The government declined Umeme’s request for an extension, instead opting to integrate electricity distribution into a new state-owned entity, the Uganda National Electricity Company.

Dr Micah Abigaba, an energy economist and lecturer at Makerere University Business School in Kampala, explained that Umeme has played a key role in Uganda’s electricity distribution since 2005, investing approximately $850 million in network expansion and infrastructure upgrades.

These investments have contributed to increasing electricity access to 47% of Uganda’s population as of 2022. However, this figure remains low compared to neighbouring countries and global standards, with Uganda targeting universal electricity access by 2030.

The creation of the Uganda National Electricity Company is still in progress, with legal and structural frameworks being finalised. The government has assured the public that the transition from private sector-led distribution to state management will not disrupt power supply.

A major reason cited for ending Umeme’s concession is the high electricity tariffs, currently at around $0.22 per kilowatt-hour, which are relatively expensive compared to neighbouring countries such as Tanzania.

Uganda’s electricity generation sector has also been undergoing changes.

The government previously took over operations from Eskom Uganda in March 2023, marking a broader strategy to regain control over its energy sector. The total cost of compensating both Eskom and Umeme is estimated at $500 million, with Umeme’s buyout alone expected to cost approximately $200 million.

Despite concerns about the government’s ability to efficiently manage electricity distribution, Abigaba suggested that lessons from past experiences could help improve efficiency.

The transition to an integrated national electricity company aims to lower tariffs and expand electricity access while maintaining infrastructure reliability.

--ChannelAfrica--