FAMReports News Desk | December 2025
Uganda Electricity Distribution Company Limited has secured a major financial boost after signing a five year USD 50 million financing agreement with Absa Bank Uganda, a move expected to significantly strengthen power distribution infrastructure and accelerate access to electricity across the country.
The facility, signed on Friday at the UEDCL Tower in Nakasero, Kampala, marks the first ever debt financing for the national power distributor and is projected to enable the connection of more than two hundred thousand new customers by 2026. The funding will support network upgrades, construction of new substations, smart grid initiatives, and the expansion of electricity distribution into underserved communities.
Speaking at the signing ceremony, David Wandera, Managing Director of Absa Bank Uganda, said the facility reflects the bank’s long term commitment to financing infrastructure that drives inclusive growth and economic transformation.
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“Reliable power distribution is fundamental to Uganda’s industrialisation, competitiveness, and inclusive growth,” Wandera said. “This facility reflects Absa Bank Uganda’s long term commitment to financing infrastructure that unlocks productivity and improves the quality of life for communities across the country.”
He added that Absa’s pan African experience in infrastructure and energy financing positions the bank to mobilise long term capital aligned with national development priorities, including Uganda’s Vision 2040 and National Development Plan IV.
The financing will be deployed toward reinforcing existing distribution lines, reducing technical losses, integrating renewable and distributed energy solutions, and rolling out digital metering systems to improve efficiency and accountability within the power sector.
Paul Mwesigwa, Managing Director of UEDCL, said the funding will play a critical role in supporting government efforts to achieve universal electricity access while improving system reliability and affordability.
“This investment will enhance the reliability and efficiency of the electricity supply system, thereby cementing our role in supporting Uganda’s economic growth,” Mwesigwa said. “UEDCL will be able to greatly enhance the nation’s distribution network with this funding.”
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Mwesigwa revealed that the loan was secured at an interest rate of eight percent VAT inclusive, significantly lower than prevailing market rates estimated at about twenty eight percent, a factor expected to reduce pressure on electricity tariffs and improve the sustainability of the distribution segment.
UEDCL Board Chairperson Lydia Ocheng Obo described the agreement as timely, noting that the utility’s expanding mandate requires sustained capital injection to meet growing demand and industrialisation needs.
She said the deal sets an important precedent for government agencies to access private sector financing directly, strengthening confidence in public institutions and easing pressure on public finances.
“The agreement is a sign of support for UEDCL and the government as a whole and establishes a standard for government agencies within and outside the energy supply sector to borrow money directly from the private sector,” she said.
The Electricity Regulatory Authority approved the loan arrangement and incorporated it into the tariff framework as part of efforts to make electricity distribution financially self sustainable.
The partnership also supports Uganda’s broader industrial policy agenda by enabling expanded grid infrastructure, improving power reliability for businesses, and unbundling suppressed electricity demand by the close of 2026.
As Uganda accelerates its industrialisation drive, stakeholders at the signing underscored that access to reliable electricity remains a cornerstone for job creation, productivity, and inclusive economic growth.
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