Blog: Energy Sector

Energy Sector

Size and Structure

The total energy consumption in Uganda is estimated at over 5 million tons of oil of which 93% is derived from biomass (wood/ charcoal and agricultural residue); electricity and oil products constitute 7%. Uganda generates its own electric power from Nalubaale, Bujjagali, Kilembe, Mpanga, Nyangaki, Bugoye hydropower stations, and thermal stations.

The energy consumption pattern shows that residential related activities account for 70.3 % of total use. The rest is accounted for by commercial use (13.6 %), Industrial use (10.7%), transport use (5%) and other uses (0.4%). Most of the energy consumed for residential activities is woody biomass energy, which cannot be used in industries in its raw form. The low level of access to electricity energy, high tariff and low generation capacity explains why the majority of Ugandans use woody biomass energy as a source of fuel.

Although, the consumption of electricity per capita is low, Uganda has an estimated hydropower potential of (over 4,500MW), biomass co-generation (1,650 MW), geothermal (450MW), peat power (800MW), high solar power and fossil fuel thermal potential as well as a high nuclear energy potential. Exploitation of these potentials will massively reduce the deficit with time. Uganda exports some of the generated power to neighbouring Kenya, Tanzania and Rwanda. The total exports to these three countries are expected to be more than 180MW in the near future.

Energy sources available in Uganda include fuel wood, charcoal, bagasse, petroleum products and electricity (hydro and thermal).

Biomass Energy
The contribution of forestry to national energy demands is mostly expressed through woody biomass use by households and institutions for heating purposes.

Petroleum Energy
Petroleum products include Premium Motor Spirit (PMS), Automotive Gas Oil (AGO), Bulk Illuminating Kerosene (BIK), Aviation Fuel, Fuel Oil (FO) and Liquefied Petroleum Gas (LPG). All the petroleum products are imported. Petroleum is used to generate thermal energy.

Geothermal Energy
There are a number of sites identified in western Uganda with potential for generation of geothermal energy. These include; Katwe-Kikorongo, Burunga and Kibiro in the Albertine Graben in western Uganda. However these are yet to be exploited.

Wind Energy
There exist a number of sites identified in northern and north eastern as well as the central region of Uganda with potential for generation of wind energy. These include; Karamoja and Lake Victoria islands. However these are yet to be exploited.

Solar Energy
Uganda’s location astride the equator presents immense potential for generation of solar energy.

Hydro Energy
This is the major source of energy in Uganda. It is mainly used for industrial and commercial purposes. The total installed capacity of electric power plants that feed into the national grid increased by 5.6 % from 539 Mega Watts (MW) in 2010 to 569MW in 2011. Following the commissioning of the Bujagali Energy in 2012, the capacity now stands at 819 MW.

Status of Economic Activities in the Sector

The total nominal value for consumption of charcoal and firewood in 2009/10 was estimated to be Shs 409.1 billion. This source of energy is used in many households country-wide. This subsector is highly fragmented and dominated by small producers and families. Charcoal is made by individuals who sell it locally or to small traders who then move it on to towns and cities.

Petroleum and Its Products

Petroleum and petroleum products are used for transport. Products for transport include; Premium Motor Spirit (PMS), Automotive Gas Oil (AGO) and Aviation Fuel (Jet A1). Other products like Kerosene (BIK), gas, lubricants and bitumen are used for cooking, lighting, building and road construction. Currently all petroleum products are imported into the country.

The predominant sources of electricity are thermal and hydro. The total installed capacity of electric power plants that feed into the national grid increased by 5.6 % from 539 Mega Watts (MW) in 2010 to 569MW in 2011.

