The electricity distribution sector in Uganda is characterized by a complex structure. Umeme Limited is the major distributor and supplies over 90% of customers in the country. It has been operating a 20-year concession since 2005, while the ownership of the network remains in the hands of Uganda Electricity Distribution Company Limited (UEDCL). In parallel, the country has been divided into thirteen geographical areas additional to the Umeme Limited concession, in which the distribution of electricity is entrusted to local private operators and where the funding of assets is provided by REA, the rural electrification fund. At this time, only a few areas are operated by private operators, while the others are operated by default by UEDCL.
In most areas, contiguous networks are operated by different distributors, which poses significant planning challenges and has resulted in inefficient investments to interface the networks. In addition, the rate of access to grid electricity remains low in the country (22% in 2017) and the current institutional structure has fallen short of delivering the connections required to meet the access targets.
In this context, the association Ricardo Energy & Environment – ICEA – MRC-Consultants was appointed by the World Bank to conduct a study aimed at enhancing distribution sector efficiency and financial sustainability and accelerating electricity access through appropriate institutional reforms.
The study included (i) a diagnostic of the distribution subsector to determine the strengths and weaknesses of the current electrification approach, and (ii) a series of more detailed assessments including the technical, financial and operational capacity of local stakeholders and the overall institutional and regulatory framework, and (iii) recommendations with respect to the legal, institutional, and regulatory framework to accelerate electricity access in the country, and the financial requirements to achieve access goals.
ICEA intervened on the financial aspects of the study, through the retrospective analysis of the financial performances of the various operators, and the financial analysis of the seven options for restructuring the sector that have been proposed. The results are derived from a financial model developed specifically for this study, covering the segments of electricity generation, transmission and distribution.
The preliminary results of the study were presented at a workshop attended by all stakeholders of the electricity sector in Uganda, which took place on May 9, 2019 in Kampala.