| dc.description.abstract | This study was conducted for the purpose of analyzing industrial electricity demand in Uganda from the year 1998 to 2022. To achieve this, descriptive statistical and econometric methodologies were utilized to analyze the influence of electricity price, industrial income (GDP) and Index of Industrial Production (IIP) on electricity demand. Using the Augmented Dickey-Fuller test, it was found out that variables are first difference stationary which is the necessary condition for a cointegrated system. A co integration test using the Johansen-Juselius method was used to determine if there is a long run relationship among electricity consumption, its price, index of production and the GDP of the industrial sector. The Error Correction Model was then applied to determine the short run elasticities and the Error Correction Term was interpreted to determine the speed at which electricity demand returns to equilibrium after a change in GDP, IIP and electricity price. The study revealed that in the short run, electricity price has no effect on quantity of electricity demanded. However, in the long run, electricity demand is price sensitive with a price elasticity of -0.14 in large industries. GDP has a positive influence on electricity demanded both in the short and long run. In the long run, the income elasticity for large and medium industry is 0.78 and 0.32 respectively and it is found to be 0.032 for the large industries in the short run. This makes electricity a normal good as well as a necessity for the industrial sector. IIP has a positive (0.06) and negative (-0.09) influence on electricity demand in large and medium industries respectively. This implies that large industries are more energy efficient as compared to medium industries. In both medium industry and large industry, there was convergence towards long run equilibrium at a rate of 0.4% and 0.11% respectively. Thus, there is a long run relationship among electricity consumption and electricity price, industrial income and index of industrial production. This study has revealed that electricity is a necessity and is thus a key input factor for the industrial sector in Uganda. Therefore, government regulatory bodies should take action by controlling the price of electricity and ensuring a steady supply of this indispensable input in Uganda’s industries. Also, it is recommended that new industries should consider purchasing and installing equipment with improved technologies to ensure efficient use of electricity in their production processes. | en_US |
