KAMPALA, UGANDA | Uganda's efforts to achieve rural electrification through mini-grids hinge on effective public-private partnerships, according to industry experts and government officials at a high-level panel discussion held on Thursday. The event, titled “Enhancing the Enabling Environment for Mini-Grid Development in Uganda,” underscored the necessity of collaboration to tackle regulatory and financial hurdles.
Alex Wanume, Country Director for NOA Uganda, outlined the difficulties faced by mini-grid developers. “We’re often seen as exploiting rural communities with high tariffs, which hampers our operational effectiveness,” he noted. NOA Uganda currently operates 31 mini-grids across the country and has several projects in the pipeline. Wanume called for increased trust and cooperation among stakeholders to achieve the goal of establishing 2,000 mini-grids by 2030. He proposed extending the concession period to 20 years to facilitate better planning and reinvestment.
Jeroen Van Linden, Regional Project Coordinator for Beyond the Grid Fund for Africa NIRAS, emphasized the shortcomings of the current regulatory framework. “An effective framework should clearly define licensing, concession periods, tariff approval processes, and compensation mechanisms,” he stated, highlighting that many critical details are often overlooked, leading to insecurity for developers.
Patrick Tutembe, Chief Economist at the Electricity Regulatory Authority (ERA), spoke about the importance of investment recovery. “In our context, it’s crucial that any investment is recoverable. This includes operational costs and capital expenditures,” he explained. To support this, the government has capped customer charges at 30 cents.
Tutembe also pointed out challenges unique to rural areas, such as low demand and limited economic centers, which impact tariff structures and concession agreements. He noted the implications of grid arrival on concession agreements, suggesting that government compensation for investors may be necessary if the grid arrives before the agreement expires.
Elizabeth Kaijuka Okwenjye, Principal Energy Officer at the Ministry of Energy and Mineral Development, highlighted several key challenges facing mini-grid development, including inadequate regulatory frameworks, lack of anchor loads, and a preference for grid connections over mini-grids. She mentioned that Uganda has about 500 potential mini-grid sites ready for development.
The government is addressing these regulatory challenges through the Promotion of Mini Grids Project, which has introduced mechanisms like bundled tenders and concession frameworks to encourage private sector investment with governmental support.
Henry Jumba, Country Coordinator for GET Transform under GIZ, emphasized the crucial role of private sector involvement in mini-grid development. “The private sector brings essential financing and expertise needed for efficient mini-grid operation,” he said, adding that public-private partnerships help balance interests between the government and private entities.
One significant risk for mini-grid developers is the arrival of the national grid. Jumba explained, “If I install a mini-grid now and the grid arrives in two years, my business case becomes unviable.” He suggested that public-private partnerships could offer exclusivity and government guarantees to mitigate this risk.
Team Europe, which includes the European Union, Germany, and other partners, is actively supporting Uganda’s rural electrification initiatives through pioneering mini-grid projects. The Pro Mini Grids project, funded by the EU with 3.7 million euros and Germany with 0.8 million euros, has effectively demonstrated a sustainable electricity supply model for remote areas.
EU Ambassador to Uganda, Jan Sadek, remarked, “Uganda and the EU share a vision for a just and clean energy transition.” He emphasized that as Uganda’s largest development partner, the EU is committed to supporting the nation’s energy sector, focusing on rural electrification, renewable energy, and regional energy connectivity.
Key initiatives include the Pro Mini Grids project, GET Access Uganda, and the Beyond the Grid Fund for Africa. Sadek underscored the EU's role in catalyzing progress through strategic investments and collaborative efforts, aligning with Uganda’s Vision 2040 and Nationally Determined Contributions to enhance energy security and promote sustainable development.
