Alternative Energy & Power 2019

Last Updated August 07, 2019

Uganda

Law and Practice

Authors



Kasirye Byaruhanga & Co Advocates is one of Uganda's leading business law firms. The firm provides legal services in a broad range of areas, including commercial real estate; corporate-commercial transactions and restructuring; mergers, acquisitions and divestiture litigation and dispute resolution; labour, employment and pension law; immigration; international trade; PPP and joint ventures; personal wealth management; equipment leasing; mining and natural resources; corporate restructuring and insolvency; competition and antitrust; non-profit organisations; banking and finance; oil and gas; energy law and policy; and probate and administration of estates.

The principal laws governing the power industry in Uganda are as follows.

  • The Constitution of the Republic of Uganda, 1995  is the supreme law of the land and provides for the land tenure systems, ownership and control of natural resources in Uganda. It also provides for the protection and preservation of the environment.
  • The Electricity Act, 1999, Chapter 145 and regulations thereunder established the Electricity Regulatory Authority, which is mandated to regulate and license the generation, transmission, distribution, metering and supply of electricity. It also liberalised the electricity sector and unbundled the Uganda Electricity Board (UEB) to split the power industry into generation, transmission and distribution sectors run by the Uganda Electricity Generation Company Limited (UEGCL), the Uganda Electricity Transmission Company Limited (UETCL) and the Uganda Electricity Distribution Company Limited (UEDCL) respectively.
  • The National Environment Act, 2019  provides for the management of the environment for sustainable development.
  • The Public Enterprises Reform and Divestiture Act, 1993, Chapter 98  provides the legal framework for the divestiture of public enterprises, which enabled the removal and privatisation of UEB.
  • The Land Act, 1998, Chapter 227 provides for the tenure, ownership and management of land in Uganda.
  • The Water Act, Chapter 152  provides for the use, protection and management of water resources and supply.
  • The Public Finance Act, 1962, Chapter 193 provides for the control and management of public finances; for the audit and examination of public accounts as well as the accounts of statutory bodies.
  • The Investment Code Act, 2019 provides for the registration of investors and investment licences, and the facilitation, monitoring and evaluation of investment and investors.
  • The Public Private Partnership Act Uganda, 2015  provides for PPP agreements; the role of the private party in a PPP and management of PPPs.

Generation

Generation is a combination of State ownership and private investor ownership. The ownership of generation companies is as follows.

  • The government of Uganda through the State-owned entity UEGCL owns Nalubaale Hydro Power Station, Kiira Hydro Power Station and Isimba Hydro Power Station. Nalubaale and Kiira Hydro Power Stations are operated and maintained by Eskom Uganda Limited.
  • Bujagali Energy Limited, which is a public-private venture between the government of Uganda and private investors, owns and operates Bujagali Hydro Power Station.
  • Jacobsen Electro, a private investor-owned company, owns and operates Namanve Thermal Power Station.
  • Electro-Maxx Limited, a private investor-owned company, owns and operates Tororo Thermal Power Station.
  • Kilembe Mines Limited, a private investor-owned company, owns and operates Kilembe Mines Power Dam.
  • Tronder Power Limited, a private investor-owned company, owns and operates Bugoye Power Station.
  • Eco Power, a private investor-owned company, owns and operates Ishasha Hydro Power Station.
  • Africa EMS, a private investor-owned company, owns and operates Mpanga Hydro Power Station.
  • Hydromax Limited, a private investor-owned company, owns and operates Kabalega Hydro Power Station.
  • Kasese Cobalt Company Limited, a private investor-owned company, owns and operates Mubuku III Power Station.
  • Kakira Sugar Works Limited, a private investor-owned company, owns and operates Kakira Thermal Power Plant.
  • Kinyara Sugar Works Limited, a private investor-owned company, owns and operates Kinyara Thermal Power Plant.
  • Sugar and Allied Industries Limited, a private investor-owned company, owns and operates Kaliro Thermal Power Station.

Transmission

The transmission sector is run through the Uganda Electricity Transmission Company Limited, a State monopoly in charge of the transmission facilities. UETCL is licensed to carry out activities of construction, ownership and operation of installations of high-voltage transmission (above 33 kV) of electricity in Uganda.

Distribution

The Electricity Regulatory Authority (ERA) has issued licences to several electricity distribution companies, both State-owned and private investor-owned. This was done with a view to eliminating monopolies in the distribution sector in order to improve efficiency in the distribution of electricity. The distribution companies licensed by ERA include the following: UEDCL/UMEME Limited, The West Nile Rural Electrification Company (WENRECO), Bundibugyo Electricity Cooperative Society (BECS), Kyegegwa Rural Energy Cooperative Society (KRECS), Pader-Abim Community Multi-Purpose Electric Cooperative Society (PACMECS), Kilembe Investments Limited (KIL) and Kalangala Infrastructure Services Limited.

