In 1997, the government of Uganda formulated a comprehensive plan for transforming the energy sector into a financially viable industry. Since then there have been significant reforms in legislative and policy frameworks: unbundling of the Uganda Electricity Board to separate companies responsible for generation (UEGCL), transmission (UETCL) and distribution (UEDCL); establishment of an independent market regulator (ERA) as well as the rural electrification agency (REA). Most importantly, Uganda has opened itself to free competition in energy generation (and to some extent also distribution) meaning that private investors are encouraged to set up electricity generation and sell to the state-owned transmission system operator UETCL according to published feed-in tariffs. This has resulted in a number of investments in large-scale as well as mini-hydropower generation. Uganda has published feed-in tariffs, although some investors are uncertain as to the government’s ability to pay in foreign exchange over the long term as the project pipeline increases. Some new distribution networks have also been developed but don’t attract many investors due to low margins. Instead, distribution is financed by the government from loans and donor support; communities are encouraged to operate rural electrification distribution networks. A lot of rural electrification takes place using offgrid installations – solar PV panels are subsidized by the state and encouraged among households. ERA and UETCL are widely believed to be very competent entities. Despite the (in regional context) rather impressive progress, 90% of Uganda’s total energy consumption is still made up of biomass – primarily burning of wood (84%) and charcoal (6%). Of the remaining 10%, 4% comes from electricity while the remainder is generated from petroleum products. Consequently, low level of access to modern forms of energy, particularly electricity, has continued to be one of the major infrastructure bottlenecks to socio-economic growth in Uganda.

EEP Projects in Uganda: