Uganda's Electricity Regulatory Authority (ERA) has recently published a notice specifying the category of consumers that can purchase electricity in bulk directly from generation licensees, the bulk supplier or uncontracted generators (known as eligible sellers).
For a consumer to be eligible to purchase electricity in bulk, the consumer must have an average demand of at least 1,500 kVA (approximately 1,350 kW). This will likely cover consumers engaged in industry and manufacturing business. If such an eligible consumer is connected to the National Grid, that consumer can purchase only 30% of its electric energy directly from an eligible seller. If however the eligible consumer is not connected to the National Grid, such consumer can purchase 100% of its electric energy directly from an eligible seller.
This development follows amendments to the Electricity Act in 2022 which allowed consumers to purchase electricity in bulk directly from generation licensees, the bulk supplier or uncontracted generators. Prior to this amendment, Uganda operated a single buyer model – the Uganda Electricity Transmission Company Limited (UETCL) held the licence to purchase all electricity generated in Uganda. This was inefficient because the electricity transmission network did not cover the whole country. Moreover the network could not be extended to cover the whole country because such a project was not economically viable and some rural areas have low demand for electricity. The law was amended to remove this monopoly of the bulk supplier.
These developments are part of the broader government policy focusing on industrialisation as one of the key priority areas to transform the country's economy. The government seeks to attract foreign direct investment into industries and manufacturing through reduced energy costs for bulk consumers. The expectation is that cutting out intermediaries from the supply chain will reduce transmission and distribution costs and make electricity more affordable for bulk consumers.
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