BY PAUL TENTENA AND ZABALI KURUTHUM
For Shena Twebaze, a cake baker in Kakoba, Mbarara City, an unexpected power outage can turn hours of work into financial loss.
Her business depends on electricity to bake cakes for birthdays, weddings, children’s parties and other celebrations. When power goes off while cakes are in the oven, the products can become half-baked or spoil, leaving her counting losses and struggling to meet customers’ deadlines.
“Power outages delay production; they affect the quality of the baked products and prevent me from completing customer orders on time,” Twebaze says.
“This means that customers who place their orders wait longer, get irritated or have to go to other bakers. The delay disappoints them so much. It affects the reputation of my business and income. Remember, cakes are always booked for a certain purpose, which cannot wait for long,” she adds.
Twebaze’s experience reflects the challenges faced by small businesses across Uganda as persistent power interruptions disrupt production, compromise perishable goods and threaten customer relationships.
For many entrepreneurs, electricity is not simply a utility. It is the backbone of their daily operations, and every hour without power can mean lost income.
The disruptions have also reignited questions about the performance of the Uganda Electricity Distribution Company Limited (UEDCL), which took over electricity distribution from Umeme Limited in April 2025, and whether the former distributor could return to manage the network.
Businesses count the cost
In Mulago, Kampala, Arthur Ahimbisibwe, who operates a salon, says power outages interrupt his work because most of his equipment, including hair dryers, clippers and shaving machines, relies on electricity.
When the power goes off, he cannot serve customers efficiently. Some become impatient and leave for salons where electricity is available, costing him business and potential repeat customers.
Catherine Ankunda, a juice maker in Kikumi-Kikumi, Makerere Ward, Kampala, faces a similar challenge.
Her business depends on electric blenders to prepare juice and refrigerators to preserve fruits and finished products. When electricity goes off, production slows and refrigeration becomes unreliable.
“I cannot prepare juice quickly because my blender cannot work without electricity, and the fridge is off for cooling. This makes my customers go and buy from other sellers with electricity,” Ankunda says.
“Without electricity, my fruits and sometimes the juice I have prepared also go bad because the fridge is off, hence making losses,” she adds.
The consequences extend to larger businesses dealing in perishable products.
Michael Asiimwe, manager of People’s Supermarket in Mpererwe along Gayaza Road, says power interruptions threaten products that require refrigeration, including fresh meat, milk and yoghurt.
“We lose the fresh meats, milk, yoghurt and end up having huge losses,” Asiimwe says.
For Sadiq Mayengo, a tailor, unreliable electricity disrupts work on electric sewing machines and creates tension with customers waiting for their orders.
He says delays affect the production of uniforms, curtains, suits, gomesi, carpets and other products, undermining customers’ confidence in his business.
The problem is particularly frustrating when customers have deadlines that cannot be extended, forcing entrepreneurs to explain delays they cannot control.
Farooq Kyazze, who operates a chips and chicken business, says electricity interruptions can bring his business to a complete standstill.
“When power is off, it means I am out of business. I cannot fry the chips and chicken to sell to my customers. When Umeme was still around, power was always on, though expensive. I wish they could return,” Kyazze says.
His remarks capture a growing dilemma among some business owners: whether to tolerate the high electricity costs they previously complained about or endure the disruptions they say are affecting their livelihoods under the current distribution arrangement.
But can Umeme return, and would bringing back the former distributor resolve the country’s electricity reliability challenges?
Can Umeme return?
Umeme operated Uganda’s electricity distribution network under a 20-year concession that began in March 2005, following the transfer of the distribution business in 2005. Its concession ended in March 2025, after which UEDCL assumed responsibility for the distribution network.
According to Selestino Babungi, Umeme’s former managing director, the transition followed changes to the legal and institutional framework governing electricity distribution.
Babungi says electricity distribution reverted to government following the expiry of Umeme’s concession, with UEDCL taking over the responsibility.
He argues that any return by Umeme would require a fresh legal and regulatory process rather than an automatic reinstatement of the previous concession.
