Electricity News

Uganda National Electricity Company To Replace Umeme, Eskom

Nankabirwa (2nd L) tours UETCL’s 20MW Kapeeka substation

The Ministry of Energy and Mineral Development intends to create the Uganda National Electricity Company Limited (UNECL) to take over the generation, transmission and distribution of electricity after the government decided against renewing the concessionary contracts of Eskom Limited and Umeme Limited.

Since March 1, 2003, South African company Eskom has been the country’s largest energy generator, managing and maintaining the 180MW Nalubaale and 200MW Kira hydropower plants under a 20-year concession.

Umeme on the other hand, is the main electricity distribution company, whose 20-year concession ends in March, 2025.

In a statement, the ministry said UNECL will operate as a public private partnership (PPP), where the state will hold majority shareholding.

The changes that follow a cabinet directive of October 3, 2022 are part of the power sector reforms that the ministry hopes will “enhance sector performance and provide affordable power” by minimizing “expensive private capital in the electricity sub-sector.”

Industry watchers will be wary of the similarities between UNECL and the disbanded Uganda Electricity Board (UEB) that operated as a monopoly managing generation, transmission and distribution of the country’s electricity before it was unbundled in 2001 following the enactment of the Electricity Act, 1999.

The Uganda Electricity Generation Company (UEGCL), the Uganda Electricity Transmission Company (UETCL) and the Uganda Electricity Distribution Company (UEDCL) which replaced UEB, will now all fall under the UNECL.

While noting the contribution of Umeme and Eskom over the years, Ruth Nankabirwa, the minister of Energy directed the Electricity Regulatory Authority (ERA) and the aforementioned electricity departments to ensure a smooth transition from Eskom and Umeme.

The ministry has already constituted a joint committee to handle the Eskom concession and is in the process of making a similar arrangement for the Umeme concession to ensure a seamless handover of the operations of the assets.

Irene Bateebe, the ministry’s Permanent Secretary was quick to note the government’s commitment to fulfilling its financial obligations as per the new developments. This will be important seeing that Umeme alone has an annual capital expenditure of about $40 million.

“UEDCL and UEGCL will be supported to enable them to manage the transition period and operation of the concessions as happened with the 50MW Namanve thermal power plant that reverted to UEGCL in 2021,” added Bateebe.

The Electricity (Amendment) Act, 2022 was enacted into law in June this year to amend various provisions of the Electricity Act, 1999.

In an interview with this website recently, Bateebe said grid expansion, power reliability, last mile connection and tariff reductions continued to be important targets of the ministry.

Electricity access in Uganda stands at about 57 per cent, with 19 per cent on grid and 38 per cent off-grid.

The National Development Plan III (NDP III) says Uganda should have achieved universal electricity access by 2030.

“We are structuring new funding of $630 million, which will contribute to meeting the set electrification target. This is going to help us accelerate grid expansion and last mile connection,” the permanent secretary said in the interview.

About $4 billion is needed to invest in the distribution and transmission networks to ensure every one accesses electricity, according to the new National Electrification Strategy.

“That is why we opened the sector up to attract private financing to supplement the public funding,” Bateebe explained.

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