After two decades under private management, government officially reclaimed control of its national electricity distribution system. On April 1, 2025, the Uganda Electricity Distribution Company Limited (UEDCL), a fully government owned entity, assumed full responsibility
for electricity distribution following the expiry of Umeme Limited’s 20-year concession. This landmark transition signals a new era in which the government is seeking to align power supply with its industrialization agenda, reduce electricity tariffs, and accelerate inclusive economic transformation. The decision reflects growing concerns voiced severally by President Yoweri Museveni that private sector profit motives were undermining national development goals, particularly in job creation and affordable power for manufacturing.
In 2005, the government of Uganda entered into a 20-year power distribution concession with Umeme Limited. The concession ended on March 30, 2025. The next day, Umeme handed over all its operations to the government’s fully owned company, the Uganda Electricity Distribution Company Limited which officially commenced distribution and sale of power in Uganda on April 1. Umeme had in 2022 been notified by the government that the concession would not be renewed upon expiry.
President Yoweri Museveni had publicly criticized Umeme for prioritizing abnormal profit making and failing Uganda’s industrialization agenda. In his speech on Labour Day celebrations at State House Entebbe in 2021, Museveni said that Umeme was failing industrialisation and as a result, affecting job creation because electricity tariffs were high. The President even criticized government officials who negotiated and signed the Umeme agreement.
“They went behind and then brought something called Umeme. What is this for? A private company, looking for profits, you make it a middleman between the generation of electricity and the final consumers, including the factories which you want to create jobs. What’s this, what are you looking for?” Museveni wondered.
The president announced that electricity for industrial parks would be supplied directly from the generation plants and transmitted without passing through Umeme – a move that threatened to significantly reduce the utility’s revenue from its bulk electricity consumers.
“Oh, Umeme will collapse…if it collapses, my mother died and I buried her. Also Mr Kaguta died. People die and society goes on. So, if Umeme dies, that’s their mistake,” Museveni said.
The President blamed Umeme for the high electricity tariffs driving up industrialists’ costs, while the utility continued to earn profits annually due to a 20 percent return on investment.
This, however, wasn’t Museveni’s first instance voicing his disappointment with Umeme.
In his 2020 Independence Day speech, Museveni said, “we are working hard to evacuate power from Karuma dam to the manufacturing hub and export excess power. There is a group called Umeme. These are private people who want to make high profits. Can you make high profits from bone marrow and then we survive? We are debating that. If you are looking for high profits, there are areas you can go to.
” He added: “When it comes to electricity, this is a strategic issue. We now have enough electricity that can be sold cheaply to the manufacturers but people who want to make business are the ones pushing it up.
” However, Umeme takes a different view. The company says that it transformed Uganda’s electricity sector.
Umeme’s Chief Corporate and Regulatory Officer, Blessing Nshaho says that the company has over the period of two decades increased customers, cut power losses significantly, increased the distribution network among other achievements. “We were given approximately 250,000 customers, we have added 2 million to the grid within 20 years; almost an average of 100,000
connections per year.
Last year (2024) alone, we did 220,000 connections. So, we have pretty much grown the number of customers by almost 10 times,” he said while speaking at the Kigo Thinkers Baraza at the Electricity Regulatory Authority (ERA) head office in Kampala.
On matters revenues, Nshaho said, “we were effectively handed over about 160 billion shillings of revenue per year, and we are now handing 2.5 trillion highlights.” “We were given about 5,000 transformers; we are handing back about 17,000. At the time we joined, if you talk about the transformers, we had a transformation capacity of about 550 MVA; now we are handing over the transformation capacity of about 2,500 MVA,” he added.
When Umeme took over the electricity distribution system in 2005, it inherited a line length of about 17,000 kilometers which has since grown to over 44,000 kilometres. Energy losses stood at 38%. This has since reduced to 16%. In terms of the collection rates, Nshaho said Umeme inherited a collection rate of between 50 and 80% which has since increased to between 99%
to 100%. This was achieved following the introduction of the prepaid metering system known as Yaka. “You can realise that with growth in the population, growth in the economy, growth in industry that we have been able to support the sector,” Nshaho said.
The former CEO of the Electricity Regulatory Authority, Eng. Dr. Frank Ssebowa agrees that Umeme registered progress for Uganda’s power sector. “I do recall on one occasion, there was a hotel called hotel diplomat in Muyenga. You could sit and see the city being loaded on and offloaded in a rotational manner. ……. I think we needed Umeme then, and I’m glad we’ve gone through this experience of 20 years. I tell you that back then, even the government itself didn’t know what the electricity sector was about. We did not know what the losses were, we were not too sure how many clients.
Then we went out to get somebody who would help us to know, and eventually that somebody emerged to be Umeme,” Ssebowa said. “They (Umeme) started on the long journey. Unfortunately, at milestones where we were supposed to cross check with each other; where are we on this, where are we on that; we were usually quarreling, in the first 10 years rather than saying we have a problem which needs to be dealt
with,” he added.
WHY DID UMEME COME AND DID UGANDA NEED IT?
“Government is a slow reliever or giver of its money. When we wanted money to invest in certain aspects, it would take forever to get various approvals. You go to finance, they say this, you go to that, they say that; all those challenges were somehow resolved.
It took a long time, but they were resolved. You could find that there were banks willing to lend money into the sector very quickly, which up to now, I think, has been the case. Whether it will continue to be the case, that’s a different story,” Ssebowa said. “Before the handover, government was in a hurry to borrow US $50 million on behalf of UEDCL. Now, who was doing that about 12 months ago, it was Umeme.
When you borrow money from a bank, if you want to go back after five years, after five days or after what time, you must be seen to be paying back. So, some of the money Umeme borrowed, they didn’t take. Definitely for my shares, I didn’t get a lot of that money. What happened was that it was put into the system. This system is a far magnificent entity from what we had before. Some of us, when I first joined, we went around the country to assess the equipment that Umeme was going to receive. After that, we went again to check, it was in shambos. Goats in substations, cows and families that were living in
substations. I saw that with my own eyes. You don’t find that anymore.
Our system is one of the best.”
“For years now, I think from 2018, we (Uganda’s electricity sector) have been rated as the best regulated entity in electricity supply on the African continent, not by a small party. The African Development Bank itself hires experts to look. A major part of that is, how are your utilities performing? These people of Umeme as well as others have done a great job of cooperating with the regulator in taking new initiatives [to improve Uganda’s electricity sector].”
WHAT ARE THE MAJOR CHALLENGES UEDCL WILL FACE?
“I think the main challenge for UEDCL is going to be finance. I looked at the lineup of the new leadership there. Some of them are actually senior engineers, senior people who have been with Umeme for years. So, on that scale, I think there is no problem,” said Ssebowa.
