Energy Transition as Umeme Hands Over to UEDCL

The electricity distribution sector has entered a new era as Umeme officially handed over its assets to the Uganda Electricity Distribution Company Limited (UEDCL), marking the end of its 20-year concession.

The transition is part of Uganda’s second-generation energy reforms aimed at improving financial sustainability, expanding access, and enhancing the reliability of electricity supply.

Energy and Mineral Development minister Ruth Nankabirwa confirmed the transition, stating, “UEDCL now assumes full responsibility for electricity distribution, aiming to enhance financial sustainability, expand access, and improve reliability.

“It will maintain service continuity, with improvements to the network and services to ensure a reliable electricity supply.”

To ensure a smooth transition and improve the electricity distribution system, the Government of Uganda has made substantial financial commitments.

The Cabinet approved the borrowing of up to $190.1 million (about Shs700 billion) to finance the buy-out amount for Umeme and an additional $50 million for UEDCL’s investment needs.

Furthermore, the Ministry of Energy and Mineral Development, in collaboration with its partners, has mobilized $50 million from ABSA Bank to address network deficiencies and improve the reliability and quality of electricity supply.

Minister Nankabirwa urged Ugandans to be patient as UEDCL works on upgrading the system to meet the growing power demand.

Umeme’s Managing Director, Selestino Babungi, reflected on the company’s impact over the past two decades.

“Actually, this year, considering what we have been working with from the first quarter, Umeme is a $700 million revenue business, growing at an average of 10% annually,” he said.

“That’s what we are handing over, and we believe that should be protected because it goes on to attract investments upstream, downstream, and in regeneration.”

Babungi also expressed concerns about the rising demand for electricity, cautioning that if no interventions are made in the next three years, Uganda may experience a power shortage.

He suggested that Uganda explore regional power trade through the East African Power Pool (EAPP) to import electricity from Ethiopia and other neighbouring countries as a stopgap measure.

Under UMEME’s management, the electricity customer base expanded from 292,000 in 2005 to 2.3 million in 2024.

Technical and commercial losses were significantly reduced from 33% in 2005 to 16% in 2024, while revenue collections consistently exceeded targets in recent years.

UEDCL’s Managing Director, Paul Mwesigwa, outlined the company’s five key operational pillars: connecting the customer, making power available, managing energy losses, collecting the cash, and promoting safety.

Mwesigwa emphasized that these principles have helped UEDCL emerge as a trusted government utility, poised to transform Uganda’s power distribution landscape.

Minister Nankabirwa issued a stern warning to UEDCL, making it clear that failure to meet expectations could lead to consequences. “We have no business with you when you are not performing,” she cautioned, urging the utility to maintain high service delivery standards.

The Electricity Regulatory Authority (ERA) also reaffirmed its commitment to ensuring a conducive regulatory environment that fosters investment, innovation, and consumer protection.

Eng. Ziria Tibalwa, chief executive of ERA, praised Umeme’s contributions but underscored the need for continued improvements in service delivery.

“As Umeme relinquishes control of the electricity distribution assets today, we are undoubtedly appreciative of their service to Uganda over the last 20 years,” she said.

“ERA remains committed to creating a regulatory environment that fosters investment, innovation, and consumer protection.”

UEDCL has been steadily growing its footprint in Uganda’s electricity sector. Over the past two decades, the company has taken over five electricity distribution concessions, including Ferdisult Engineering Limited (2017), Bundibugyo Energy Cooperative Society (2021), Pader Abim Community Multi-Purpose Energy Society (2023), Kyegegwa Rural Energy Cooperative Society Limited (2024), and Kilembe Investments Limited (2024).

Umeme is now the sixth concession under UEDCL’s control, solidifying the company’s role in Uganda’s electricity distribution landscape.

As UEDCL takes full control of Uganda’s electricity distribution, the focus is on improving network infrastructure, enhancing service delivery, and ensuring that electricity reaches more Ugandans efficiently.

With the government’s financial backing and regulatory oversight, the transition is expected to usher in a more sustainable and reliable power distribution system for the country.

While Umeme exits the scene, its legacy of expanding access and reducing losses serves as a foundation upon which UEDCL must build.

The challenge now lies in maintaining the momentum and ensuring that Uganda’s growing electricity demand is met with efficient and sustainable distribution strategies