Most Ugandans expect two primary outcomes from this government-led move: more affordable electricity tariffs and a more stable power supply.<\/p>\n\n\n\n
According to the Ministry of Energy and Mineral Development, these expectations were among the key motivations for the transition.<\/p>\n\n\n\n
Permanent Secretary Irene Bateebe stated that the government\u2019s priorities include ensuring the financial sustainability of the power sector, expanding access to electricity\u2014especially in rural and underserved areas\u2014and consolidating the distribution system in alignment with the Energy Policy 2023.<\/p>\n\n\n\n
Other objectives include reducing operational costs in the electricity supply industry\u2014thereby lowering tariffs, as guided by President Museveni\u2014and enhancing efficiency through a government-owned and operated utility.<\/p>\n\n\n\n
\u201cThese reforms are essential for achieving Uganda\u2019s vision of a fully electrified nation, where every citizen has access to reliable, affordable, and sustainable electricity,\u201d Bateebe said.<\/p>\n\n\n\n
The Role of ERA and Tariff Adjustments<\/strong><\/strong><\/p>\n\n\n\n Electricity tariffs in Uganda are reviewed quarterly. The distribution company submits applications to the Electricity Regulatory Authority (ERA) for adjustments or maintenance of existing tariffs. ERA considers macroeconomic conditions\u2014such as inflation, exchange rates, and the cost of inputs like fuel\u2014when determining the next quarter\u2019s tariff.<\/p>\n\n\n\n The approved tariff enables the distribution company to cover its operating expenses, earn a profit, and recover its investments. Under the Umeme concession, the permitted return on investment (ROI) was nearly 20 percent\u2014double the national average for successful businesses in Uganda, which typically earn around 10 percent.<\/p>\n\n\n\n This high ROI was justified by the fact that Umeme relied heavily on high-interest commercial loans for its investments. Four years ago, UEDCL proposed reducing Umeme\u2019s ROI to 14 percent, arguing that it would still be a profitable venture.<\/p>\n\n\n\n Now, with UEDCL\u2014a government-owned entity\u2014in charge, there is potential to reduce the ROI requirement further, helping lower electricity tariffs. UEDCL is expected to require fewer commercial loans, thanks to state backing.<\/p>\n\n\n\n PS Bateebe noted that the Ministries of Energy and of Finance, Planning and Economic Development requested Parliament to approve a $50 million (approximately UGX 183.7 billion) loan to help UEDCL transition effectively.<\/p>\n\n\n\n “This demonstrates the government\u2019s financial and operational support for the electricity distribution segment,” she said.<\/p>\n\n\n\n Expert Perspectives<\/strong><\/strong><\/p>\n\n\n\n Gilbert Kibekityo, a Research and Policy Analyst at the Uganda Manufacturers Association, believes UEDCL\u2019s public ownership offers a unique opportunity for reinvestment in grid modernization. This, he says, could lead to both lower tariffs and improved reliability.<\/p>\n\n\n\n He added that ongoing integration with transmission infrastructure and new projects like the Karuma Hydropower Plant should further reduce the cost per unit of electricity.<\/p>\n\n\n\n The Ministry has mandated UEDCL to increase annual household connections to 300,000, up from the current 200,000. Higher consumption levels are expected to reduce the unit cost of electricity delivery.<\/p>\n\n\n\n Kibekityo also highlighted that UEDCL, being a local public agency, can reinvest its profits into the sector, minimizing reliance on expensive commercial loans that characterized Umeme\u2019s operations.<\/p>\n\n\n\n Public Responsibility in Tariff Reduction<\/strong><\/strong><\/p>\n\n\n\n While the government and UEDCL bear primary responsibility for reducing tariffs, citizens also have a role to play\u2014particularly in reducing energy losses. Currently, total system losses stand at just over 16 percent, with a significant portion due to power theft.<\/p>\n\n\n\n When consumers steal electricity, they pass those costs on to paying customers. Vandalism also contributes to operational costs, as equipment must be replaced\u2014raising expenditures and, ultimately, tariffs.<\/p>\n\n\n\n If vandalism is curbed, the reduced maintenance costs could be reflected in lower tariffs for consumers.<\/p>\n\n\n\n Current Tariffs and Future Outlook<\/strong><\/strong><\/p>\n\n\n\n Currently, domestic consumers pay UGX 250 for the first 15 units (known as the lifeline tariff) and UGX 756.2 for each subsequent unit\u2014down from UGX 775.7 in the first quarter of 2025.<\/p>\n\n\n\n According to ERA, the tariff reductions across all consumer segments are attributed to the end of Umeme\u2019s concession and UEDCL\u2019s assumption of distribution responsibilities. Other contributing factors include changes in macroeconomic indicators such as the USD\/UGX exchange rate, consumer price index, energy generation mix, and global fuel prices.<\/p>\n\n\n\n The approved electricity end-user tariffs for the second quarter of 2025 represent a weighted average reduction of 14 percent compared to the first quarter.<\/p>\n\n\n\n When President Yoweri Museveni launched efforts in 2018 to phase out private operators in Uganda\u2019s electricity sector, his primary concern was the high tariffs burdening citizens. He had realized that the contracts signed between private sector companies and the government disproportionately favored the contractors, allowing them to generate substantial profits at the expense of consumers. 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