By David Mwanje
Ugandans closed 2025 with relief on their electricity bills after average power tariffs dropped by 14 percent to 395.8 shillings per kilowatt hour, down from 459.8 shillings at the start of the year. The reduction follows increased hydropower generation from the fully commissioned Karuma Hydropower Project and major changes in the management of power distribution.
According to the Electricity Regulatory Authority (ERA) year-end report, the drop marks an important shift for households and businesses long burdened by high electricity costs. The turnaround came after Umeme Limited’s 20-year concession ended in March, with Uganda Electricity Distribution Company Limited taking over national power distribution.
ERA Chief Executive Officer, Ziria Tibalwa Waako, said the tariff decline reflects stronger generation capacity and a more efficient investment approach in the distribution network. She noted that Karuma’s 600MW has stabilised supply, reduced overall generation costs, and made electricity more affordable across the country.
The timing is critical for the economy. High power costs have for years weighed heavily on manufacturers and small businesses. Analysts say lower tariffs could cut production costs by up to 5 percent in energy-intensive sectors such as agro-processing, steel, and textiles. With inflation around 3 percent, households are also expected to feel some relief in day-to-day spending.
However, the shift to state-led distribution was not smooth. Many consumers experienced frequent outages and unstable voltage during the transition, affecting homes, shops and factories. In response, ERA approved targeted investments, including grid upgrades, replacement of ageing infrastructure and wider use of smart meters. Distribution losses stood at 17.1 percent in 2025 — an improvement, but still a concern.
New tariff measures introduced during the year focused on consumer protection and economic growth. Domestic users now benefit from a 250-shilling lifeline rate for the first 15 units, easing costs for low-income households. Hospitals, health facilities and street lighting now pay 360 shillings per unit.
To support industrialisation, ERA reclassified some customers, allowing value-addition manufacturers and large institutions transitioning from wood fuel to electricity to access the same 360-shilling rate. Government hopes these reforms will help raise household electricity access to 60 percent by 2030 while encouraging cleaner energy use.
Uganda’s installed electricity capacity reached 2,098MW in 2025, driven largely by hydropower. Another 65MW from small hydro and solar is expected to join the grid by late 2026. The number of connected customers rose to 2.52 million — a 10 percent increase.
Regionally, Uganda strengthened its role in the Eastern African Power Pool after hosting the new regulatory secretariat in Kampala from April. Approved cross-border trading rules now open doors for electricity exports to Kenya, Tanzania and beyond, positioning Uganda as a potential net power supplier.
Challenges persist. Infrastructure vandalism continues to disrupt the grid, with 11 convictions recorded last year. Electricity theft and technical losses still cost the sector billions annually. The year also ended with leadership changes at ERA as the Ministry of Energy appointed Eng. Grania Rosette Rubomboras as the new board chair.
