Uganda Electricity Distribution Company Limited (UEDCL) is a limited liability company incorporated in Uganda under the Companies Act and started operations on 1st April 2001. The Government implemented a Power Sector Reform and Privatization Policy, which resulted in the separation of Uganda Electricity Board (UEB) into Generation, Transmission and Distribution successor companies.
The UEDCL, one of the successors of the Uganda electricity board is the owner of the electricity distribution network up to 33KV. The network was handed over to Umeme limited on the 1st march 2005, under a concession arrangement. Umeme Ltd is wholly owned by CDC Globeleq of UK.
UEDCL was privatized by the Government of Uganda (GoU) through a 20 year concession by bringing on board Umeme Ltd a private investor in the electricity distribution and supply business in order to:
- Attract Foreign Direct Investment (FDI);
- Improve the quality of service;
- Rehabilitate, upgrade and expand the distribution network; and
- Increase the electricity access to other customers in the country.
The concession involved Umeme and other parties entering into a number of agreements, namely:
- The Lease and Assignment Agreement (LAA) with UEDCL;
- The Support Agreement with GoU;
- The Power Sales Agreement with Uganda Electricity Transmission Company Limited (UETCL); and
- Licenses for Electricity Distribution, Supply, and Embedded generation by the Electricity Regulatory Authority (ERA).
Subsequent to the concession of the electricity distribution business to Umeme, UEDCL,s role changed to:
- Administering the Lease and Assignment Agreement;
- Operating and maintaining the electricity off-grid stations in Moyo, Adjumani and Moroto until their divestiture;
- Supervising the completion of the Rural Electrification Schemes that were under construction before the transfer of business to Umeme
- Managing the pole treatment plant;
- In an event of an early termination of the agreement, UEDCL should be in position to take over and resume the operations of electricity distribution and supply business.
The Lease and Assignment Agreement (LAA) involved the leasing of the distribution assets to Umeme to carry out electricity distribution and supply business; and embedded generation. The main features of the LAA include the following:
Umeme paid an upfront transaction fee to the Government of Uganda.
- 20-years concession to maintain and operate the electricity network owned by UEDCL.
- To collect revenues from all connected customers based on the tariff set by ERA.
- An obligation to make an investment of a minimum of US$ 5 Million during the initial period (first 18 months of operation) and a minimum of US$ 65 Million in the first 5 years in system rehabilitation and reinforcement.
- Payment of monthly lease fees to UEDCL for use of its assets.
- The obligation to return control of the assets, including all new investments, to UEDCL at the end of the lease.
The supply and distribution licenses to Umeme provide for an exclusive right to supply electricity in an area up to one kilometer radial distance from the existing distribution lines, with other firms being free to compete to supply electricity beyond this area; and an obligation to provide service within the area of exclusivity.