The handover of Umeme licenses for the sale and distribution of electricity to Uganda Electricity Distribution Company Limited (UEDCL) has put the country’s energy sector into sharp focus, especially with power resources shifting from private to public hands.
Energy Minister, Ruth Nankabirwa said the handover today followed completion of the review of the UEDCL applications by the Electricity Regulatory Authority (ERA).
The handover was based on President Museveni’s earlier decision who directed that all expiring private electricity distribution concessions not be renewed upon their natural expiry. Thus far, five concessions have already been returned to the government.
Umeme’s concession expires in 2025.
Whereas some Ugandans remain sceptical about the government’s ability to efficiently manage the distribution network, which, Eng. Ziria Tibalwa Wako, the ERA Executive Director, acknowledged that the transition may have questions and uncertainties.
Mr Wako has instead promised that a deliberate effort has been made to establish optimal staffing for the efficient operation and management of the distribution network post- March 2025.
The Electricity dilemma
For one to understand whether UEDCL will deliver results to Ugandans; let’s first rewind to how the sector has grown over the past 24 years.
Uganda’s generation mix depends heavily on hydropower, which typically accounts for over 80 percent of the country’s electricity.
Most additional capacity is also renewable, including several solar installations and thermal power plants running on sugarcane bagasse.
Uganda carried out a comprehensive Power Sector Restructuring and Privatisation Strategy in the late 1990s and early 2000s, under which it unbundled the vertically integrated Uganda Electricity Board in 2001 into three state-owned companies that respectively cover generation, transmission and distribution.
The Uganda Electricity Generation Company Limited (UEGCL) is the state-owned body created in 2001 to handle the generation activities of the old Uganda Electricity Board.
Two of the UEGCL’s main generating assets were operated by South Africa’s Eskom Uganda Limited since 2004 under a 20-year concession contract for the 180 Megawatts (MW) Nalubaale hydro power plant (HPP) and 200 MW Kiira HPP.
This concession came to an end in March 2023 and was not renewed. In addition to plants owned by the UEGCL, there are several large hydropower stations operated as public-private partnerships, as well as over 30 small Independent Power Producers, grid-connected solar installations and co-generation plants running on sugar cane waste (bagasse).
The Uganda Electricity Transmission Company Limited (UETCL) owns and operates all transmission infrastructure in the country. Although amendments made in 2022 to the Electricity Act ended the UETCL’s single-buyer status, most generators and distribution companies continue to have contracts with the UETCL, since there is not yet a regulatory framework in place allowing generators to sell to customers directly.
The Uganda Electricity Distribution Company Limited owns all grid-connected distribution infrastructure. Responsibility for managing most of these assets was transferred to a private company, Umeme, in 2005 under a 20-year concession agreement, and has now returned to UEDCL.
Umeme, whose network primarily covers urban and peri-urban areas, is currently responsible for distributing over 90% of grid-based electricity in Uganda.
Since the unbundling of the electricity supply industry at the turn of the century, generation capacity has substantially increased to 2000 MW, technical losses have been reduced and there has been a shift towards cost-reflective tariffs, according to an industry analysis by the International Energy Agency published in November, 2023.
The Energy Agency is also playing a central role in helping Uganda transition into cleaner energy sources through the Energy Transition Plan launched at COP28 in Dubai in December, 2023.
The Agency shows that Uganda continues to have one of the lowest electricity access rates in Sub-Saharan Africa due, in part, to connection costs that are too high for most potential customers.
Even when connections have been subsidised, consumption typically has been low, due largely to the high cost of power.
Low consumption has made it challenging to fund grid maintenance and expansion, as well as to maintain grid stability on long, low-demand networks.
Lack of adequate transmission and distribution infrastructure as well as vandalism has also been cited to prevent the full use of a significant share of Uganda’s power plants, although available capacity is still above peak demand.
Take-or-pay contracts with many generators require the government to purchase a significant amount of unused energy, contributing to high consumer tariffs which the government has avoided subsidising.
The Energy Ministry’s current priorities in the sector include finding ways to lower the cost of power and increase electricity access and demand, focusing on economically productive uses of energy, particularly in the agricultural and industrial sector. After a century, regions such as West Nile has been finally connected to the grid.
The Ministry cites cost reduction as the main reason for not renewing the major concession contracts in generation and distribution for Eskom and Umeme and plans to re-merge the three state-owned companies in the sector.
