Govt preparing UEDCL to take over Umeme functions next year
Umeme will hand over electricity distribution assets in March next year when its concession expires. Photo / File
What you need to know:
- Government had said it would form a new company - Uganda National Electricity Company Limited - to operate the electricity sub-sector. However, no details have been provided since
Energy State Minister Sidronius Okaasai Opolot has said government is preparing Uganda Electricity Distribution Company Limited (UEDCL) to take over Umeme functions when its concession expires.
Responding to Monitor’s inquiries regarding the formation of a successor company under which government had earlier suggested Uganda’s electricity interests would be operated, Mr Okaasai said yesterday that whereas it was too early to go into details, government was working on a plan through which UEDCL would handle not only Umeme’s distribution functions but would also oversee operations of smallholder distributors such as Kyegegwa Rural Electricity Cooperative Society, Kirembe Investments Limited and Pader-Abim Rural Electrification Cooperative Society, whose concessions have ended.
“Come March 2025, the distribution of power in the country not only for Umeme but even for the other smaller distributors, will be handed over to UEDCL. We are preparing UEDCL to take over and details will be communicated at an appropriate time,” he said, noting that there was no plan by government to extend Umeme’s 20-year concession even for a single month when it ends in March next year.
UEDCL, which was formed in 2001 after government split up the then Uganda Electricity Board to promote efficiency, has been involved in distribution functions of power to both domestic and commercial end-users on a smaller scale with much of its assets operated by Umeme, which leased them from government in 2005.
However, asked how government was planning to fund Umeme’s close to Shs1 trillion payout, which was not provided for in the 2024/25 Budget, the financial year in which the concession will expire, Mr Okaasai said this “is being worked on” without providing details. The Ministry of Energy had last year indicated that electricity distribution assets, currently managed by Umeme, would revert to a state-managed company called Uganda National Electricity Company Limited.
However, Mr Okaasai did not provide any details on the same.
It was not immediately clear if the company is being planned for the rationalisation process, in which government is planning to host all electricity-related functions, including distribution, generation, and transmission, among others under one company.
Nankabirwa blames Umeme
Earlier, while launching the Electricity Regulatory Authority (ERA) regional offices in the eastern district of Mbale last Saturday, Energy Minister Ruth Nankabirwa blamed the Umeme concession for the current expensive power tariffs, noting that any successor company to Umeme must offer a lower than 15 percent return on investment for the country to achieve affordable tariffs.
Ugandans, she said, had for long been subjected to high power tariffs due to an expensive Umeme concession, whose high return on investment, was feeding into power tariffs.
The Umeme concession, she said, was expensive and had contributed to the current expensive tariffs that remain a challenge to many Ugandans.
The concession had been structured in such a way that Umeme recovers its investments through power tariffs.
“Umeme has done its part, but its concession was expensive. 20 percent return on investment affected the end-user tariffs. I expect a successor arrangement, which will not have a 20 percent return on investment, not even 15 percent. I want that reduced kabisa [Swahili for absolutely] so that I can distribute power, which will be affordable,” Ms Nankabirwa said.
Government has previously indicated that it was relatively impossible to reduce electricity tariffs under the current Umeme concession.
Energy Efficiency and Conservation Bill
Ms Nankabirwa also indicated that on Monday (June 17), the Cabinet had passed the Energy Efficiency and Conservation Bill, which will soon be tabled before Parliament.
“On Monday, we passed a very important bill in Cabinet. I know Parliament will like it - the Energy Efficiency and Conservation Bill. We want to help you people who are the consumers to use good gadgets that don’t waste electricity so that you do the same work with little energy,” she said.
