United NationsDepartment of Economic and Social Affairs Sustainable Development


Statement by Uganda (5 May 2006)
One of the pre requisites for investments in the energy sector is for individual recipient countries
to have conducive long term policies which provide an attractive investment environment.
In Uganda, the necessary power sector reforms were put in place towards the end of the 1990s. A
new Electricity Act which broke the monopoly of the vertically integrated public utility company
was enacted by Parliament in 1999. This new legislation opened up the power sector to private
participation in the generation and distribution of electricity.
An independent regulator was also established to license companies interested in the electricity
production and supply business and also set the tariffs.
The vertically integrated public utility was unbundled, into three distinct companies for
generation, transmission and distribution. The generation company was consessioned to a private
operator. Similarly, the distribution company was also consessioned out to a private operator.
With a conducive investment environment in place, it was hoped that private capital would flow
in to build new hydropower plants to meet the electricity demand of the country.
There were earlier efforts to build the 250 MW Bujagali project but this did not materialise. For
the distribution concession, although it materialised, there weren't many companies expressing
interest in the concession.
To date, none of the Vivtoria Nile sites has been developed despite the power sector reforms and
conducive policies existing in Uganda.
In the meantime, since Uganda is mainly dependent on hydropower resources for electricity
supply, the electricity supply for the country has been adversely affected by a prolonged drought
which has been going on for the last three years since 2003. Generation from hydropower
sources has dropped by more than 50%. Out of the installed capacity of 300 MW from
hydropower, only 135 MW is being generated and is likely to drop further as the drought
situation persists.
The country has had to resort to expensive thermal generation (using petroleum). 50 MW of
diesel fuel generators have been in operation since May 2005 and 100 MW more is planned to be
installed in the course of this year. The expensive thermal generation requires heavy Government
subsidy for the end user tariff. With the soaring oil prices, the amount of money required in
subsidies is enough to build new power hydropower plants along the River Nile.
The decrease in available electricity supply is affecting all economic and social sectors as
different localities go without electricity for 24hours on alternating basis. Without quick
solutions, the poverty eradication strategies and attainment of millennium development goals is
certainly at stake.
Some of the measures which Government is undertaking include the following:
(i) Energy efficiency measurers - installation of energy efficient bulbs and efficiency campaigns
in industries (SMEs).
(ii) Reducing technical (as well as commercial) losses which are high.
(iii) Use of renewable energy resources like solar PV for lighting and solar water heaters.
(iv) Use of renewable energy resources like biomass in power generation (cogeneration in sugar
mills)as well as development of small hydropower plants.
In the medium term Government is looking at development of the Victoria Nile hydropower sites
like Bujagali and Karuma. There is also a need to have significant investments in the distribution
and transmission networks.
In conclusion, for the developing countries, especially in sub Saharan Africa, special
interventions are necessary to ensure that generation and distribution of electricity is enhanced.
Otherwise at the current rate, it is unlikely that the number of people in these countries who are
without access to electricity will reduce - in fact with growth in populations, this number is likely
to rise.
Eng.Paul Mubiru
Commissioner for Energy Department - Uganda