The electricity cost in Uganda remains among the highest in Sub-Saharan Africa. This is despite continued reforms and new infrastructure projects. Many Ugandans still struggle to afford electricity, especially in the private sector.
In the 2025/26 Budget Speech, Finance Minister Matia Kasaija outlined several steps. One was a one-year income tax exemption for Bujagali Energy Limited (BEL) until June 30, 2026. This measure aims to ease pressure on tariffs. Another move was the full takeover of electricity distribution by Uganda Electricity Distribution Company Limited (UEDCL). This action has reportedly saved taxpayers Shs250 billion annually. Yet, electricity remains costly for households and businesses.
As of March 2021, households paid $0.189 per kWh. Businesses paid $0.157 per kWh. These figures show the electricity cost in Uganda has barely improved. A lifeline tariff exists for low-income homes, but only those consuming less than 100 units monthly benefit. They get the first 15 units at Shs250 per kWh.
Bujagali’s power plant significantly contributes to high electricity prices. It operates at just 68% of its capacity. That’s well below its 99% availability. The plant’s financing model increases its tariffs. Unlike Isimba or Kiira, Bujagali factors loan repayments into the electricity price. This makes its cost per kWh much higher.
In April 2025, Bujagali’s tariff stood at 8.11 US cents per kWh. That figure exceeds the government’s target of 5 US cents. BEL’s General Manager, Alaister McDougall, noted that the plant could lower its price. However, it must operate at full capacity to do so.
High tariffs affect Uganda’s industrial productivity. A 2023 report by Makerere University’s Economic Policy Research Centre (EPRC) detailed this problem. Medium industries pay 15.6 US cents per kWh. Cottage industries pay 17.5 US cents. These high rates raise production costs and reduce competitiveness.
Julius Wandera from the Electricity Regulatory Authority (ERA) acknowledged Bujagali’s high tariffs. However, he pointed out that government support has reduced the rate from 13 to 8 US cents. He expects it to fall further once loans are fully paid off.
The government offers industrial users a better deal. Large industries using over 1.5 megawatts during off-peak hours pay only 5 US cents per kWh. This approach aims to attract investment and boost industrial growth.
Uganda removed private distributors like Umeme Ltd from the market. This decision followed concerns that profit-driven companies made electricity expensive. MP Geoffrey Feta supports this move. He believes electricity is a public service, not a business. The government now controls distribution through UEDCL.
Since then, ERA has released new and lower tariffs. The shift allows Uganda to provide more affordable power. Government officials hope this will stimulate economic activity and job creation.
The 2025/26 budget allocates Shs1.04 trillion for the energy sector. Funds will expand UEDCL operations and connect one million new customers. The plan also includes new plants in Ayago, Oriang, and Kiba, plus a nuclear project in Buyende. The Kiira-Nalubale plants will also undergo rehabilitation.
Electricity access has grown significantly. In 2010, access stood at 11%. By 2024, it reached 60%. Still, the electricity cost in Uganda remains a barrier for many people and businesses.
The government must continue cutting costs and improving operations. UEDCL needs strong capacity to provide stable, affordable electricity. When that happens, all Ugandans—especially youth and small businesses—stand to benefit.
Affordable power will boost productivity and support growth. The country is on the right path. But more work is needed to reach the 5 US cents per kWh dream.
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