The power industry was unbundled by the Electricity Act, 1999 and the UEB, which was vertically integrated, was split into three segments, namely (UEGCL) to generate electricity, (UETCL) as a single operator of transmission facilities and (UEDCL) to distribute electricity to end users.

Purely State-owned Entities

  • The Uganda Electricity Generation Company Limited, formed under the auspices of the Electricity Act, 1999 with a purpose to generate electricity in Uganda.
  • The Uganda Electricity Transmission Company Limited, formed under the auspices of the Electricity Act, 1999 with a sole purpose of transmitting electricity to distribution points.
  • The Uganda Electricity Distribution Company Limited, formed under the auspices of the Electricity Act, 1999 to distribute electricity to end users in Uganda.
  • The Rural Electrification Agency, also formed under the auspices of the Electricity Act, 1999, is responsible for bringing electricity to rural areas.

Investor-owned/Combined State-owned and Private Investor-owned Entities

Generation sector

  • Eskom Uganda Limited operates and maintains Nalubaale and Kiira Hydro Power Stations.
  • Bujagali Energy Limited is a PPP between private investors and the government of Uganda that owns and operates Bujagali Hydro Power Station.
  • Jacobsen Electro is a private investor-owned entity that owns and operates Namanve Thermal Power Station.
  • Electro-Maxx Limited owns and operates Tororo Thermal Power Station.
  • Kakira Sugar Works Limited is a privately owned entity that owns and operates Kakira Thermal Power Plant.
  • Kinyara Sugar Works Limited is a privately owned entity that owns and operates Kinyara Thermal Power Plant.
  • Sugar and Allied Industries Limited owns and operates Kaliro Thermal Power Station.
  • Kilembe Mines Limited owns and operates Mubuku I Power Station.
  • Tronder Power Limited owns and operates Bugoye Power Station.
  • Eco Power owns and operates Ishasha Hydro Power Station.
  • Africa EMS owns and operates Mpanga Hydro Power Station.
  • Hydromax Limited owns and operates Kabalega Hydro Power Station.
  • Kasese Cobalt Company Limited owns and operates Mubuku III Power Station.

Distribution sector

  • UMEME Limited, operating under a concession licence from UEDCL.
  • West Nile Rural Electrification Company.
  • Bundibugyo Electricity Cooperative Society.
  • Kyegegwa Rural Energy Cooperative Society.
  • Pader-Abim Community Multi-Purpose Electric Cooperative Society.
  • Kilembe Investments Limited.
  • Kalangala Infrastructure Services Limited.
  • Kisiizi Hospital Company Limited.
  • Absolute Energy Limited.
  • Bwindi Community Micro Hydropower Limited.
  • Pamoja Energy Limited.

Foreign investment can only take place upon adherence to the requirements under the Investment Code Act, 2019. The Uganda Investment Authority (UIA), which was established under the repealed Investment Code Act, Chapter 92, is mandated to issue investment licences to foreign investors to carry on business in Uganda.

A foreign investor shall not invest and participate in the operation of any investment activity in Uganda before registration with UIA.

Section 15 of the Investment Code Act, 2019 provides that an investor shall qualify for registration and issuance of an investment licence by UIA upon satisfying the minimum investment capital requirement. A foreign investor has to meet a minimum investment capital requirement before obtaining an investment certificate that permits him or her to carry on business of any nature in Uganda.

Section 16 of the Investment Code Act, 2019 further states that an investor who satisfies the minimum investment capital requirement shall apply to UIA for registration in order to be facilitated and promoted.

An application for investment registration shall be accompanied by the following:

  • a certificate of registration of the business;
  • a business plan;
  • an Environmental Impact Assessment Certificate;
  • the projected number of employees; and
  • a licence granted by the business sector in which the investor intends to operate.

Thereafter the foreign investor shall be issued an investment certificate.       

Section 24 of the Investment Code Act, 2019 provides that an investor’s registered business enterprise or an interest or right over any property or undertaking forming part of that enterprise cannot be compulsorily acquired by another party except in accordance with the Constitution of the Republic of Uganda, 1995.

However, where a registered business enterprise of an investor or an interest or right over property forming part of that enterprise is compulsorily acquired, the following shall apply: (i) prompt payment of fair and adequate compensation shall be made prior to the taking of possession of the property, and (ii) an aggrieved party has right of recourse to the courts of law in respect of the compulsorily acquired property

Furthermore, the aforesaid compensation paid out to the investor shall be freely transferable out of Uganda without being subjected to exchange control restrictions under the Foreign Exchange Act, 2004.

In terms of dispute resolution mechanisms, Section 25 of the Investment Code Act, 2019 provides that where a dispute arises between an investor and UIA or the government in respect of a registered business enterprise, efforts should be made to resolve the dispute through negotiations for an amicable settlement as per the Arbitration and Conciliation Act.

