Uganda Manufacturers Enjoy Competitive Electricity Rates into 2026

2026-03-20 - 12:54

By Ibrahim E. Kasita In a major move to ensure industrial stability, the Electricity Regulatory Authority (ERA) has maintained electricity tariffs for the first quarter of 2026 (January to March), allowing Uganda’s extra-large industrial consumers to continue benefiting from highly competitive power rates. Under the newly approved tariff schedule for Q1 2026, the average tariff for extra-large industrial consumers stands at UGX 203.6 per kilowatt-hour (kWh)—equivalent to approximately 5.6 US cents. Crucially, these manufacturers continue to access power at the coveted 5 US cents (approx. UGX 185) per unit during off-peak hours (midnight to 6:00 am), fulfilling a long-standing presidential directive aimed at lowering production costs. “I want to congratulate the Electricity Regulatory Authority for this consistency. Maintaining these prices into 2026 provides the predictability that manufacturers need for long-term planning,” confirmed Dr. Ezra Muhumuza Rubanda, the Executive Director of the Uganda Manufacturers Association (UMA). “Our members are leveraging this price competitiveness to boost production and expand exports, which is significantly improving Uganda’s terms of trade.” This tariff stability follows a year of significant transition in the power sector, which saw the Uganda Electricity Distribution Company Limited (UEDCL) successfully take over the national distribution network following the end of the Umeme concession in April 2025. A Strategic Industrial Anchor The decision to hold rates steady—which are now roughly 14% lower than 2024 levels—underscores the government’s commitment to its industrialization agenda. By keeping power affordable, the government is aligning with the goals of Vision 2040 and the Fourth National Development Plan (NDP IV), which view manufacturing as the primary engine for job creation and economic transformation. Energy Minister Ruth Nankabirwa noted that delivering the 5 US cents tariff was a top priority from President Yoweri Museveni. The current structure ensures that while the average rate remains near 5.6 US cents, the 5 US cents target is fully realized during the off-peak shifts for heavy industries such as steel and cement. Economic and Environmental Gains Lower electricity costs are delivering multi-fold benefits: Regional Competitiveness: Reduced overheads allow Ugandan-made goods to compete more effectively within the East African Community (EAC) and the African Continental Free Trade Area (AfCFTA). Technological Modernization: Stable, affordable power encourages factories to invest in modern, high-capacity machinery that would have been too expensive to run under previous tariff regimes. Green Industrialization: With Uganda’s energy mix heavily reliant on renewable hydropower (supported by the full commissioning of the Karuma Hydropower Plant), affordable grid electricity reduces the need for polluting diesel generators. Challenges and the Road Ahead While the tariff reduction is a success, the focus for 2026 is shifting toward supply reliability. Despite the lower costs, some industrial hubs still face intermittent outages due to aging transmission and distribution infrastructure. Electricity Regulatory Authority is closely working with Uganda Electricity Distribution Company Limited (UEDCL) and the Uganda Electricity Transmission Company Limited (UETCL) to ensure that “affordability is matched by quality of service.” Conclusion As Uganda enters 2026, the electricity sector remains a cornerstone of the nation’s “economic leap.” By maintaining the 5.6 US cents average and 5 US cents off-peak tariffs, the government has sent a clear signal to both local and foreign investors: Uganda is open for business, with affordable power at its core. The promise of a thriving, industrialized economy is no longer a distant vision but a reality being powered, unit by unit, at one of the most competitive rates in the region. The Author is serves at the Electricity Regulatory Authority