The Independent Uganda: You get the Truth we Pay the Price
COMMENT | NNANDA KIZITO SSERUWAGI | President Yoweri Museveni views investment in energy as one of the fastest ways to transform a society and reduce poverty. Multiple studies back this perspective. One such study by the World Bank and the International Energy Agency (IEA) finds that the single biggest driver of GDP for developing countries is electrification. Studies by these bodies found a 50-80% drop in poverty rates in countries like Vietnam (1993-2015) and Ethiopia (2000-2023), where access to electricity jumped from less than 20% to over 80% during the bracketed periods. There are also studies to show that women and children in areas without access to electricity waste 4-10 hours daily in the poverty-trapping drudgery of fetching firewood and water. Access to energy is also linked to several other key indicators of human wellness, such as health and education.
Uganda had an extremely small, entirely hydropower-based energy sector in 1962. The transmission lines snaked along a narrow corridor from Jinja to Kampala. The Owen Falls Dam (now Nalubaale) was our only power station. We had a 150MW installed generation capacity. Less than 2% of the population could access electricity. Connection was almost entirely limited to parts of Kampala, Jinja industrial area and Entebbe. The rural areas virtually had no access to grid electricity.
The Uganda Electricity Board, which had been incorporated in 1948, did all the work, monopolising electricity generation, transmission and distribution. Due to absence of a national grid to talk about, over 98 % of Uganda’s total energy consumption was dominated by use of firewood and charcoal.
This background is important for establishing the right context in which to analyse the performance of Uganda’s access to energy today. It also sets the benchmark on which to evaluate Museveni’s performance.
Whereas developed countries like Britain essentially had universal access to energy, with a 99.9% electrification rate by the early 1950s, the electrification rate was still less than 2% in Uganda by 1986. Due to poor maintenance, underinvestment and political instability, our energy sector did not significantly develop from 1962 to the 1990s. The macrotrends in electrification emerged in the post-1990s when the country started recovering gradually from both the post-conflict era and the economic stagnation of the 1970s and 80s.
Museveni came to power when Uganda was generating only 60MW out of the installed capacity of 150MW. He embarked on a mission to generate, transmit and distribute electricity to all parts of Uganda.
While this mission was also partly influenced by the World Bank/IMF 1990s Structural Adjustment Programs to tackle UEB’s huge losses, high tariffs, poor supply, and other chronic inefficiencies, Museveni owned and championed the reforms and made it his goal to transform the energy sector. With support from the World Bank and IMF, his government undertook the Strategic Restructuring Plan (1995-1997) to transform UEB into a private capital-attracting, commercially viable entity.
As part of the energy sector reforms undertaken by government through the Electricity Act of 1999, UEB was unbundled into three entities: the Uganda Electricity Generation Company Limited (UEGCL), the Uganda Electricity Transmission Company Limited (UETCL) and the Uganda Electricity Distribution Company Limited (UEDCL). The three entities were made responsible for electricity generation, transmission, and distribution, respectively. The government retained transmission under UETCL, but handed the concessions for electricity generation and distribution to private companies.
According to Andrew Mwenda, when government decided to unbundle UEB as explained above, it hired an international company, Fieldstone Private Capital Group Limited, to help handle the matter. When tenders for generation and distribution concessions were advertised, five companies expressed interest, but all pulled out without submitting a bid after undertaking due diligence on the political and regulatory framework of our energy sector. The companies had discovered the following: Uganda had subsidised the electricity tariff for a very long time; our electricity tariff had remained unchanged from 1993 to 2002, meaning that the prevailing price then was far below the actual cost of generating, transmitting and distributing electricity – its value having been eroded by inflation and foreign exchange depreciation; and the country had also condoned rampant power thefts.
Only 280,000 people were connected to the grid in 2005. According to the Electricity Regulatory Authority (ERA) and UEDCL, the number of customers connected to the national grid has since increased to approximately 2.4 million. Based on UBOS standards, each Ugandan household has about 4-4.5 people, implying that roughly 9.5–10.5 million people now have access to grid electricity.
The biggest problem of all, for a long time, was energy losses. These were both technical (power getting lost in the process of transmission) and commercial (the rampant power theft). As a consequence, these losses also caused high tariffs for customers.
Thanks to the government’s bringing of Umeme on board in 2005, the company greatly contributed to transforming the energy sector. Having inherited the biggest historical problem of energy losses at 38%, Umeme reduced them by more than half to 16.5% in just 13 years. By the time Umeme transitioned the distribution to UEDCL early this year, distribution losses stood at only 13-15%.
Only 280,000 people were connected to the grid in 2005. According to the Electricity Regulatory Authority (ERA) and UEDCL, the number of customers connected to the national grid has since increased to approximately 2.4 million. Based on UBOS standards, each Ugandan household has about 4-4.5 people, implying that roughly 9.5–10.5 million people now have access to grid electricity.
In order to achieve his aim of distributing electricity to all parts of Uganda, Museveni embarked on refurbishing the Nalubaale dam and building new ones. He has since built Kiira dam, supported the private sector to build Bujagali dam, and recently, invested in the construction of Karuma and Isimba dams. Due to all these investments, Uganda now generates 2,052 Megawatts of electricity, which has expanded access to electricity to over 10 million Ugandans.
With the exception of Buvuma and Obongi, all districts in Uganda are now connected to the national grid. Museveni’s government has also worked with the private sector to build small power plants, including: Kigwabya Hydropower Plant (4.2 MW) in Kagadi; Xsabo Nkonge Solar Plant (20 MW) in Gomba; Pro Industries Co-generation Plant (4.3 MW) in Gulu; and Off-grid solar systems: 400 kWp on Bussi Island in Wakiso district, among others. These plants have further enhanced access to electricity.
Uganda has also recently commissioned nine transmission lines totalling 1,038.3 km. These are: Karuma-Kawanda, Karuma-Olwiyo, Karuma-Lira, Namanve-Luzira, Mutundwe-Entebbe, Opuyo-Moroto, Gulu-Agago, Kole–Gulu–Nebbi–Arua and Mirama-Kabale, thus bringing the cumulative total of transmission lines to 5,140 km up from 2,354 km in 2019/20.
Museveni now intends to reduce the cost of electricity for manufacturers to 5 U.S cents per kWh. When UEDCL took over from Umeme, the electricity tariff for extra-large manufacturers was reduced to 5.5 from 8.8 U.S. cents per kWh in 2023. Reducing the tariff is key to supporting the industrialisation ambitions of our country. Museveni is also keen on generating more electricity for the tenfold growth and socio-economic transformation goals of Uganda, well knowing that an increase in the number of factories and a full utilisation of the existing ones will render the current electricity we generate inadequate. The future of e-mobility and the use of railways will increase the electricity demand even further. Already, half of the country’s electricity consumption is by the 622 large and 52 extra-large factories. The 2.4 million domestic consumers combined use only 23%.
That said, our country’s fast population growth is one of the factors that will affect access to energy in the near future. We need to plan for energy expansion, mindful of the reality that our population growth is one of the highest in the world, and therefore, our energy investments must be commensurate with population increase. We also face an environmental catastrophe if we do not gradually wean the majority of Ugandan households off traditional biomass. Almost 87% of energy consumption in Uganda is wood and charcoal, which explains the depletion of Uganda’s forest cover to 8% from 24% in 1990. Besides, bioenergy is also our biggest source of pollution, causing high health risks.
Another challenge we face is that power purchase agreements (PPAs) signed with UETCL often include “take-or-pay” clauses, which require government to pay for deemed energy that it has not been able to use. This significantly increases the cost of power, which is subsequently reflected in the tariffs consumers have to pay. We need to develop adequate capacity for power evacuation and distribution to avoid such immense losses.
Additionally, developing new energy generation projects is not a simple task in Uganda, especially due to our public procurement systems, which make it hard for the government to execute major infrastructure projects. Out of experience, it takes at least two decades to build a dam in Uganda. Examples of this are: the 600MW Karuma took 25 years to build from 1998 to 2023; the 250 MW Bujagali dam took 20 years, from 1992 to 2012. There is concern that Karuma and Isimba face serious structural deficiency risks, which may cause a dam breach in future. These are urgent matters that Museveni should address to avoid regression in his immense energy sector achievements.
It is undeniable that Museveni has presided over a transformative energy sector, expanding its coverage and improving its efficiency. The achievements in electricity generation, transmission and distribution have benefited from the contribution of multiple players, but Museveni’s vision has been central to this success. It is now time to roll up our sleeves to make the necessary economic adjustments necessary for Uganda to afford transformative, long-term investments in energy development.
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The writer is a Ugandan thinking about Uganda.
