems that dogged the country last year. The rise in consumption resulting from the current power shortage has compounded the problem. If we were able to transport more diesel in other ways, we would not be having this problem," he said.

Uganda needs about 340 MW, but the country's two major power stations, Kiira and Nalubaale, are generating 180 MW, supplemented by 50 MW of thermal electricity. The country is now implementing a 12-hour power loadsheding.

Source: Xinhua