Table of Installed Capacity and Actual Generation of Power Connected to the National Grid

Type of Power Installed power capacity Actual power Generation Remarks
Hydropower 659MW 390–450MW 180MW (Nalubaale HPP)
200MW (Kiira HPP)
28.84MW (Mini –HPP) Bujjagali 250MW
Biomass Potential Power 26MW(17 MW) connected to the Grid 26MW(17MW) connected to the Grid Kakira (18MW) but to grid (12 MW), Kinyara (8MW) but to Grid 5 (MW)
Thermal power 170MW 170MW Namanve (50MW), Kiira (50MW) & Tororo (20MW)

Source: National Development Plan 2012

Demand Drivers And Resource Base Factors

Demand Drivers

  • Population growth and rapid urbanization
  • Industrialisation.
  • Power demand in the region.
  • Increased wealth in the rural communities


Resource base factors

  • Natural rivers and waterfalls, for hydropower generation
  • All year round sunshine which can be harvested for solar
  • Oil and gas deposits
  • Geothermal resources
  • Natural forests for biomass
  • Uranium deposits

Key Trends


Petroleum Products
The main petroleum products volumes monitored for their contribution to the economy include Premium Motor Spirit (PMS), Bulk Illuminating Kerosene (BIK) and Automotive Gas Oil (AGO). Graph 6, below shows that the volumes of PMS imports increased by 17 % between 2010 and 2011 while BIK imports decreased by 6%. However, AGO import volume did not show any significant change between 2010 and 2011.



Electricity purchases by Uganda Electricity Transmission Company Limited (UETCL) from the main hydro and thermal plants that supply power to the main grid increased by 2.6 % from 2,819 GWh in 2010 to 2,891 GWh in 2011.



Number of live customers by tariff category, 2007 2011

There was a notable increase of 29.7 % in the Street lighting category in 2011 compared to the previous year’s which registered persistent declines. Similarly, the number of live customers in the General Tariff category also increased by 29.6 % in 2011 compared to 2010.

Uganda exports electricity to Kenya, Rwanda and Northern Tanzania estimated at 180 million Kilowatt Hours per annum. (Source: The World Factbook 2006)

Investment and Business Opportunities


  • Development of mini-hydropower stations. More than 50 mini-hydro power sites with a combined potential of 210MW have so far been identified.
  • Public Private Partnerships, consulting and engineering sub contracts.
  • Power transmission and distribution


  • Development of 450 MW of electricity by tapping geothermal resources in the rift valley.




  • Assembling and Marketing of solar units
  • Tapping the sun to generate. Solar panels and related accessories are VAT exempt.
  • Investing in local solar power grids to supply rural – urban locations as a business.

Sugar factories use sugarcane waste (bagasse) to generate electricity. There has also been progressive adoption of utilisation of biomass for generation of energy. This has been done in form of bio-gas units for households and educational institutions. The increasing population and volume of garbage generated present opportunities for power generation.

Designing, constructing, sales and service support of biomass plants out of crop residues and livestock waste.

Manufacturing and Marketing of Charcoal Briquettes to replace the use of firewood and charcoal that are very hazardous to the environment in the long run.

Technologies, Equipment And Contract Services
Opportunities exist in providing supporting technologies, equipment and consultancy in the implementation of potential projects that can be developed from the various energy sources outlined above.


Sector Specific Licensing Requirements
Necessary licences can be obtained from various government ministries and agencies, some of which include Ministry of Energy and Mineral Development, Electricity Regulatory Authority, National Forestry Authority and National Environment Management Authority. (Refer to Appendix 3)


Sector Specific Incentives for Investors
Sector specific incentives can be obtained from the Income Tax Act.



Useful Addresses and Contacts

Sector Ministry:
Ministry of Energy and Mineral Development.
P.O. Box 7270. Kampala.
Website: http://www.
Sector Regulatory Agency:
Electricity Regulatory Authority
ERA House, Plot 15 Shimoni Road Nakasero,
P.O. Box 10332 Kampala, Uganda
Tel: 256-414-341 852/646, 256-312-200166
Rural Electrification:
Rural Electrification Agency
Plot 1 Pilkington Road
10th Floor, Worker’s House
P.O Box 7317, Kampala, Uganda
Tel: 256-312-264095/264103/4/5
Fax: 256-414-346013
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