Uganda Energy Situation

1.1 Energy Sector Brief and DGIS-GTZ Partnership (AMES-U)

Biomass (firewood, charcoal and crop residues) plays a very significant role in Uganda's energy supply. It constitutes over 90% of total energy consumption in the country. It provides almost all the energy used to meet basic needs of cooking and water heating in rural and most urban households, institutions and commercial buildings. Biomass is the main source of energy for rural industries. Trading in biomass energy, especially charcoal contributes to the economy in terms of rural incomes, tax revenue and employment. Fuel wood requirements have contributed to the degradation of forests as wood reserves are depleted at a rapid rate in many regions.

Most of the traditional energy technologies (wood and charcoal stoves and charcoal production kilns) currently used in Uganda are inefficient. Several initiatives to conserve biomass resources have been undertaken by Government and the private sector, including NGOs. They include the promotion of improved stoves, as well as afforestation. However, the impact of these efforts is still limited due to a lack of awareness, poor coordination, and insufficient human and financial resources.

Uganda’s electrification rate is still very low, with grid access of only 5% for the entire country and less than 2% in rural areas. This means that only 240,000 customers are connected to the grid. Another 1% of the population provides itself with electricity using diesel and petrol gensets, car batteries and solar PV systems. The electricity prices, which had been last adjusted in 1993 along the lines of long-run marginal cost of supply, were recently reviewed to reflect the current economic cost of supply effective in June 2001. This helps to attract private sector participation in the electricity supply operations. Recognising the need and importance of accelerating access to rural areas, a new Rural Electrification Strategy and Plan was adopted by Cabinet in February 2001. This Strategy delineates the measures necessary to achieve a rural electrification rate of 10% by year 2010. Electrification in rural areas will comprise access to the interconnected grid, supply from isolated grids and solar home systems. As to the latter option, it is planned that about 20% of the newly electrified households between 2001 and 2010 will use solar energy to meet their electricity needs.

There is significant potential for energy efficiency (EE) through improved use in households, industry, commercial buildings and the transport sector. Since expenditure on energy constitutes a large proportion of the country’s GDP and a particularly large proportion of poor households’ expenditure, it is necessary to further the effective and efficient use of energy.

To make the energy policy more successful on the ground, it appeared necessary to involve districts and community decision-makers. In most districts the local governments have adopted a role in other sectors like water, environment and health, but not in energy. To extend their involvement also to the latter sector a decentralisation process together with the Ministry of Local Government was triggered. A decentralised setting, in terms of diversifying power generation, has been developed to ensure security of supply, increasing access to modern energy in rural areas and promoting renewable energy through awareness and capacity building. The main challenge so far, is to transfer the policy down to the local levels and apply it at the district and sub-county levels to meet the energy needs of the people.

Since 2003, the MEMD (Ministry of Energy and Mineral Development) is working with the local governments to mainstream energy in their District Development Plan and encourage the private sector and other institutions to effectively work together. In order to support this process, the German Ministry for Economic Cooperation and Development has commissioned GTZ to carry out the Energy Advisory Project. Originally, the Project included three districts. With the DGIS co-funding under the Partnership Agreement (Silent Partnership, AMES-U), which was approved by DGIS in November 2004, the BMZ is prepared to extend the Project to three more districts targeting 20,000 households (100,000 people), 30 SMEs and 30 public institutions.