“Government would have to declare that UEDCL has failed and re-tender distribution under the Electricity Regulatory Authority (ERA) licensing. Under the Electricity Act 2022, ERA can license multiple distributors, not just one concession as it was,” Babungi says.
His remarks suggest that the possibility of Umeme returning would depend on the government’s assessment of UEDCL’s performance, the applicable legal framework and the outcome of any future procurement or licensing process.
Although Umeme continues to exist as a company and has sought distribution opportunities in other markets, its return to Uganda would not be straightforward.
The end of its concession followed years of public debate about electricity tariffs, the cost of the distribution arrangement and the returns guaranteed under its investment agreement.
Umeme’s compensation dispute complicates matters
Umeme’s outstanding financial claims against the government could further complicate any potential return.
The company has pursued arbitration proceedings at the London Court of International Arbitration (LCIA) over its exit and the financial obligations arising from the concession and related agreements.
The claims concern compensation for the transfer of the distribution business and unrecovered investment costs, among other disputed contractual matters.
Umeme has claimed approximately $266.4 million, plus interest, alongside about $145 million in unrecovered investment costs relating to the 2008–2021 period. The combined figures amount to more than $400 million before any additional interest, depending on the applicable calculations.
The company has argued that provisions in its agreements govern the retransfer transition period and the payment of the buyout amount, including interest on delayed payments.
The precise amounts payable, the applicable contractual provisions and the status of the arbitration proceedings should be distinguished from Umeme’s claims and verified against the relevant legal documents.
Until the outstanding matters are resolved, they could remain an obstacle to renewed cooperation between the company and the government.
Government explains the outages
The government, however, says the power interruptions are partly linked to the condition of the electricity distribution infrastructure inherited by UEDCL and the work required to modernise it.
Opolot Okasai, the State Minister for Energy in the Ministry of Energy and Mineral Development, says UEDCL took over an ageing distribution network that requires extensive repairs and upgrades.
He says the company is replacing old transformers, repairing substations and rehabilitating high-voltage power lines to improve the reliability of electricity supply.
These works, he explains, can result in temporary interruptions as engineers undertake maintenance and upgrade sections of the network.
Okasai also identifies vandalism of electricity infrastructure and theft of transformer oil as additional challenges. He says the theft of oil can cause transformers to fail, undermining efforts to replace ageing equipment.
However, the minister cautions that even after the network upgrades, power interruptions may not disappear entirely because electricity demand has risen significantly.
“But even after the upgrades, we do not expect the power outages to be completely ruled out because power demand has increased tremendously. There is need for more power to be generated,” Okasai says.
His explanation points to a wider challenge facing the electricity sector: improving the distribution network while ensuring that generation capacity and other infrastructure keep pace with rising demand.
Beyond the Umeme debate
For the businesses bearing the cost of power interruptions, the debate over whether Umeme should return is ultimately about reliable electricity and predictable operating conditions.
Cake bakers need uninterrupted power to deliver orders on time. Salons depend on electricity to serve customers, while juice makers and supermarkets need reliable refrigeration to protect perishable products. Tailors and food vendors also require dependable electricity to maintain production and meet customer expectations.
Although some business owners recall Umeme as a more reliable distributor, others previously raised concerns about tariffs and the cost of its concession. A return would therefore need to be assessed against clear standards for service reliability, affordability, investment and accountability.
UEDCL, meanwhile, faces the task of demonstrating that its network rehabilitation programme can deliver measurable improvements in supply and reduce avoidable interruptions.
The government must also address infrastructure vandalism, ensure adequate investment in electricity generation and distribution, and communicate clearly with consumers about planned maintenance and the expected duration of outages.
For now, the experiences of entrepreneurs such as Twebaze, Ankunda and Kyazze illustrate the economic consequences of unreliable electricity.
Whether the solution lies in strengthening UEDCL, introducing a different distribution arrangement or inviting private operators under the existing regulatory framework, businesses want the same outcome: reliable power that allows them to work, serve customers and earn a living without the constant fear of losses.
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