Uganda’s rural electrification drive faces Shs570bn funding burden

State Minister for Energy Sidronious Okaasai told Parliament on Thursday, 13 August 2026, that the liabilities were linked to contracts still being implemented when REA was mainstreamed.

Uganda's efforts to extend electricity to underserved communities are facing a major financial challenge, with the Ministry of Energy and Mineral Development carrying about Shs570 billion in obligations inherited when the Rural Electrification Agency (REA) was absorbed into the ministry.

State Minister for Energy Sidronious Okaasai told Parliament on Thursday, 13 August 2026, that the liabilities were linked to contracts still being implemented when REA was mainstreamed. During the four years that followed, the ministry received about Shs222.078 billion, leaving a substantial gap between available funding and commitments already made.

Okaasai said inadequate budgets and delayed releases have made it difficult to keep contractors working continuously on government-funded electrification projects, contributing to delays in communities where infrastructure remains incomplete.

Ministry seeks bigger electrification budget

The ministry estimates that it needs about Shs200 billion annually to clear inherited obligations while continuing to finance new rural electrification projects, a requirement that places pressure on government spending as demand for new electricity connections continues to grow.

Okaasai said discussions with the Ministry of Finance, Planning and Economic Development had resulted in efforts to increase the rural electrification allocation from Shs35 billion in the 2025/2026 financial year to Shs161 billion in 2026/2027.

MPs told the House that delayed funding was already visible in their constituencies, with several describing communities where electricity poles had been installed but wiring and connections had not followed.

Tororo South County MP Fredrick Angura called for timely counterpart funding for the Uganda Electricity Distribution Company Limited, arguing that delays also increase borrowing and interest costs. Legislators from Butambala, Kayunga, Mbarara and other areas raised similar concerns about unreliable or incomplete electricity infrastructure.

Completed projects leave unpaid compensation

Uganda's rural electrification programmes have delivered thousands of kilometres of electricity networks and hundreds of thousands of connections, but outstanding compensation and incomplete works continue to weigh on their overall performance.

Under the Uganda Rural Electrification Access Project, 1,780.59 kilometres of medium-voltage lines and 2,646.53 kilometres of low-voltage networks were constructed, alongside 981 distribution transformers and 141,400 new consumer connections.

About half of the people affected by the project have reportedly not received compensation, with an estimated Shs28.5 billion still required.

The Accelerated Rural Electrification Programme, also known as the Sub-County Project, delivered 3,202.46 kilometres of medium-voltage lines, 6,827.82 kilometres of low-voltage networks and 180,000 connections before closing in April 2024. None of the affected landowners had been compensated when it closed, leaving claims estimated at Shs38 billion.

World Bank projects expand electricity access

Financing challenges have also affected the Energy for Rural Transformation Phase III project, backed by a US$135 million World Bank loan. The programme closed with 14 of its 21 planned line extensions incomplete and an outstanding government obligation reported at Shs5.5 billion.

A much larger programme, the US$608 million World Bank-financed Electricity Access Scale-Up Project, is targeting households, businesses, public institutions, industrial parks, refugees and host communities as Uganda tries to expand both grid and off-grid electricity access.

By June 2026, the project had delivered more than 235,906 one-pole and no-pole connections, according to the ministry. It had also provided 420,000 off-grid solar systems and 3,981 productive-use solar systems, broadening electricity access in locations where conventional grid expansion may be more difficult or expensive.

MPs link reliable power to economic growth

Several lawmakers argued that rural electrification should be viewed as an economic investment rather than simply an infrastructure programme, particularly as Uganda pursues industrialisation and higher-income status.

Arua Central Division MP Muzaid Khemis said national grid connectivity stood at about 25%, while Arua was at roughly 6%, and raised concerns about electricity tariffs in West Nile. Rubanda District Woman MP Evelyne Ninsiima argued that Uganda's economic ambitions would be difficult to achieve without dependable electricity.

Deputy Speaker Thomas Tayebwa, who presided over the sitting, said Parliament would continue examining the performance of service-delivery ministries, including Energy, Health, Education and Works.

For the Energy Ministry, the immediate challenge is balancing old financial obligations with pressure to deliver new connections, while ensuring communities do not remain surrounded by unfinished infrastructure that has yet to bring electricity into homes and businesses.