Uganda has announced that it will not renew Eskom’s licences when it expires in March next year.
The East African country said it wants to bring the electricity sector under the government and to control the reduction of costs to consumers.
Eskom was contracted to Uganda to run two hydropower stations but the contracts will not be extended when they expire in March 2023.
The Ugandan government will create the Uganda National Electricity Company Limited (UNECL), a state-owned entity to manage the generation, transmission, and distribution segments of the electricity sector.
In a statement, the Ugandan ministry of energy and mineral development said on Friday that president Yoweri Museveni has repeatedly complained that expensive private capital was responsible for high electricity tariffs in the country 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.
While the embattled South African power generator has not released a statement in response to the news, it is reported that it runs two hydropower plants at the source of the River Nile in Jinja, about 90 kilometres east of the Ugandan capital Kampala.
It is also indicated in the report that the government intends to “minimise expensive private capital” in the electricity industry by bringing it under direct state management and control, the ministry announced.
The ministry also said the UNECL will be structured as a public-private partnership (PPP) with the state entity becoming a majority shareholder.
Last month the government notified Umeme Limited, a private company with monopoly rights to distribute and generate power in Uganda, that it would not renew its licence when it expires in March 2025.
