Uganda to Nationalise Electricity Utility as Private Contracts End With Umeme and Eskom

Google+ Pinterest LinkedIn Tumblr +

  • The government of Uganda is to form the Uganda National Electricity Company Ltd after contracts with Eskom and Umeme come to their conclusion.
  • The Eskom contract for the management of two hydroplants runs out next year while Umeme’s contract for energy transmission and distribution ends in 2025. Read more

The Ministry of Energy and Mineral Development has commenced the implementation of the Power Sector Reforms, targeting enhanced sector performance and provision affordable power to the people of Uganda. The move follows a Cabinet Directive of October 3, 2022.

The reforms are expected to minimise expensive private capital in the electricity subsector investments in generation, transmission and distribution. It will culminate in the creation of the Uganda National Electricity Company Limited (UNECL) as a state-run entity with majority shareholding under a Public Private Partnership (PPP) arrangement as a possible option.

The Ugandan Cabinet, among others, directed the Ministry not to renew the Concession and Privatisation Agreements for Eskom Uganda Limited and Umeme Limited after their concessions come to their natural end.

Nationalisation process has already begun

Eskom is the country’s largest energy generator on a 20-year concession effective from March 1, 2003, for managing and maintaining the 180MW Nalubale and 200MW Kira Hydropower Plants. Umeme is Uganda’s main electricity distribution company, holding a 20-year electricity distribution concession from the Government of Uganda, effective from March 1, 2005.

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), Uganda Electricity Distribution Company Limited (UEDCL), and Uganda Electricity Distribution Company Limited (UEDCL) have also been directed to make appropriate arrangements for the transition.

Dr Ruth Nankabirwa Ssentamu, the Minister of Energy and Mineral Development, recognised Umeme and Eskom for their years of continued support and investment in Uganda’s energy sector.

“On behalf of the government of Uganda, I take this opportunity to appreciate Umeme and Eskom for the operation and maintenance of the government assets on behalf of UEDCL and UEGCL for the past 18 and 19 years, respectively,” she said.

Uganda electricity grid has grown over last two decades

The minister noted that the electricity distribution network under Umeme covers a large percentage of the country, has grown in asset capacity and complexity and employs about 2,000 staff. “To this effect, I call upon the parties to the concession agreements to ensure a smooth transition of all the relevant responsibilities and asset handover in close coordination with this Ministry,” she said.

Ssentamu said the Ministry would spearhead the transition process and engage all concerned parties, including the shareholders, to ensure that the government of Uganda’s decision to end the concession naturally is executed reasonably.

The Ministry has already constituted a joint committee to handle the Eskom concession and is in the process of making a similar arrangement for the UMEME concession. The respective committees are tasked with the planning and management of the end of the concessions to ensure seamless handover of the operations of the assets.

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

The Permanent Secretary said the Ministry, with the support of the Auditor General, would undertake a valuation of the companies’ investments to determine any outstanding obligations by government. The Ministry continues to put in place all measures to ensure universal access to clean, reliable and affordable energy.

Author: Nomvuyo Tena

Nomvuyo Tena is a Content Producer at Vuka Group and is as passionate about the energy transition in Africa as she is about music and Beyonce. 

This article was originally published on ESI Africa and is republished with permission with minor editorial changes.




Leave A Reply

About Author

Green Building Africa promotes the need for net carbon zero buildings and cities in Africa. We are fiercely independent and encourage outlying thinkers to contribute to the #netcarbonzero movement. Climate change is upon us and now is the time to react in a more diverse and broader approach to sustainability in the built environment. We challenge architects, property developers, urban planners, renewable energy professionals and green building specialists. We also challenge the funding houses and regulators and the role they play in facilitating investment into green projects. Lastly, we explore and investigate new technology and real-time data to speed up the journey in realising a net carbon zero environment for our children.

Copyright Green Building Africa 2024.