In 2021, the government announced it was planning a “second generation” of power sector reforms, under which it would re-consolidate the previously unbundled UEGCL, UETCL and UEDCL into a new, vertically integrated Uganda National Electricity Company.
The proposed reforms are taking place within the context of a wider programme of rationalisation and merger of government agencies to reduce costs and improve efficiency.
The Energy Policy for Uganda 2023 aims to achieve the Electricity generation capacity target of 52,481MW by 2040 with a grid access rate of 80%.
Over the years, the government and its development partners have pursued several policies and programmes to increase electrification rates.
Most of these were coordinated by the defunct Rural Electrification Agency.
Although all programmes have contributed to the progress made, most have fallen significantly short of their targets.
Financial challenges are reportedly the main reason for this limited success. Extending and maintaining grids is costly, especially in rural areas, where many settlements are scattered and sometimes isolated by mountains and other difficult terrain and operators can face shortages of materials.
In addition, once a household has been electrified, electricity consumption is often very low, making it difficult for distribution companies to cover maintenance costs and posing problems for grid stability on long distribution networks.
Although measures have been designed to improve affordability and foster new connections, several implementation challenges have limited such effects, including long delays and low human capacities.
A new dawn
As a means of scaling up connections across the country, the government introduced the hybrid customer connection financing Framework in December 2022.
Data from the ERA shows the government reduced the cost of a no-pole new customer connection from UGX 720,883 (USD 196) to UGX 470,000 (USD 128) through a subsidy of UGX 250,883 (USD 68) for each no-pole connection.
In addition to the subsidy, the government through the Uganda Development Bank, provided a credit line of UGX 270,000 per new connection for those who are unable to pay a lump sum of UGX 470,000.
Ugandans whose houses are located near an electricity pole can now make a down payment of UGX 200,000 to get connected to electricity and clear the balance of UGX 270,000 through a 15 percent part payment deducted on their energy purchases over a period of eight years.
The framework had made some milestones with over 27,724 being connected to electricity supply as of December 2023.
Umeme’s 2024 half-year results show over 139,196 new customers were connected on the grid bringing the total customer base to 2.1 million out of the 45 million Ugandans, reflecting a 14% growth compared to June 2023.
However, with the planned exit of Umeme in 2025, there are lingering questions on whether the Ugandan government will hold the fort effectively.
In an interview with the CEO Magazine, Uganda’s Energy Ministry Permanent Secretary revealed how UEDCL will have to invest over USD 500 million (UGX 2 trillion) in the next five years in terms of growing and maintaining the existing assets left behind by Umeme.
“We will ensure to have a robust regulator that sets standards for these companies in terms of performance,” Batebe said.
Uganda has achieved significant milestones in last mile distribution of electricity through several initiatives, but still some challenges remain.
Early this year, residents of Mitooma District in South Western Uganda brimmed with excitement after receiving free electricity connections in January this year.
“I was using candles and my phone for light. Now that I have electricity in my house, I will be using it for my children to read, cook and it will help me to avoid thieves coming to my home and will help the community,” a beneficiary is quoted sharing her excitement with officials from the Ministry of Energy.
“I want to thank the government for giving us free electricity. My children shall be able to read and I will put up a television for them to watch cartoons,” another beneficiary said.
The initiative for free electricity connections is funded as part of the World Bank Electricity Scale- Up project and implemented by the Ministry of Energy and GIZ aimed at increasing last mile connections across the country.
Ruth Nankabirwa the Energy Minister who represented the Vice President Jessica Alupo at the national launch of the USD 638m (UGX 2.4 trillion shillings) project in Mitooma noted that the project targets one million households, industrial parks, Small and Medium Enterprises, refugees, and host communities will get connected to electricity.
The project comes at a time when a number of complaints have been registered by Ugandans in getting connected to the national grid especially in rural areas, which sometimes take years.
The Big Push for Clean Energy
Uganda’s ambitious energy vision build on its climate goals laid down at the recent UN Climate Change Conference (UNFCCC COP29]) in the Azerbaijan capital, Baku, where Energy Minister Nankabirwa revealed strategic plans of gradual decarbonising through an ambitious mix that is congruent to national, regional, and continental realities of energy poverty.
This year’s COP29, which opened on November 11, was themed, ‘’In Solidarity for a Green World’.
