Govt details plans after Umeme exit

Umeme staff with some of the electric wires that they confiscated after an operation to curb electricity theft in Nateete, Kampala, earlier this year. PHOTO | FILE

What you need to know:

  • On Friday, Energy minister Ruth Nankabirwa said on her official Twitter handle that the formation of the UNECL followed a Cabinet decision not to renew the contracts of the two companies. She further revealed that the recent developments were part of the bigger reforms in the energy sector.

The government has said it is forming the Uganda National Electricity Company Limited (UNECL) to minimise private capital investments in the electricity sub-sector. This follows its decision not to renew the contracts of Umeme and Eskom Uganda Limited.

On Friday, Energy minister Ruth Nankabirwa said on her official Twitter handle that the formation of the UNECL followed a Cabinet decision not to renew the contracts of the two companies. She further revealed that the recent developments were part of the bigger reforms in the energy sector.

“Today, I unveiled my ministry’s new reforms in the power sector as per the Cabinet directive of October 3, 2022,” she wrote, adding, “We are committed to enhancing sector performance and providing affordable power to the people of Uganda.”

Her tweet was followed by a communique issued by the Energy ministry’s principal communications officer, Mr Solomon Muyita. In the statement, Mr Muyita said the decision targets to enhance the electricity sub-sector performance and provide affordable power to the people of Uganda.

“The reforms are expected to minimise expensive private capital in the electricity sub-sector investments in generation, transmission and distribution. It will culminate in creating the UNECL as a state-run entity with majority shareholding under a Public Private Partnership (PPP) arrangement,” he said.

On October 3, the Cabinet directed the ministry not to renew the concession and privatisation agreements for Eskom Uganda Limited and Umeme after they run their course. According to Mr Muyita, the ministry has already formally notified Eskom and Umeme of the government’s decision not to renew their concessions agreements when they come to their natural end in March 2023 and March 2025, respectively.

“The Electricity Regulatory Authority (ERA), the Uganda Electricity Distribution Company Limited (UEDCL) and Uganda Electricity Generation Company Limited (UEGCL) have equally been directed to make appropriate arrangements for the transition,” Mr Muyita revealed.

Unbundling backstory

Twenty years ago, Uganda in bold reforms unbundled and privatised large parts of the power sub-sector. The sub-sector reforms were championed by the World Bank Group and other international development agencies as part of a Public Sector Restructuring and Privatisation Strategy. This was intended to make the power sub-sector in Uganda financially sustainable and efficient.

Management of existing generation assets was transferred to Eskom Uganda in 2003 before the main distribution grid was transferred to Umeme in 2005 under a 20-year concession. This created the first unbundled electricity distribution network in sub-Saharan Africa.

The electricity distribution network under Umeme, which covers a large percentage of the country, has grown in asset capacity and complexity and employs about 2,000 staff.

Elsewhere, the Energy ministry has already constituted a joint committee to handle the Eskom Concession. Sunday Monitor understands the committee is in the process of making a similar arrangement for the Umeme concession.

The committee has been tasked with the planning and management of the end of the concessions to ensure seamless handover of the operations of the assets, as per the Energy ministry’s chief accounting officer, Ms Irene Batebe.      

“Government is committed to avail the necessary financing to ensure it fulfils its obligations in the related agreements. UEDCL and UEGCL will be supported to enable them manage the transition and operation of the concessions as happened with the 50MW Namanve Thermal Power Plant that has reverted to UEGCL in 2021,” Ms Batebe said.

Economic sabotage?

While the electricity distributor (UEDCL) currently runs its business with at least 380 manpower bases, Uganda’s grid has found itself grappling with a number of problems. In recent times, what the government has classified as power infrastructure vandalised has surged to the fore.

“We are experiencing vandalism where the vandals leave the infrastructure in place without chopping it and carrying it away,” Ms Nankabirwa said on Friday.

Ms Nankabirwa said the body the government has put together is pointing to a classic case of “economic sabotage.”

“Our steady progress is being attacked by bad people. We are losing money and the country is now at risk of darkness because we have to apportion power,” she said, adding: “We have to load shed some parts so that the other areas can also get power—what we call load-shedding. It is quite  unfortunate.”

Under sustained attack

The police in partnership with other security agencies have in the recent past arrested nearly 100  suspects alleged to have been involved in malicious damage and theft of electricity powerlines and other utility infrastructure in different parts of the country.

Police reports indicate that last month, an intelligence-led operation that was mounted after 132kV transmission lines from the Jinja-based 180MW Nalubaale and 200MW Kiira hydro plants were vandalised, leading to massive blackouts in central and western parts of the country.

Additionally, transmission lines of the 132kV Owen Falls-Lugogo transmission lines were vandalised at Kivuvu Village in Mukono District. This ultimately led to the collapse of four towers. The police report further indicates that the Owen Falls-North-Mulago transmission line was also vandalised at Nasuuti in Mukono District, forcing one tower to collapse.

Ms Nankabirwa says the National Security Committee is probing the matter and will release its initial findings on December 14 before generating a comprehensive report to be furnished with the House.

“I will not rush to give a statement to Parliament before concluding the debate with the National Security Committee because the MPs will ask what we are doing about it. I requested the Speaker of Parliament that I issue the statement having concretised all this intelligence information that I have,” the Energy minister said on Friday.

Ms Nankabirwa also addressed herself to the issue of Parliament backing a motion of reinstating the Rural Electrification Agency (REA).

“I was surprised to see this motion moved by an MP who supported the mainstreaming of REA back into the ministry of Energy,” she said, adding, “This is unacceptable especially at a time when Parliament has just passed a very important loan for Electricity Access Scale-up Project (EASP). Anything stepping in the way of electrifying communities will be vehemently opposed.”

In August, Parliament approved a motion by the Finance ministry intended to transfer nearly Shs500 billion of a World Bank loan that had been allocated to REA to the mother Energy ministry. REA has since been collapsed into the Energy ministry.


In an earlier interview with this newspaper, Mr Paul Mwesigwa, the UEDCL managing director, said all the required structures had been put in place to take over the electricity distribution business from Umeme Ltd once their concession expires.

“Operationally, we have a technical department that is headed by experienced engineers managing network activities, and planning for the network including connectivity across the country,” he said, adding, “There is no need to worry about matters of governance once Umeme exits.”

Mr Mwesigwa also said the company has since 2013 successfully operated in more than 74 districts that Umeme found not to be commercially viable. “These are districts majorly outside the Umeme grid since they were hard to reach,” he said, listing, among others, Kyenjojo, Kagadi, Moyo, Adjumani, Nakapiripirit and Moroto.