One year after ‘big switch,’ UEDCL reports Shs1.7 trillion revenue

KAMPALA — One year after the government took back control of electricity distribution from Umeme Ltd, early signs from the state-owned Uganda Electricity Distribution Company Ltd (UEDCL) point to a system that has stabilised—but not yet transformed.

Under Managing Director Paul Mwesigwa, UEDCL says it has kept the lights on, improved collections, and expanded its customer base. By February 2026, the utility reported revenues of Shs1.71 trillion, with customer connections rising to 2.43 million. It has also rolled out an ambitious five-year investment plan worth nearly $1 billion to modernise the grid and expand access.

Yet beneath these gains lies a more complex reality. Analysts and sector players say the transition from a two-decade private concession to full state control is still unfolding, with persistent infrastructure gaps, financing constraints, and operational risks threatening long-term progress.

From private efficiency to public control

The government’s takeover on April 1, 2025 ended Umeme’s 20-year concession, during which the private distributor had significantly reduced power losses—from about 33 percent to roughly 16 percent—while expanding electricity access across the country.

Officials defended the decision not to renew the contract, arguing that bringing distribution back under state control would better align the electricity value chain, support industrialisation, and accelerate rural electrification.

But the transition was never expected to be smooth.

UEDCL inherited a vast and ageing network of transformers, feeders, and distribution lines, alongside about 2,200 former Umeme employees. Almost immediately, it faced familiar challenges—power outages, vandalism, and scepticism from consumers wary of declining service standards.

Early gains on revenue and collections

In its first year, UEDCL’s strongest performance has been in financial management.

The company says it achieved a collection efficiency of 101 percent—meaning it recovered not only current bills but also arrears. By February, it had remitted Shs132.5 billion in taxes and paid Shs1.71 trillion to the Uganda Electricity Transmission Company Ltd for bulk power purchases.

Gross margins stood at 22 percent, with an EBITDA margin of 9 percent, and full-year revenues are projected to reach Shs2.62 trillion.

Electricity demand is also rising. Maximum demand grew by 20.4 percent to 1,188 megawatts, while energy purchases increased by 12 percent—an indication of both expanding consumption and growing pressure on the network.

Losses, a key performance indicator in power distribution, declined from 19.1 percent at takeover to 16.8 percent within six months. However, officials acknowledge that progress remains uneven across regions.

A $994 million plan to fix the grid

The centrepiece of UEDCL’s strategy is a $994 million investment plan for 2026–2030, aimed at addressing structural weaknesses and expanding access.

The plan prioritises last-mile connectivity, with a target of at least 300,000 new connections annually. It also includes rehabilitation of distribution feeders, upgrading substations, replacing ageing equipment, and rolling out smart metering systems to improve efficiency and reduce losses.

Initial financing is already taking shape. The utility has secured a $50 million facility from Absa Bank and approved procurements worth Shs412 billion, signalling early momentum.

Mr Mwesigwa has described the past year as one of stabilisation rather than transformation.

“We have focused on keeping the system stable while addressing inherited weaknesses,” he said in a recent briefing. “We have stabilised the network. Now the real work begins.”

Persistent structural challenges

Despite the positive indicators, deep-rooted challenges continue to shadow UEDCL’s progress.

Much of the inherited infrastructure is outdated or operating beyond capacity. Overloaded substations, ageing transformers, and weak distribution lines contribute to frequent outages and voltage fluctuations, particularly in fast-growing urban and peri-urban areas.

Vandalism remains another major concern. Theft of power lines, transformers, and other equipment has imposed significant financial losses and disrupted supply in several regions.

At the same time, demand for electricity is growing faster than the system can comfortably handle, driven by population growth, urbanisation, and increased industrial activity.

Financial pressures also persist. At the time of takeover, UEDCL’s debt stood at 70.4 percent of its asset base, limiting its borrowing capacity. Meanwhile, the cost of power generation—passed through the transmission system—continues to constrain the extent to which tariffs can be reduced for consumers.

Although electricity tariffs have reportedly dropped by about 14 percent, many businesses say the cost of power remains high relative to service reliability.

Mixed experiences for consumers

For households and businesses, the impact of the transition has been uneven.

While some areas have benefited from improved connectivity and fewer outages, others continue to experience unreliable supply. Small business owners, in particular, say power disruptions and fluctuating voltages are affecting productivity and increasing operating costs.

The government, however, maintains that the broader trajectory is positive. Officials point to rising connection numbers, improved revenue collection, and increased tax contributions as evidence that public management can deliver results.

The road ahead

Uganda’s long-term energy ambitions add another layer of urgency. The country plans to expand its electricity generation capacity to 22,000 megawatts by 2040, a goal that will require a robust and efficient distribution network capable of absorbing and delivering that power.

For UEDCL, this means scaling up investment, improving operational efficiency, and strengthening accountability mechanisms—all while maintaining affordability for consumers.

Energy analysts say the next phase will be decisive.

“The first year was about stabilising the system after the transition,” one sector expert noted. “The real test is whether UEDCL can now deliver sustained improvements in reliability, reduce losses further, and expand access without the efficiency pressures that existed under private management.”

Ultimately, the success of the government’s decision to take over electricity distribution will be judged not by balance sheets, but by what consumers experience: fewer outages, fairer tariffs, and reliable power supply.

For now, Uganda’s power sector stands at a critical juncture—caught between early gains and long-standing structural constraints. The next 12 months will determine whether UEDCL’s progress marks the beginning of lasting reform or simply a pause before deeper challenges resurface.