Uganda is working to diversify and decarbonize its energy mix, prioritizing renewable sources such as hydro, solar, LPG and wind power while reducing its dependence on fossil fuels.
Speaking at a fireside event at COP29 on investing in Energy, Resilience and Nature in Africa, Energy Minister Nankabirwa highlighted Uganda’s strategic goal of becoming a regional energy supplier, supported by Uganda’s leadership in the establishment of the East African Power Pool.
“As we work to increase energy access domestically, we will also leverage the power pool to export our excess electricity to neighbouring countries,” Ms Nankabirwa said.
Nankabirwa’s announcement builds on recent advances in Uganda’s energy mix, including the commissioning of the 600 Megawatts Karuma Hydro Power Plant on September 26, and the 183 Megawatts Isimba Hydro Power Plant five years ago, which pushed the electricity generation capacity to 2,000 Megawatts against average demand of 1,000 Megawatts.
Uganda aims to add 24,000 Megawatts from a nuclear power project targeted for 2027.
In addition to expanding electricity generation for export to energy impoverished neighbours like eastern DRC, South Sudan, and Rwanda, Uganda is advancing plans of developing its associated gas reserves for Liquefied Petroleum Gas (LPG) production.
Total Energies and China National Offshore Oil Corporation (CNOOC) engaged in the development of Uganda’s Lake Albert oil and gas project recently secured an agreement with an international partner to establish an LPG production facility. The plant is expected to distribute at least 500,000 gas cylinders annually.
However, Nankabirwa revealed that sustaining this project is anticipated to require around USD 30 million per year. To support these ambitions, Nankabirwa called for commercial banks to partner in a blended financing approach to bolster Uganda’s energy transition goals. The Energy Transition Plan (ETP), launched at COP28 in Dubai, aligns with Uganda’s vision for sustainable energy growth and regional integration.
Dr Gerald Banaga-Baingi, Task Team Leader for Transition and Integrated Planning in Uganda’s Ministry of Energy, explained that the country’s Energy Transition Plan is rooted in science-based strategies, transparency in emissions reporting, robust financial data, and policies that foster investment.
“Having an objective, science-based plan is essential, along with legislation, though it often takes time to implement. Blended financing, de-risking of key projects, and establishing state enterprises to support these initiatives have opened new avenues and made Uganda’s energy market more attractive for implementing its transition goals,” Dr Banaga-Baingi notes.
Banking on green energy
In Uganda’s rural and semi-urban hubs, where access to reliable power for use such as cooking can be scarce, Jamal Sonko and his team at Kyuka Ventures are proving that innovation can transform challenges into opportunities through turning plastic waste into Liquefied Petroleum Gas (LPG).
With the cost of grid connection being expensive, increasingly, more Ugandans are adopting LPG use promoted through oil marketing companies, while others are banking on solar energy.
I first met Sonko, a fellow Ugandan in August at the Future of Energy Conference in Accra, the capital of Ghana. Sonko was in Ghana to participate in a hackathon to showcase Kyuka Ventures’ solution for sustainable energy.
The trip to Ghana was also a valuable opportunity for Sonko to network with like-minded innovators and gain insights into scaling clean energy solutions.
To him, the experience emphasized the importance of collaborative partnerships and further solidified the potential of waste-to-energy technologies.
Sonko oversees vital operations at his social enterprise addressing Uganda’s plastic waste and energy poverty crises. His energy innovation transforms plastic waste into clean cooking fuel (LPG) using a unique “Soot-Free Reactive Extraction Technology.”
He tells me that by tackling both environmental degradation and energy access, his enterprise has developed an innovative solution for sustainable waste management and energy provision in Uganda.
With Uganda generating 600 tonnes of plastic waste daily and 90% of households relying on harmful fuels like charcoal; Sonko seeks to reduce pollution, curb deforestation improve health, and provide affordable, clean energy thereby creating a circular economy that benefits both the environment and the community
His business model involves clean cooking fuel through a pay-as-you-go model, along with a health insurance program (“Waste Insure”), allowing customers to pay for health coverage using plastic waste. Kyuka Ventures employs over 150 marginalized women in plastic waste collection.
Sonko serves communities in Kampala City and Ibanda District in Western Uganda, with plans to expand to rural areas across Uganda and neighboring countries like Kenya, Rwanda, and South Sudan.
His charges range from UGX 145,000 (USD 39.4) for a 6 kilogramme cylinder, and UGX 220,000 (USD 60) for a 13 kilogramme cylinder.
