Uganda won’t renew Eskom’s hydropower licences next year

Uganda said on Friday it would not renew South Africa power firm Eskom’s licences to run two hydropower stations when they expire in March next year, as part of plans to bring the electricity sector under government control to reduce costs to consumers.

The government will create the Uganda National Electricity Company Limited (UNECL), a state-run company to manage the generation, transmission and distribution segments of the electricity sector, the ministry of energy and mineral development said in a statement.

President Yoweri Museveni has repeatedly complained that expensive private capital was responsible for high electricity tariffs in Uganda, which makes it unaffordable for consumers.

“The ministry has already formally notified Eskom…of the government’s decision not to renew their concession agreements when they come to their natural end in March 2023,” the ministry said in the statement.

Eskom did not immediately respond to a request for comment.

Eskom runs two hydropower plants at the source of the River Nile in Jinja, about 90 kilometres east of the Ugandan capital Kampala.

The government intends to “minimise expensive private capital” in the electricity sector by bringing it under direct state management and control, the ministry said.

The new company, UNECL, will likely be structured as a public private partnership (PPP) with the state firm as a majority shareholder, the energy ministry said.

Last month the government notified Umeme Limited, a private company with monopoly rights to distribute power in Uganda, that it would not renew its licence when it expires in March 2025.