Power tariffs reduced as UEDCL takes over

NEW DAWN

KAMPALA - The Uganda Electricity Distribution Company Limited yesterday officially took over the distribution of electricity in the country, Benon Ojiambo and John Odyek attended the function and write what transpired.

As the Uganda Electricity Distribution Company Limited (UEDCL) took on the mantle to sell and distribute electricity on March 31, 2025, the Government has lowered end-user tariffs by 14% effective April 1, 2025. 

The second quarter tariffs were announced by the Electricity Regulatory Authority (ERA) during a function at which Umeme Limited handed over its electricity distribution business to UEDCL in Kampala’s Industrial Area. 

The function that attracted different players from the electricity industry, central government officials, parliamentarians and development partners, marked a significant shift as the Government stamped its authority on taking control of the electricity sub-sector.

Tariffs slashed ERA board chairperson Dr Sarah Kanaabi Wasagali said the domestic consumers’ tariff has been reduced by sh19.5 to sh756.2 per unit from sh775.7 charged in this year’s first quarter. 

Wasagali, said the reduction was aimed at promoting domestic consumption of electricity.

 However, the first 15 units are sold at a lifeline tariff of sh250 per unit to cushion customers who do not consume more than 100 units in a period of three months.
Commercial enterprises have seen their tariff reduced by sh25.8 to sh546.4 per unit, down from sh572.2 in the previous quarter. 

In the same vein, medium-scale manufacturers will pay sh355.1 for every unit consumed, a reduction from sh417.8 incurred during the previous quarter. 

Services industry players such as hotels in this category will be charged sh412.8 per unit, a reduction from sh434.5 charged during the last quarter. 

Large industrialists will pay sh51 less as their category’s tariff has been set at sh300.4 per unit, a reduction from the sh351.5 charged in the previous quarter. 

On the other hand, extra-large industrialists such as steel and cement manufacturing firms will averagely pay sh95.5 less for every unit of electricity consumed. 

Their rate has been reduced to sh203.6 from the sh299.1 charged in the previous quarter. 

The adjustments, according to Wasagali, were informed by a multiplicity of factors including the expiry of Umeme’s concession, appreciation of the Ugandan shilling against the US dollar and the expected growth in electricity demand that is expected to grow at an annual rate of 10.54% this year. 

“This reduction has seen us realise sh250b in savings as government,” energy minister Ruth Nankabirwa said.

UEDCL takes over 

Monday, March 31, 2025 saw the symbolic handover of the electricity distribution assets that were leased to Umeme Limited in 2005, back to UEDCL. 

Umeme managing director Selestino Babungi described the circumstances under which his company was assigned the distribution network to operate.

“When you look at the archives, there were challenges in the sector in terms of inefficiencies, few connectivity, limited technical capacity to run the electricity supply industry, and limited investments while the whole sector was deemed commercially unviable. 

This led to the earlier reforms,” Babungi said. He enumerated the various achievements Umeme has managed to register over the 20-year period. 

“As we hand over, we have made cumulative investments of $850m (over sh3 trillion), more than doubling the distribution network. You gave us 500 transformer zones and we are giving back over 17,000 transformer zones. 

“You gave us 250,000 customers and we are handing over 2.2 million customers. Energy loss reduction has been an issue. We may take it for granted, but it eats into the financial viability of the sector. At the start, we had 38% energy losses. We are handing over at 16% losses and hope you will improve on that number,” Babungi said. 

He added that: “We had challenges with distribution efficiency. Out of 100 units of electricity we were getting from Uganda Electricity Transmission Company Limited (UETCL), we were converting only 50% into cash at the start of the concession. As we hand over, 84% of the units we get from UETCL are converted into cash. That has led to growth of the business.” 

Babungi added that they have commercially turned around the distribution business growing its annual turnover from sh160b to sh2.3 trillion with an annual growth rate of about 10%. 

However, the Umeme boss expressed fear that the high demand growth of electricity could outstrip supply if no big generation plant is developed in the next three years. 

Paul Mwesigwa, the UEDCL managing director, said his company is up to the task to deliver the utility to Ugandans and that they hope to achieve the high target of reducing energy losses from the current 16% to 15.59% by the end of this year. 

He said they are currently undertaking the procurement of critical equipment like transformers, cables and utility meters so as to be able to respond to customers’ needs such as clearing connection applications that have been left unattended to by the previous service provider Umeme. 

“Our stores are being filled. Tomorrow (today), we shall start deploying the logistics across the country and within a period of 10 working days, all the connections should be up and running. We expect to clear all the pending applications in the next three months,” Mwesigwa said, adding that they are targeting 300,000 new connections by the end of this year.

Mwesigwa said the good thing is that more than 50% of the required stock is in their warehouses. 

“We have received up to $74m (sh270.4b) as financing for our operations for this year. We believe we are going to start on a good note,” Mwesigwa said. 

He added that they deployed the ‘fairest’ environment during the recruitment of staff under the new structure. “All jobs that came from the new UEDCL structure of 2,712 staff members have been majorly filled by staff from Umeme,” he said. 

Nankabirwa expressed delight upon reaching this day, but cautioned the UEDCL boss that he was taking on the mantle during a ‘difficult time’ characterised by political campaigns where politicians often exert pressure on service providers such as electricity distributors. 

“It is not going to be very easy for you. You will feel pressure from all the candidates in the political campaigns. You can ask Babungi,” Nankabirwa warned. 

The minister urged UEDCL to focus on clear communication with the public, particularly about developments and challenges in service delivery. 

She warned that the company should not expect public sympathy if service delivery suffers.

However, she assured that the Government would invest in UEDCL to ensure efficient service provision. Nankabirwa said electricity distribution services provided by Umeme had been costly, and that the Government expects tariffs to decrease with the entry of UEDCL.
 
Nankabirwa emphasised that the Government will dialogue with Umeme to settle the dispute over the buyout amount.

Addressing discrepancy 

Umeme board chairperson Patrick Bitature acknowledged receipt of the $118m as the ‘undisputed’ buyout amount that was approved by the Auditor General despite the company claiming $234m. 

To address the discrepancy in the buyout amount, Bitature said they would engage the Government in the next 30 days to reconcile any gaps that were left. 

“In our opinion, there are gaps and the Government has asked us to bring them forward so that we can reconcile in good faith. We are grateful that the concession was written so carefully and they anticipated everything. We should be able to finalise this and report to our shareholders in May,” he said.