“By 2030, the goal is to serve 100,000 households, reduce deforestation by 25%, and create 1,000 green jobs,” Sonko tells me.
With financing being a challenge for green energy innovators like Sonko, the Uganda Energy Credit Capitalisation Company (UECCC) launched a Price Subsidy program in December this year, that will address the affordability barrier associated with the upfront cost of acquiring clean energy technologies by households and enterprises.
Solar lantern prices will be discounted by 60% and the prices for solar systems with two lights will be discounted by 50%, clean cooking solution prices powered by solar, briquettes, ethanol, biogas and liquefied petroleum gas will be discounted by 30%-50% depending on the technology.
Productive uses of energy equipment such as water pumping, irrigation, refrigeration and cooling, water heating and grain milling will have prices discounted by 60%.
The Energy Dilemma across Africa
As Uganda pulls strings together on her energy dilemma, similar initiatives are being mooted elsewhere across the continent.
The continent’s top energy decision makers who met at the Future of Energy Conference in Ghana in August, viewed the energy transition as a critical juncture in human history—a time when the choices that Africa makes on energy systems will shape the future of her civilization for decades, if not centuries to come.
Organised under the theme, “Harnessing Africa’s Resource Wealth: Fueling Innovation for Equitable Energy Access,” the conference was structured to explore the critical policy interventions required for Africa’s energy future.
Mr Benjamin Boakye, the Africa Centre for Energy Policy Executive Director argued that the continent must confront a stark reality: an energy crisis that affects 600 million people in Africa alone—people who are denied the basic right to electricity and therefore are bound by the chains of energy poverty.
“Electricity is as foreign as the stars in many parts of Africa, where the simple act of turning on a light is an unattainable luxury,”Mr Boakye said.
The 600 million people rely on biomass—wood, charcoal, dung—to cook their meals. This reliance on traditional fuels not only binds them to the past but also exposes them to severe health risks causing respiratory diseases, eye infections, and other health issues that claim millions of lives each year.
Boakye presented another perspective noting that in the 21st century, the continent is still forced to confront the tragedy of young people, “who can only study during the day when the sun is up or at night by the dim light of the moon, yet they have to compete on the same academic playing field with those who have access to latest technologies.”
While the plight of rural and underserved communities is dire, the energy crisis is not confined to those without access to electricity.
Boakye notes that load shedding, in recent times, has become a recurring nightmare in countries like Zambia and South Africa.
“In Ghana we call it Dumsor, and recurrently we do get our share. In Nigeria, it has simply become a fact of life. The disruption caused by these power outages affects every aspect of life, from businesses that lose productivity to households left in darkness,” he says.
While the idea of transitioning away from fossil fuels has been met with resistance, Boakye suggests that this narrative, while compelling, deserves critical examination. It is a narrative that must balance opportunities and risks, considering not only the immediate needs of our economies but also the long-term sustainability of the planet, and people.
Amid these challenges, Boakye identifies opportunities in renewable energy systems. The International Energy Agency predicts that half of the growth in energy supply this year will come from solar PV, with three-quarters of that growth driven by solar and wind.
Boakye suggests that Africa should not only contribute resources but also reap the economic benefits of the renewable energy revolution and innovate to meet the unique energy challenges faced by communities.
Ghana’s Energy Ministry has also set up ambitious targets such as developing a 2000 MW solar plant which will be scaled to 10,0000 MW, nuclear energy and e-mobility, but the gold-rich country still has a long way to go with only 5 percent renewable penetration.
H.E. Mohamed Nasheed, the first Secretary General of the Climate Vunerable Forum (CVF) and former Maldives’ President, approached the energy transition question from a climate perspective.
Mr Nasheed heaped the blame primarily on industrialised nations, noting that Africa is not the primary culprit for global heating. The industrialized nations, through their relentless extraction of fossil fuels, have pushed the world to the brink.
In 2015, at the Paris climate conference, countries agreed to reduce emissions to reach net-zero by mid-century. This transition is further accelerated by the costs of solar and wind power, which just keep falling and falling.
The global energy transition to renewables is progressing at an ever-increasing pace, and sooner or later, fossil fuels will become obsolete.
However, developed countries are transitioning to renewable energy at a much faster rate. This discrepancy suggests that developing countries risk falling behind in the technology race.
