Govt to spend Shs420b on sprucing up grid

Uganda Electricity Distribution Company Limited (UEDCL) is set to spend $110m (about Shs420b) on new procurement after the takeover from Umeme on March 1, 2025.

This follows the government’s decision not to give Umeme an extension of its contract. Mr Paul Mwesigwa, the UEDCL managing director, recently revealed during a media briefing that the money will be used to replace worn out Umeme infrastructure.

Mr Mwesigwa also advised local suppliers to always know the Public Procurement and Disposal of Public Assets (PPDA) rules while applying for bids. He noted that the government has stopped issuing international bids on equipment manufactured in the country as they promote the Buy Uganda Build Uganda (Bubu) policy.      

Last month, during a parliamentary sitting for the Natural Resources Committee, Mr Emmanuel Otaala, the head of  Natural Resources Committee, disclosed to the Budget Committee that negotiations are underway to obtain $765.75m (Shs2.920t) in foreign funding to enable the government to assume control of the Umeme concession.

“According to UEDCL, it has been in consultation with global financial institutions to support this cause and they are in favour of the $765.75m that the organisation needs,” Mr Otaala said.

Sunday Monitor understands UEDCL is seeking $540m (Shs2.059t). Of this, $190m is needed as an initial investment during the takeover process, and Umeme is owed $225.75m (Shs860.8b) for the buyout.

In another development, the government intends to create the Uganda National Electricity Company Limited (UNECL) to take over the generation, transmission and distribution of electricity. This comes after the government decided against renewing the concessionary contracts of Eskom Limited and Umeme Limited.

In a statement, the ministry said UNECL will operate as a public-private partnership (PPP) with the state having 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 minimising “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.