KAMPALA Uganda Electricity Distribution Company Limited (UEDCL) has secured a five-year $50 million (about Shs180 billion) financing facility from Absa Bank Uganda to expand and modernise the country’s electricity distribution network, in a move aimed at improving power reliability and meeting rising demand.
The loan, signed on Monday at the UEDCL tower in Nakasero, will finance large-scale grid upgrades, construction of new electricity substations, smart grid initiatives, and network reinforcements. UEDCL said the investments will reduce technical losses and enable the utility to unlock suppressed electricity demand by the end of 2026.
In a press statement the company said the financing will also support the integration of renewable energy into the national grid while strengthening electricity reliability to support Uganda’s industrialisation agenda.
UEDCL Board Chairperson, Ms Lynda Ochieng-Obbo, described the deal as timely, noting that it is the company’s first major private-sector financing since assuming responsibility for electricity distribution nationwide.
“This agreement is a sign of confidence in UEDCL and the government’s broader efforts to establish a standard framework for public agencies to access private capital,” Ochieng-Obbo said.
The UEDCL Managing Director, Paul Mwesigwa, said the investment will enhance the reliability and efficiency of electricity supply, contributing to improved affordability for consumers.
“This investment will enhance the reliability and efficiency of the electricity supply system, cementing our role in supporting Uganda’s economic growth,” he said.
Mr Mwesigwa added that the Electricity Regulatory Authority (ERA) approved the loan and allowed it to be included in the tariff structure to help make the distribution segment financially sustainable. The facility attracts an interest rate of eight percent, lower than the prevailing market rate of 28 percent, inclusive of VAT.
Absa Bank Uganda Managing Director, David Wandera, said the financing aligns with the bank’s long-term commitment to supporting infrastructure development across Africa.
“Reliable power distribution is fundamental to Uganda’s industrialisation, competitiveness, and inclusive growth. By partnering with UEDCL at this critical phase, we are supporting a more resilient and future-ready power distribution network aligned with Vision 2040 and the National Development Plan IV,” Wandera said.
The financing comes amid growing public concern over intermittent power outages and unending blackouts reported in several parts of the country since UEDCL took over electricity distribution from Umeme.
The loan also comes against the backdrop of significant infrastructure gaps inherited by UEDCL on April 1, following the end of Umeme’s concession. According to the company’s five-year strategic plan, Mr Mwesigwa, while speaking with the Monitor by the start of the month, said UEDCL requires about $950 million to fully stabilise and expand the electricity distribution network.
In its first year of operation, the utility received approval to spend $74 million, funds he says have already been secured, and has ordered network equipment worth more than $134 million, enough to sustain operations for the next 18 months.
UEDCL was established in 2001 following the unbundling of the Uganda Electricity Board and is mandated to own and operate the country’s electricity distribution network spanning more than 33,000 kilometres. The company received its electricity distribution licence in December 2024 after the expiry of Umeme’s 20-year concession.