Uganda Electricity Sector: Achievements, Facts, figures and key stakeholders
Electricity is a key factor in the social economic transformation of Uganda holistic program. It’s actually an engine for industrialization and hence social-economic transformation.The Government of Uganda under the leadership of H.E Yoweri Kaguta Museveni prioritized increasing Uganda’s energy production, foreign investment in the sector has increased. The Electricity Regulatory Authority has been at the forefront of transforming the electricity sector to offer the best to the people of Uganda.
With the focused leadership of President Museveni, it is estimated that as of December 2020, installed electricity capacity in Uganda was 1,268.9 megawatts (MW) with demand at 737 MW, leaving a surplus of 532 MW. President Museveni in 2019 commissioned the 183 MW Isimba Hydro Power Dam, and the 600 MW Karuma Hydro Power Dam is slated to come online by 2022.
According to Mr Julius Wandera the Director of Corporate Affairs at the Electricity Regulatory Authority (ERA), The transformation of the electricity sector in Uganda is attributed to the wise leadership of H.E Yoweri Kaguta Museveni and the determination of the board and management of electricity regulatory Authority,the Ministry of Energy and Minerals development as well as the licensed private sector companies and public entities.
Public Opinions is therefore conducting a countrywide survey to determine the best performing electricity sector companies in Uganda and recognize them with the Uganda Economic Development Mark of Excellence Award and to be ranked on the list of the Uganda GREAT50 Economic Stakeholders while their corporate logos and profiles will be published in the 2021/2022 Uganda Economic Stakeholders Book of Records. NOMINATE an Electricity Company you think has made tremendous contribution to attainment of Uganda Vision 2040 and United Nations Sustainable Development Goals through offering high quality services and products, paying taxes, employing Ugandans, supporting productive corporate social Responsibility, environmental protection,etc.
Its important to note that the addition of the Karuma Hydro Power Dam is projected to boost Uganda’s total capacity by 48% and leave potentially over 1000 MW of excess power generation capacity. However, analysts believe a large suppressed demand exists, particularly among industrial consumers, due to Uganda’s unreliable transmission and distribution systems. Despite these energy projects, Uganda has one of the lowest electrification rates in Africa, primarily due to: an overreliance on biomass sources in the energy mix, constrained electricity transmission and distribution infrastructure, limited access to off-grid solutions, limited productive use of energy, and uncoordinated intra- and inter-sectoral planning. In urban areas, 57.2% of
Infrastructure expansion in the energy sector has been a central point of interest in all documents that detail the government’s strategy and plans for economic development. Whereas Vision 2040 and the first two national development plans mainly focused on the expansion of the installed energy generation capacity, the third plan aims to make this generated energy better available to households and businesses. As part of the first two plans, the sector (nearly) finalized its two flagship projects: the construction of the Karuma (600MW) and Isimba (183MW) hydropower dams. The installed generation capacity more than doubled from 601MW in 2010 to 1,252MW by the end of 2019 and is expected to further increase once the Karuma dam is fully operational in November 2020 (ERA, 2019; NDP III, NPA, 2020; MoFPED, 2020b). Unfortunately, the installed capacity is not fully utilized because of gaps in the transmission and distribution infrastructure.
Ugandans have access to electricity; however, access drops to 10% in rural areas, and it is only 22.1% nationwide.
Uganda has approximately 3,101 km of transmission lines, which the government aims to increase to 4,354 km by 2025.
As investment in transmission is still insufficient, some existing generation capacity cannot be distributed. Additional investment is also needed to enable export of electricity to other countries in the region. The ERA regulates licensing, generation, transmission, and distribution. Uganda’s power tariffs are set on a quarterly basis, and the average tariff to consumers is $0.15/kWh ($0.13/kWh for large industrial users), with the first 15 units of power subsidized.
USAID’s Power Africa has been providing transaction advisory services to generation projects to reach financial close or commercial operations, but is now focused on increasing access to electricity and improving the enabling environment for private sector investment in electricity generation and access. Through Power Africa support, over 1.5 million new connections have been added, with the bulk being off-grid solutions that benefit rural communities. Much of Power Africa’s support targets innovation in product development, last mile market entry and development, and the promotion of productive use of energy.
