UEDCL Clinches Low-Interest USD 50 Million Deal to Expand and Stabilise Power Supply

The Uganda Electricity Distribution Company Limited (UEDCL) has secured a landmark USD 50 million (approximately Shs190 billion) financing facility from Absa Bank Uganda, marking a major milestone in the government’s efforts to modernise and stabilise the national electricity distribution network.

The five-year financing agreement was signed on Monday morning at UEDCL Tower in Nakasero, Kampala, and is expected to significantly enhance electricity reliability, reduce technical losses, and support Uganda’s rapidly growing demand for power by the end of 2026.

Major Investment in Network Upgrades

Under the agreement, the funds will be deployed to upgrade and reinforce the existing electricity distribution infrastructure, roll out smart grid technologies, construct new substations, and support the integration of renewable energy generation into the national grid.

The investment will also help to unbundle suppressed electricity demand, improve system efficiency, and expand access to reliable power across both urban and rural areas.

This financing comes at a critical time, as UEDCL consolidates its role as the country’s sole electricity distributor following the expiry of Umeme Limited’s 20-year concession on December 31, 2024.

UEDCL Board: A Vote of Confidence in Government Reforms

UEDCL Board Chairperson Ms. Lydia Ocheng-Obo described the financing deal as timely and strategic, noting that the national distribution network has for years faced significant funding constraints.

She said the agreement signals growing private sector confidence in UEDCL and the Government of Uganda, while setting an important precedent for public entities to responsibly access private capital.

“This financing demonstrates strong private sector confidence in UEDCL and the government-led reforms in the energy sector,” Ocheng-Obo said.

“It establishes a benchmark for other government agencies, within and outside the energy sector, to responsibly borrow from the private sector to support national development.” 

Paul Mwesigwa: Powering Uganda’s Economic Growth

UEDCL Managing Director Mr. Paul Mwesigwa said the facility directly aligns with government priorities of industrialisation, universal electricity access, and affordable power supply.

He emphasised that reliable electricity distribution is a critical enabler of economic transformation and that the funding will strengthen UEDCL’s capacity to support Uganda’s development agenda.

“With this funding, UEDCL will significantly enhance the national electricity distribution network,” Mwesigwa said.

“This investment will improve reliability and efficiency of the electricity supply system, cementing our role in supporting Uganda’s economic growth.”

Mr. Mwesigwa also highlighted the financial prudence of the deal, revealing that the loan was negotiated at an interest rate of 8 percent VAT inclusive, far below prevailing commercial market rates of about 28 percent.

“Securing long-term financing at such a competitive rate is a major financial win for UEDCL and the Ugandan taxpayer,” he noted.

He commended Absa Bank Uganda, the Ministry of Energy and Mineral Development, and the Ministry of Finance for their support, particularly acknowledging Hon. Dr. Canon Ruth Nankabirwa, Minister of Energy, and Hon. Matia Kasaija, Minister of Finance, for granting a no-objection to the loan.

Mwesigwa further disclosed that the Electricity Regulatory Authority (ERA) approved the inclusion of the loan in the electricity tariff structure, a move aimed at ensuring the long-term financial sustainability of the distribution segment.

Absa Uganda Reaffirms Commitment to Infrastructure Financing

Absa Bank Uganda Managing Director Mr. David Wandera said the bank was proud to partner with UEDCL at a pivotal moment in Uganda’s energy sector transition.

He reaffirmed Absa’s commitment to mobilising long-term capital for transformative infrastructure projects that drive inclusive growth across Africa. 

“Reliable power distribution is fundamental to Uganda’s industrialisation, competitiveness, and inclusive growth,” Wandera said.

“This facility reflects our long-term commitment to financing infrastructure that improves productivity and quality of life, in line with Uganda’s Vision 2040 and National Development Plan IV.”

A New Era for Electricity Distribution

UEDCL was established in 2001 following the unbundling of the former Uganda Electricity Board (UEB) and owns all electricity distribution infrastructure below 33kV nationwide.

With the full takeover of electricity distribution after Umeme’s exit, UEDCL now carries the responsibility of ensuring reliable, affordable, and sustainable power supply across the country.

The USD 50 million Absa financing deal marks a significant milestone in UEDCL’s transition into a fully government-run distributor and underscores its central role in powering Uganda’s industrial growth, service delivery, and socio-economic transformation.