UEDCL Takes Over UMEME’s Role to Distribute Power in Uganda

By Anastasios Gordon Sekandi, EAT 17:11 January 02, 2025.

Umeme Limited is leaving Uganda after 20 years of electricity distribution. The Uganda Electricity Distribution Company Limited (UEDCL) will take over Umeme’s operations on April 1, 2025.

The Minister of Energy and Mineral Development, Hon Ruth Nankabirwa, alongside officials from ERA Uganda, officially handed over the Electricity Distribution License from UMEME Limited to Uganda Electricity Distribution Company Limited (UEDCL) on Tuesday December 31, 2024.

“The Concession is enshrined in several binding Concession Agreements. The Company has formally received written communication from the Government of the Republic of Uganda, notifying it that the current Concession will continue to run until its natural end in March, 2025 as stipulated in the Concession Agreements after which, there will be no renewal,” the power distributor said on the Thursday.

UMEME noted that it will remain committed to its duties as per the existing agreement with the country.

Courtesy Photo: Hon Ruth Nankabirwa briefing the media.

What does UMEME exit mean for electricity consumers in Uganda?

On December 8th, 2022, Umeme issued a public notice indicating that the Government of Uganda confirmed that Umeme’s current 20-year Concession, which expires on March 30, 2025, will not be renewed.

Several factors have been highlighted as the reason for the government’s decision. Still, the high cost of power tariffs, linked to UMEME’s Concession—especially the agreed 20% return on investment, which the deal expensive for power consumers in Uganda.

Indeed, during the 2021 Labour Day celebrations, President Yoweri Museveni expressed displeasure with Umeme over the failure to cut down electricity tariffs, hampering the industrialisation agenda and, ultimately, job creation and poverty reduction efforts.

To prepare for Umeme’s exit, the government has already embarked on preparing the Uganda Electricity Distribution Company Limited (UEDCL) to take over Umeme’s role of power distribution in the country. After the takeover, it is envisaged that power for industrial parks will go straight from generation sites to factories with no third party, thus lowering the overall power tariff for industries.

H.E Yoweli Museveni touring Karuma Hydropower Plant; Courtesy Photo.

It is worth noting that by the time Umeme was established in 2005, the Uganda Electricity Board (UEB), which oversaw power distribution and supply in Uganda, was grappling with power outages. Due to a dilapidated network, the sector lost 4kWh for every 10kWh of power produced. Also, the sector was heavily reliant on government subsidies. A World Bank study in 1998 showed that Uganda’s electricity system was not financially viable because of distribution inefficiency, characterised by high energy losses (40%) and uncollected bills.

As of 2021, Umeme had improved the electricity distribution efficiency from 50% in 2005 to 83% by reducing energy losses from 38% in 2005 to 18%. The number of transformers has increased from 6,000 in 2005 to 14,833 in 2022, and customers connected to the power grid have increased by more than fivefold, from 294,000 in 2005 to over 1.6 million in 2022. Regarding revenue collections, Umeme remitted to Uganda Revenue Authority taxes amounting to UGX 106 billion in 2021.

In the December 2022 public notice, Umeme promised it will remain committed to performing its obligations as per the existing concession Agreements and will continue to operate and maintain the electricity distribution system in line with prudent utility practice to ensure continued service delivery through to the end of the concession.

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