Kampala, Uganda – Ugandan electricity consumers can finally be hopeful to benefit from reduction of UMEME power tariffs. The government has taken over electricity distribution and sales operations previously managed by Umeme Ltd. This move, officially announced on December 31, 2024, marks the culmination of a 20-year concession with Umeme, ushering in a new era of public-sector management under the Uganda Electricity Distribution Company Ltd (UEDCL).
Will UEDCL lower UMEME power tariffs?
The announcement was made by Energy Minister Ruth Nankabirwa during a press conference at the Uganda Media Centre in Kampala. She assured the public that electricity costs, already showing a downward trend, would continue to decline under UEDCL’s stewardship.
Did UMEME ever drop power prices in the past?
A comparative analysis of power tariffs for domestic, commercial, medium, and large industrial users between the last quarters of 2023 and 2024 reveals notable reductions. For instance:
- Domestic consumers’ rates dropped from Shs805 per unit to Shs796.
- Commercial users saw a reduction from Shs611 to Shs599.
- Medium industrial users experienced a decrease from Shs461 to Shs448.
- Large industrial players benefited from a reduction from Shs384 to Shs378.
Minister Nankabirwa attributed these reductions to the government’s commitment to affordable energy. She also hinted at further cuts, which she will announce on January 2, 2025.
“The essence of the government takeover is to ensure Ugandans enjoy affordable and reliable power. The existing tariff packages, such as the declining block tariff, will continue, and we will ensure industrialists and other users benefit,” she said.
UEDCL’s Investment Strategy
To sustain the downward trajectory of electricity costs, UEDCL plans to invest $70 million annually (approximately Shs256 billion) over the next 25 years. This investment will address network inefficiencies, reduce power cuts, and support the expansion of infrastructure.
Speaking to the media, UEDCL Managing Director Paul Mwesigwa outlined the company’s strategy:
- Upgrading conductors and inserting new transformers.
- Establishing sub-stations to manage network overload.
- Extending transformer insertions to reinforce the backbone infrastructure.
“We’ve already secured half of the funds and begun procuring materials. By April 1, when UEDCL takes over, we will have the necessary inventory to hit the ground running,” Mr. Mwesigwa said.
The agency also aims to cut the current power loss rate of 15% through massive sensitization campaigns, anti-vandalism measures, and technological upgrades.
Will there be power shutdown during the shift from UMEME to UEDCL?
Minister Nankabirwa acknowledged potential transitional challenges, such as power outages, as UEDCL assumes full operational control. However, she assured the public that the government is prepared to intervene swiftly.
“Some challenges, like power cuts, are inevitable during this transition. We ask for patience as we ensure UEDCL achieves 100% authority and stabilizes operations,” she said.
The government is also finalizing the buyout of Umeme Ltd. The Auditor General is assessing Umeme’s investments to determine the final compensation, initially estimated at Shs921 billion but revised to Shs849 billion by early 2024.
“We are ready to pay the buyout amount. By the time the government decided not to renew the concession, it had committed to meeting all obligations,” Nankabirwa added.
Historical Context and Policy Reversal
The government’s decision to reclaim power distribution aligns with a broader policy shift. In 2005, the Uganda Electricity Board (UEB) was privatized under a World Bank/IMF initiative aimed at improving service delivery. However, in 2017, President Yoweri Museveni reversed this policy, citing the negative impact of privatization on key sectors.
UEDCL has since reclaimed operations from several private entities, including Ferdsult Engineering Services Ltd and Pader-Abim Community Multi-Purpose Electric Cooperative Society Ltd, whose licences expired last year.
Looking Ahead
With its experience managing power distribution in challenging regions like Karamoja, Adjumani, and Kisoro, UEDCL is confident in its ability to deliver affordable, reliable electricity nationwide.
“Our track record in hard-to-reach areas demonstrates our capacity to serve Ugandans efficiently. We will build on this to ensure quality service delivery at lower costs,” Mr. Mwesigwa emphasized.
As UEDCL prepares to take full control on April 1, 2025, Ugandans can anticipate a brighter, more affordable energy future.