Speaking at a natural resource stakeholders’ dialogue in Accra, former President Nana Addo Dankwa Akufo-Addo announced that Ghana would soon introduce laws to ban the wholesale export of bauxite and iron.
“We should not repeat the mistakes made with our gold resources,” the former President said.
Mr. Nasheed echoing H.E Akufo-Addo’s actions, suggests that African countries could consider forming a treaty to enforce mineral export bans collectively. This coordinated effort could position Africa as a leader in the global energy transition, fostering a high-tech revolution across the continent.
Dr. Marit Kitaw, Interim Director at African Minerals Development Center (AMDC), African Union presented arguments hinged on exploiting critical minerals in powering Africa’s energy needs.
Dr. Marit noted that there are drastic shifts currently occurring in the world that will have significant impact on the energy transition: climate change, wars, and other factors are reshaping the geopolitical structure of power.
These shifts, though compounded with risks and uncertainties, provide opportunities for Africa, especially as the continent is endowed with the strategic green minerals the world needs for the energy transition and green industries, including for solar panels, wind turbines and energy storage systems such as lithium-ion batteries.
Of global reserves, Africa hosts 6% of copper, 53% of cobalt, 25% of bauxite, 21% of graphite, 46% of manganese, 35% of chromite, 79% of phosphate rock, 91% of platinum group metals (USGS, 2022).
Beyond reserves, Africa is accounting for an even greater share of current production of many of these minerals, including a commanding 70% of cobalt.
Out of 20 critical minerals, Africa is in the top three producer countries for chromium, cobalt, manganese, phosphates and titanium. It should also be noted that Africa’s relatively low-level exploration would suggest that it should rise in reserve rankings when it attracts more exploration focus.
Lithium, Nickel, Cobalt, Manganese and Graphite, for example, are important for battery performance, and Rare Earth Elements (REEs) are important for Electric Vehicles and wind turbines.
Dr Marit quotes data from the International Energy Agency showing the production of lithium and cobalt alone may increase by 500% by 2050 to meet demand for clean energy. This requires significant investment today, as the average time from discovery to first production for mines is around 16 years.
“Clean energy technologies produce lower carbon emissions yet, almost paradoxically, many need more minerals than the fossil fuel-based ones they are replacing. Many of the minerals feeding the rapidly expanding solar, wind, hydro, battery and electric vehicle industries are sourced from Africa,” she says.
The rising profile of mineral resources feeding this new industrial age marked by the falling cost of clean energy technology is viewed as an advantage to Africa providing a new set of development opportunities: to channel minerals into industrialising clean energy industries for her own needs alongside feeding global supply chains.
However, Dr Marit notes that several developed economy countries have identified as ‘critical minerals’ a set of minerals essential for clean energy equipment, high technology and defence industries with limited sources of supply or vulnerable supply chains. Furthermore, they are taking steps to secure access to critical minerals by seeking diversified supply chains.
In the African context, these minerals are considered ‘strategic’ or ‘green’ as indicated in the upcoming African Green Minerals Strategy, following two main criteria; minerals that are used in clean energy technologies and green industries;and minerals that are feedstocks into the mining supply chain.
Africa’s significant endowment in strategic/critical minerals has established it as a renewed area for geopolitical contestation as western and eastern powers attempt to consolidate their power and secure supply chains.
“For African commodity producers, the rising profile of ‘critical’ or ‘strategic’ mineral resources promises not only improved revenue and income but more importantly, there is a much bigger opportunity to be seized,” Dr Marit says, emphasising the need to innovate in technology, policy, and financing as a catalyst that drives Africa toward equitable energy access.
Sulemanu Koney, the Ghana Chamber of Mines Executive Director offers other alternatives such as deepening cooperation among relevant research and academic institutes in Africa exemplified by the recent Zambia/ DRC cooperation agreement to produce Nickel, Manganese and Cobalt (NMC) battery precursors as well as strategic partnerships between academic and research institutes in Africa and counterpart leading R & D institutes globally.
Mr Koney also suggests innovative financing schemes with recent data showing a massive interest in the sector from global financiers with off-grid power making up 25% of start-up investments in Africa in 2023.
Multilateral financing institutions like the African Development Bank and the World Bank are revamping funding for off-grid solar expansions.
The two institutions recently announced ambitions to support the private sector to rapidly expand access to 300 million people, with significant new regional and country-led programs coming online.