Will Umeme legacy light the way for UEDCL?

By David Mukholi, Journalist 

KAMPALA - Umeme will officially exit on March 31. Established in 2005, the company was tasked with electricity distribution and soon became a household name. 

Though its early years were marked by scepticism and challenges, it departs at a time when public confidence in its services is high. This, then, raises questions about the Uganda Electricity Distribution Company Limited (UEDCL) which is taking over. 

Can UEDCL match or surpass Umeme’s performance? If so, Uganda’s electricity distribution could continue its upward trajectory, growing from the current base of over two million consumers. 

However, concerns remain about whether UEDCL will have the financial capacity to sustain operations. Records show that by December 2021, Umeme had invested $547.5m. 

UEDCL is now projected to spend $70m (sh256b) annually over the next 25 years. Will it have the money? It is important to note that Umeme has been doing the UEDCL job for the last 20 years. 

It will have to prove itself by picking Umeme’s success as a template and even do better. Another issue is whether the anticipated lower electricity tariffs will be subsidised by the Government. 

While cheaper power would benefit consumers, reliance on subsidies could pose certain risks. 

Subsidisation, though well-intentioned, often leads to inefficiencies, stagnation and fiscal burdens — outcomes that are ultimately unsustainable. 

So, how will UEDCL ensure lower tariffs? The word Umeme means “electricity” in Swahili. 

Since 2005, the company has expanded the electricity network across Uganda, fulfilling its mission to provide safe, reliable power through an efficient distribution system, managed by dedicated staff, while ensuring shareholder value. 

Importantly, Umeme operated as a commercial entity — providing services, generating revenue, paying taxes, reinvesting and delivering dividends. 

This approach set it apart from its predecessor, the Uganda Electricity Board (UEB). Umeme’s story is that of Uganda’s post-1986 transformation. 

It is about liberalisation and privatisation that have shaped the national economy. While not without flaws, Umeme’s track record suggests that private sector management can drive real improvements — often outperforming state-run operations plagued by bureaucracy and limited innovation. 

When Umeme took over, Uganda’s electricity sector was in crisis. Electricity generation was below 500MW. Losses were high, infrastructure was neglected and customer service was virtually non-existent under UEB. 

UEB held a monopoly over power generation, transmission and distribution, but it was overwhelmed and inefficient. Like many state-run entities at the time, it suffered from inertia and lacked a business mindset. 

In its early days, Umeme got to be associated with load shedding, a problem which was beyond its mandate. At the time, the generation capacity was low and the company could only supply what was available. 

As the generation increased over the years, rationing ended and the negative perception declined too. Umeme took over a business that was in bad shape and had to turn it around to make it a success of some sort. It goes back to the past. 

In the 1970s, Uganda’s electricity sector began to deteriorate. The Owen Falls Dam (now Nalubaale) was the sole and biggest hydropower generation plant, but it suffered from neglect, and no new facilities were planned. 

David Mukholi

Contrary to popular belief, load shedding predates 1986 — it simply wasn’t felt as acutely due to low demand. Many factories had closed following the 1972 expulsion of Asians, depriving Uganda of key industrial players. Only a few houses had electricity. 

With several factories shut and a few running below capacity, there was no significant demand for electricity. Also, with nightlife dead due to insecurity and coupled with suppressed people’s voices, Ugandans accepted the lack of electricity as normal. 

There was no fuss about outages and short supply as it would be today. UEB also heavily subsidised electricity, relying on public funding to survive. 

Even with increased generation, it is unlikely UEB would have expanded the consumer base significantly. 

Typical of many state agencies, UEB lacked a business orientation and was dependent on government subventions — competing with other sectors for limited resources. Visiting a UEB office was often disheartening. 

Disorganisation was rampant — files scattered, customer profiles mixed up and billing errors common. Emergency response was poor, and while consumers complained about billing, many were complicit in electricity theft. 

The Electricity Act of 1999 liberalised the sector and dismantled UEB, creating three independent entities: Uganda Electricity Generation Company Limited (UEGCL), Uganda Electricity Transmission Company Limited (UETCL) and Uganda Electricity Distribution Company Limited (UEDCL). 

UEDCL granted a 20-year concession to Umeme, beginning in March 2005 and ending next week. Key expectations for Umeme included expanding distribution, reducing power losses, and introducing modern billing systems. 

The results are visible — customer numbers grew from 200,000 to over two million, losses dropped from about 40% to 16%, and the rollout of pre-paid meters (Yaka) transformed billing and payment, addressing longstanding issues from the UEB era. 

Today a 24-hour call centre takes emergency calls and teams are dispatched in response. It is possible that some cases of supply disruptions are promptly attended to. 

There are routine maintenance and also upgrades on the system. This is a sign Umeme meant business. These are some of the achievements that UEDCL will be measured against. 

Payment of bills was modernised and made easy, which ended the previous manual system which was susceptible to manipulation. In the past paying bills was tedious, and one had to endure long queues at UEB and later Umeme offices. 

Times have changed. The expansion of the electricity distribution has resulted in the growth of small businesses like salons, restaurants, pubs and metal fabrication in both urban and rural areas. 

Umeme’s legacy strengthens the case for privatisation, a subject of intense political debate in Uganda. Critics argue that the State erred in ceding economic control to the private sector and insist that the Government should be actively involved in running businesses. 

They claim this would create jobs and restore public ownership of key entities. 
However, Umeme has shown that the private sector can operate efficiently, create employment, pay taxes and deliver tangible results. The role of the Government, then, should be to create and protect a conducive environment for such enterprises to thrive.

X: @dmukholi1