Post-concession sector transition
In 2000, Umeme Limited obtained a 25‑year concession agreement from the Uganda government to operate most power distribution assets across the country and invest in network expansion to increase access. Over this period, the Electricity Regulatory Authority successfully implemented measures to incentivise cost‑reflectivity, operational performance, and efficiency gains.
The concession agreement expired in March 2025, when operational responsibilities transferred back to the state‑owned Uganda Electricity Distribution Company Limited. The main challenge was ensuring that efficiency gains achieved over the last two decades would persist under the new regulatory framework.
At the same time, new legislation created an opportunity to position Uganda for future national and regional success, including participation in emerging power trading platforms.
Regulatory and market design
Funded by the Norwegian Water Resources and Energy Directorate, WSP was asked to complete several workstreams to support Uganda through its transition.
We developed a new economic regulatory framework, producing a tariff methodology for transmission and distribution utilities, including UEDCL. This methodology now forms the legal basis for electricity price formation in Uganda.
To support implementation, we undertook a detailed cost of service study. This included developing new tariff models and calculating new electricity rates across the country. The model incorporates feed‑in tariffs, revenue reconciliation, and quarterly indexation.
Our team also designed an over‑the‑counter electricity market, defining key trading mechanisms and the roles and responsibilities of participating stakeholders.
Ongoing work includes recommending measures to accelerate electricity access and improve affordability, informed by surveys of more than 1,200 households and professional and institutional energy users, both on‑ and off‑grid. In parallel, WSP is developing long‑term electricity pricing forecasts to help evaluate the impact of different energy mix and battery storage scenarios.
Improved affordability and resilience
The new tariff methodology contributed to a 15 percent reduction in electricity rates in April 2025. By design, it also supports greater cost‑reflectivity and reduces year‑on‑year price shocks for customers.
New incentive mechanisms aim to maintain and build on efficiency gains achieved over the last two decades. Recommendations on electricity access and affordability are expected to improve the livelihoods of millions of households across Uganda.
New power trading compliance mechanisms are intended to stimulate private sector participation, capacity expansion, and demand growth, while long‑term price forecasting tools will support more informed decisions on future power sector investments.
This project was completed by Ricardo plc, now part of WSP.
