Ugandan power distribution company Umeme Ltd. plans to invest $1.2 billion on grid expansion

Uganda’s main electricity distribution company Umeme Ltd. plans to invest the sum of $1.2 billion on the refurbishment and expansion of grid in the country between now and the next seven years.

While speaking to Reuters in an interview on Wednesday, the company’s chief executive, Selestino Babungi said the state firm has consulted an expert that will develop strategies to help raise funds.  The investments will be used to meet the demand for a projected rise in power by 2020.

A combined 780 megawatts (MW) of power will be added to the grid, after the completion of two new hydro-power plants that the East African country has been developing on the Nile: Karuma and Isimba. Uganda’s power generation capacity, which currently stands at about 700 MW, is expected to double after the two China-financed and constructed plants come online.

According to a 2015 report by consultancy McKinsey, the average per capita consumption rate for sub-Saharan Africa excluding South Africa is 150 kilowatt hour. Uganda’s consumption rate falls below the line.

“We need to invest in new infrastructure to uptake the new generation: extending lines, building new substations, connecting more customers,” Babungi said.

Uganda’s energy potential remains untapped though it holds significant potential for growth. According to Umeme, the country’s grid only carters for the energy need of just 23 percent of the country’s 40 million people and power consumption stands at 85 kilowatt hours per capita annually.

The Ugandan government is attempting to become energy self-sufficient as much of the hydroelectric potential of the country has not been exploited. Burning of renewable resources provides approximately 90 percent of the energy in the country.

Government’s decision to expedite the creation of domestic petroleum capacity coupled with the discovery of large petroleum reserves holds the promise of a significant change in Uganda’s status as an energy-importing country. And economic activities toward beginning crude oil production and an industrialization drive by the government of President Yoweri Museveni was expected to expand consumption by eight percent annually over the next five years, Babungi noted.

Uganda expects to have a generating capacity of at least 1,900 megawatts by the end of 2019, as forecast by the Uganda Ministry of Energy and Mineral Development.