The Ministry of Energy and Mineral Development has commenced the implementation of the Power Sector Reforms, targeting to enhance sector performance and provide affordable power to the people of Uganda.
The move follows a Cabinet Directive of October 3, 2022, to the ministry to come up with reforms to minimize expensive private capital in the Electricity Sub- Sector investments in generation, transmission, and distribution.
The reforms will culminate in creating the Uganda National Electricity Company Limited (UNECL) as a state-run entity with majority shareholding under a Public Private Partnership (PPP) arrangement as a possible option.
Cabinet, among others, directed the Ministry not to renew the Concession and Privatization Agreements for Eskom Uganda Limited and UMEME Limited after their concessions come to their natural end.
Eskom is the country’s largest energy generator on a 20-year concession effective March 1, 2003, for managing and maintaining the 180MW Nalubale and 200MW Kira Hydropower Plants. Umeme is Uganda’s main electricity distribution company, holding a 20-year electricity distribution concession from the Government of Uganda, effective March 1, 2005.
The Ministry has already formally notified Eskom and UMEME of the Government’s decision not to renew their concessions agreements when they come to their natural end in March 2023 and March 2025, respectively.
The Electricity Regulatory Authority (ERA), Uganda Electricity Generation Company Limited (UEGCL), and Uganda Electricity Distribution Company Limited (UEDCL) have also been directed to make appropriate arrangements for the transition.
In the document issued by the ministry on Friday, Minister of Energy Ruth Nankabirwa Ssentamu appreciated UMEME and Eskom for the years of continued support and investment in Uganda’s Energy Sector.
“On behalf of the Government of Uganda, I take this opportunity to appreciate UMEME and Eskom for the Operation and Maintenance of the Government assets on behalf of UEDCL and UEGCL for the past 18 and 19 years, respectively.”
The Minister noted that the electricity distribution network under UMEME covers a large percentage of the country, has grown in asset capacity and complexity and employs about 2,000 staff. “To this effect, I call upon the parties to the concession agreements to ensure a smooth transition of all the relevant responsibilities and asset handover in close coordination with this Ministry.”
She said the Ministry would spearhead the transition process and engage all concerned parties, including the shareholders, to ensure that the Government of Uganda’s decision to end the concession naturally is executed reasonably.
The Ministry has already constituted a Joint Committee to handle the Eskom Concession and is in the process of making a similar arrangement for the UMEME concession. The respective Committees are also tasked with the planning and management of the end of the concessions to ensure seamless handover of the operations of the assets.
“Government is committed to avail the necessary financing to ensure it fulfils its obligations in the related agreements,” elaborated Irene Batebe, the Permanent Secretary in the Ministry. “UEDCL and UEGCL will be supported to enable them to manage the transition period and operation of the concessions as happened with the 50MW Namanve Thermal Power Plant that has reverted to UEGCL in 2021,” she noted.
Mrs. Batebe also added that the Ministry, with the support of the Auditor General, would undertake a valuation of the companies’ investments to determine any outstanding obligations by Government. She added that her ministry continues to implement all measures to ensure universal access to clean, reliable, and affordable energy.
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