Uganda Ponders Renationalizing its Electricity Markets

Ugandan electricity distributor UMEME is being questioned by Parliament and residents as to the true benefits of the Bujagali hydropower dam. UMEME is being questioned on its ability to deliver affordable and reliable power to consumers, particularly in light of the recent announcement of load shedding within the country.

Some argue that the only solution for the East African nation is to cancel UMEME’s contract and to renationalize power distribution. However, this would lead the government to pay up to 120% of the power distributor’s total investments.

It has been shown that privatizing the power generation sector allows governments more cushion while also expanding the sector. Privatization has companies footing most of the bill, and in Africa, many governments do not have the capital to expand their grids. Ministers, members of parliament, NGOs, and the like are calling for the return of the Uganda Electricity Board which is a rare occurrence.

If Uganda does renationalize its power generation sector, it stands the chance of creating a downturn in investor confidence in other sectors.

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