Uganda’s Electricity Supply Industry was greatly affected by the Covid-19 pandemic, with the peak demand dropping to as low as 588.5 MW in April 2020 having dropped from 728.7 MW in February 2020. The maximum demand registered in 2020 was 736MW in November 2020.
Uganda operates a Single Bulk Supplier Model in Electricity Transmission. The Uganda Electricity Transmission Company Limited (UETCL) has a License for Bulk Power Supply, Import, and Export of Electricity as well as a System Operator. During the FY2019/20; UETCL purchased and sold 4,329.4 GWh and 4171.4 GWh respectively.
The energy purchases and sales in the FY 2019/20 increased but at a decreasing rate, recording an annual growth rate of 2% far below the 6% average annual growth rate observed since FY 2015/16. This drop in the growth rate is partly due to the market performance constraints imposed by the Covid-19 Pandemic. Uganda’s Tariff Structure classifies Electricity Customers into Six Categories these are, Domestic, Commercial, Medium Industrial, Large Industrial, Extra-Large Industrial, and Street Lights.
The number of customers on the grid increased by 11% in the FY 2019/20 from the 1,454,219 during the FY2018/19. About 94% of the customers on the network are domestic customers with the other customer categories constituting 6%. Umeme Limited accounts for 93% of the total customers, UEDL had a 5% share while the other distribution companies account for 2%.
Uganda’s Electricity sub-Sector is run under a liberalized set up following its Liberalization in 1997 and the enactment of the Electricity Act, 1999. The Liberalization and enactment of the Electricity Act, 1999, mandated the unbundling of Uganda Electricity Board (UEB) which was a monopoly managing generation, transmission, distribution, sale, import, and export of Uganda’s Electricity.
Uganda’s Electricity Supply Industry is now regulated under the Electricity Act, 1999, Chapter 145, the Energy Policy, the National Environment Act, Chapter 153, and the Statutory Instruments and Guidelines issued by the Electricity Regulatory Authority (ERA).
The structure of Uganda’s Electricity Supply Industry
Uganda’s Electricity Supply Industry is divided into Three (3) independent segments:
- Generation
- Transmission
- Distribution
The Generation segment has a combination of the Government of Uganda-owned power plants, Independent Power Producers (IPPs), and Public-Private Partnerships (PPPs). The Transmission Segment is wholly owned by the Government of Uganda. The Distribution segment, just like Generation, is also liberalized and has private players, as well as a Government of Uganda-owned Distribution Company – the Uganda Electricity Distribution Company Ltd (UEDCL).
The Electricity Regulatory Authority is the legal supervisor of Uganda’s Electricity Supply Industry. ERA was established in the year 2000 as a body corporate, with the capability to sue or be sued. It consists of Five (5) Board (Authority) Members appointed by the Minister responsible for Energy, with the approval of the Cabinet. ERA also has a Secretariat that comprises of Technical Staff who operationalize the decisions made by the Board.
Electricity Regulatory Authority (ERA) is mandated by the Electricity Act, 1999, to issue Licenses with the attendant License Terms and Conditions for Electricity Generation, Transmission, Distribution, Sale, Import, and Export of Electricity. ERA is also mandated to establish a Tariff structure and approve rates of charges, among other functions. ERA is duty-bound to conduct its functions in an Open, Objective, Fair, Reasonable, Non-discriminatory, Transparent manner, and also promote Fair Competition in the Liberalized Electricity Supply Industry. ERA ensures that Utilities earn a reasonable rate of return on their investments necessary to provide a Quality Service at Affordable Prices to the Electricity Consumer.
The Electricity Regulatory Authority has since its establishment presided over a steadily growing sub-Sector that has eliminated load shedding due to increased generation and accelerated Electricity Access for End-Users.
