Learning from Power Sector Reform: The Case of Uganda

57 Pages Posted: 18 Apr 2019 Last revised: 19 Apr 2019

See all articles by Catrina Godinho

Catrina Godinho

University of Cape Town (UCT) - Graduate School of Business

Anton Adriaan Eberhard

University of Cape Town (UCT) - Graduate School of Business

Date Written: April 17, 2019

Abstract

Uganda's power sector structure is among the most sophisticated in Sub-Saharan Africa, and Uganda is one of only a handful of countries in the region where tariffs are close to being cost reflective. While reforms were swift and comprehensive, following the 1999 Electricity Act, significant difficulties were encountered along the way that prevented the benefits of reform from materializing until much later. The failed first attempt with the Bujagali Hydropower independent power producer left the country heavily exposed to the 2005/06 and 2010/12 droughts, which in turn created difficulties for the new private distribution utility, Umeme, and led to a relaxation of the regulatory performance targets for the concession. This situation led to a buildup of frustration with the new operator and the launch of two public enquiries, which recommended termination of the concession. In 2012, with the easing of drought conditions and the completion of the Bujagali Hydropower Project following a second independent power producer arrangement, there was improvement in the availability of power. This made it possible to set more demanding performance targets for the concessionaire, Umeme, which fed through into substantial improvements in operational efficiency and accelerating service coverage. Although the reform model was eventually able to deliver results, the associated cost was comparatively high. Furthermore, the extension of the private concession model to financially unviable rural areas did not prove to be successful. Access rates began to pick up only following the adoption of a revised approach in 2012, built around government-led and donor-funded expansion of rural networks.

Keywords: Energy Policies & Economics, Energy Sector Regulation, Energy Demand, Energy and Mining, Energy and Environment, Rural and Renewable Energy, Water and Energy, Hydro Power, Renewable Energy, Rural Energy

Suggested Citation

Godinho, Catrina and Eberhard, Anton Adriaan, Learning from Power Sector Reform: The Case of Uganda (April 17, 2019). World Bank Policy Research Working Paper No. 8820, Available at SSRN: https://ssrn.com/abstract=3374043

Catrina Godinho (Contact Author)

University of Cape Town (UCT) - Graduate School of Business ( email )

9 Portswood Road
Cape Town, 8002
South Africa

Anton Adriaan Eberhard

University of Cape Town (UCT) - Graduate School of Business ( email )

9 Portswood Road
Cape Town, 8002
South Africa

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