KAMPALA, December 15, 2025 — The Uganda Electricity Distribution Company Limited [UEDCL]has secured a loan worth US$ 50 million [approximately Shs 190 billion] from Absa Bank Uganda to finance the upgrade and expansion of the country’s electricity distribution network, in a move aimed at supporting Uganda’s economic and industrial growth.
The loan agreement was formalised through a memorandum of understanding [MoU], following approval from the Energy ministry, and Finance ministry of Finance, both shareholders in the government-owned power distributor.
Speaking at the signing ceremony in Kampala, the UEDCL Managing Director Paul Mwesigwa said the financing of the project marks a major milestone, noting that it demonstrates UEDCL’s ability to attract competitive funding from development partners.
“This loan agreement with Absa Bank will benefit Ugandans. It shows that as a government-owned company, UEDCL can raise capital at a financing rate of less than 8 percent gross of tax, compared to 28 percent previously, with the loan repayable over five years,” Mwesigwa said.
He added that the loan being tied directly to UEDCL’s balance sheet is a strong vote of confidence in the company’s governance, creditworthiness, and performance.
“This is a fundamental demonstration that a government company can go to the market and secure funding based on its own performance. We are committed to putting this money to good use and repaying it on time. According to our five-year strategic plan, the electricity network requires about US$ 995 million over the next five years,” he noted.
Mwesigwa explained that the funds will be used to finance key infrastructure projects, including the construction of new substations and the upgrading of overloaded feeders and transformers.
Areas earmarked for intervention include Kasangati and Gayaza, where a substation will be constructed around Magigye–Kasangati, as well as Nakasero Hill, Kololo, William Street, and Makerere, which will benefit from a major substation intended to stabilize power supply within Kampala’s urban areas. Additional designs also cover Mukono, Nantabulirwa village, and surrounding locations.
“As a result, within the next two years since we took over, we expect most parts of the country to experience improved and stable electricity supply,” Mwesigwa said.
He further highlighted that reducing financing costs from 28 percent to 8 percent will ultimately benefit consumers through lower electricity tariffs, while also enhancing network stability.
According to Mwesigwa, network optimisation has already contributed to a 13 percent increase in power supply, rising from 986 megawatts to a peak of 1,115 megawatts. He acknowledged that increased power purchases from the transmission system have placed strain on the network but said financing of this nature will help normalize those pressures and strengthen system reliability.
UEDCL Board Chairperson Lydia Ochieng-Obbo commended the partnership, describing it as a strong example of collaboration between the public and private sectors.
“This partnership brings together a public sector entity and a private sector institution, with the private sector supporting the Government of Uganda in mobilizing much-needed capital to invest in, repair, and expand the electricity distribution network,” she said.
Absa Bank Uganda Chief Executive Officer David Wandera said the lender is committed to supporting Uganda’s development, emphasizing the critical role of electricity in driving industrial growth and improving livelihoods.
“At Absa, we believe electricity ignites growth by supporting industry and improving people’s lives. Through this USD 50 million facility, we are proud to play a significant role in transforming the energy sector, the economy, and the livelihoods of Ugandans,” Wandera said.
Now faced with infrastructural challenges, UEDCL officially took over power distribution from UMEME in the country on March 31, 2025, marking the end of UMEME’s 20-year concession, bringing electricity distribution back under government control.
https://thecooperator.news/uedcl-records-10-percent-increase-in-power-demand/
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