To ensure Sustainable Electricity Supply, ERA has over the years created a conducive regulatory environment and incentives aimed at diversifying the Country’s Generation Mix. Uganda’s Power Generation is mainly diversified across Four (4) different sources as follows: –
- Hydro – 1,023.59 MW
- Thermal – 100 MW
- Cogeneration – 63.9 MW
- Grid-connected Solar – 60 MW
Uganda’s Electricity sub-Sector has grown from Three (3) Generation Plants in 2001 to over 40 Plants and is still growing. The Total Installed Generation Capacity has grown from 60 MW in 1954, 400 MW in 2000 to 1237.49 MW as of October 2020. This capacity is expected to rise to 1837.49 MW by mid-2021.
Uganda’s Electricity Transmission is managed by the single operator of the Transmission System – the Uganda Electricity Transmission Company Ltd (UETCL) which directly executes Power Purchase Agreements with Independent Power Producers and manages the scheduling and actual dispatching of Power Plants. The Uganda Electricity Transmission Company Ltd holds a Licenses for the operation of the High Voltage Transmission Grid, the System Operator License, the Export and Import of Electricity License, and the Bulk Supply License.
Because of a conducive regulatory environment created by Electricity Regulatory Authority (ERA), a remarkable improvement in the Distribution of Electricity in Uganda has been realized. Energy Losses have been reduced from over 30% at liberalization to 16% in 2020. The Access to Clean Energy rate has also increased and the legally Grid-Connected Customer Base has grown from approximately 180,000 Customers in 2001 to 1,643,288 in 2020, including Off-Grid Customers.
As a way of growing Access to Clean Energy across the Country, President Museveni directed Electricity Reglatory Authority to issue license to several Electricity Distribution Operators across the Country to serve the hitherto unserved and predominantly rural community. The number of Electricity Distribution Companies now stands at Nine (9). The Distribution Companies are: Umeme Limited, West Nile Rural Electrification Company (WENRECo), Uganda Electricity Distribution Company Limited (UEDCL), Bundibugyo Electricity Cooperative Society (BECS), Kyegegwa Rural Energy Co-operative Society (KRECS), Pader-Abim Community Multi-Purpose Electric Co-operative Society (PACMECS), Kilembe Investments Limited (KIL), Hydromax,Kalangala Infrastructure Services Limited (KIS),etc. These companies are operating in various regions of the Country, which has increased Access to Electricity. Access has grown from a perennial 12%-15% to 51% according to the most recent access statistics released by the Uganda Bureau of Statistics.
ERA as the Regulator of Uganda’s Electricity Supply Industry has an established fully-fledged Consumer Affairs Unit (in the Department of Corporate and Consumer Affairs), which handles Electricity Consumer Complaints that have not been resolved by the Distribution Companies. The Consumer Affairs Unit operates a Contact Center that can be reached by the Public on Telephone Number 0200-506000 during working hours (8:00 am to 5:00 pm, Monday to Friday) and across various online platforms. These several contact points are aimed at promoting Consumer Protection, to give the Consumers the opportunity to be heard when they are unhappy with their Electricity Service.
In NDP III, the government wants to increase the role of the state again. Under the first two development plans, the private sector was considered as the main driver of growth. However, “under NDP III the role of the state in guiding and facilitating development will be strengthened.
The government will invest either wholly or jointly with the private sector and the communities in strategic enterprises to crowd in the private sector in order to spur growth in a balanced manner across the country” (NDP III, NPA, 2020, page 8). It is still unclear how this will impact the earlier privatization efforts of the government and the transformation of the energy sector, and whether some of the reforms will be reversed.
However, Uganda’s Cabinet discussed on the 10th of September 2018 the “alignment” of public entities and agencies in order to limit wasteful expenditures. A bundling of UEGCL, UETCL, UEDCL under the Ministry of Energy and Mineral Development was listed explicitly as one of the approved reforms (Cabinet of Uganda, 2018). The decision resulted in widespread criticism and was not forwarded to Parliament. The government of Uganda has not taken further action to take the decision forward.
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