Where the negotiations fail, the dispute may be submitted to arbitration as follows:

  • in accordance with the procedures for arbitration provided under the Arbitration and Conciliation Act;
  • in accordance with the rules of procedure for arbitration of ICSID; or
  • as per the framework of any bilateral or multilateral agreement on investment protection to which the government of Uganda and the country of which the investor is a national are parties.

The Investment Code Act, 2019 also provides that the investment certificate in respect of a registered business enterprise may specify the particular mode of arbitration to be resorted to in the case of a dispute relating to an investor’s business enterprise. The specification under the investment certificate shall constitute the consent of the government, UIA and the investor to submit to that mode and forum of arbitration.

Section 25 (4) of the Investment Code Act, 2019 provides that where the parties to a dispute do not agree on the mode or forum for arbitration, the party aggrieved by the compulsory acquisition or the compensation payable may apply to the High Court for the determination of any of the following:

  • his or her interest or right;
  • the legality of the taking of possession or acquisition of the property, interest or right;
  • the amount of compensation to which he or she is entitled and the prompt payment of that compensation; and
  • any other matter in dispute relating to the business enterprise.

The government of Uganda awards incentives to investors who meet certain qualifications.

Section 12 of the Investment Code Act, 2019 provides that an investor shall qualify for incentives if he or she meets the following qualifications for incentives:

  • satisfies the minimum investment capital required under the relevant laws;
  • engages in any of the priority areas specified in Schedule 2 of the Investment Code Act, 2019;
  • exports a minimum of 80% of the goods produced;
  • provides for substitution of 30% of the value of imported products;
  • 70% of the raw materials used are sourced locally;
  • directly employs a minimum of 60% of citizens; or
  • introduces advanced technology or upgrading of indigenous technology.

However, the qualifications for incentives set out in any other law shall also apply in determining if an investor qualifies for incentives.

Section 13 of the Investment Code Act, 2019 provides that an investor who has been given an incentive shall receive a Certificate of Incentives issued by UIA. The Certificate shall (i) state under what law the investor has been given the incentive and (ii) give detailed particulars of the incentives given.

There are no restrictions in respect of the sale of power industry assets or business; however, the sale of such assets must be in accordance with the law as stated hereunder.

The Electricity Act, 1999 and the Electricity (Application for Permit, Licence and Tariff Review) Regulations, 2007  are the principal laws that govern the transfer of assets in the power industry.

Section 46(1) of the Electricity Act, 1999 provides that the Electricity Regulatory Authority has to consent in writing to the transfer of a licence in the power industry.

Under Section 46(2) of the Electricity Act, 1999, a licensee may apply to ERA in the prescribed form and manner for the transfer of a licence. The application shall be accompanied by the application in the prescribed form of the person to whom the licensee intends to transfer the licence. Upon approval of the transfer, the prescribed fee shall be paid.

ERA shall put into consideration the legal, technical and financial competence of the transferee when approving the transfer.

Under Regulation 12(2) of the Electricity (Application for Permit, Licence and Tariff Review) Regulations, 2007, ERA shall, before approving a transfer or assignment of a licence, be satisfied that:

  • the transferee or assignee has fulfilled the requirements for licensing;
  • the transferee or assignee has accepted and is willing to undertake the obligations under the licence; and
  • the transferee or assignee has paid the transfer fee.

Regulation 12(3) of the Electricity (Application for Permit, Licence and Tariff Review) Regulations, 2007 provides that within 30 days after receipt of an application to transfer or assign a licence, ERA shall (i) publish the application in the Gazette or in at least one newspaper of wide circulation in Uganda and (ii) communicate its decision to the applicant.       

Consent to any application shall not be unreasonably withheld unless ERA has reason to believe that the interests of the public shall be prejudiced by the transfer.

In the event that ERA does not consent to a transfer, the licensee can appeal to the Electricity Disputes Tribunal against its decision.

Under Section 56 of the Electricity Act, 1999, ERA is mandated to designate a bulk supplier that will be responsible for the transmission and sale of electricity in bulk to distribution and sales companies.

Uganda Electricity Transmission Company Limited is licensed to carry out the activities of construction, ownership and operation of installations for the high-voltage transmission (above 33 kV) of electricity in Uganda.

UETCL is licensed by ERA to do the following:

  • to co-ordinate the power supply system to obtain instantaneous balance between the generation and consumption of electricity, co-ordinate transmission outages, monitor the import and export of electricity, and prepare forecasts of capacity requirements;
  • purchase power to provide continuous and economic supply of electricity to meet the load requirement for customers served directly or indirectly from high-voltage transmission grid (HVTG) facilities;
  • import and export electricity power to neighbouring countries pursuant to the terms of the agreements;
  • to be the bulk supplier and single buyer of power for the national grid in Uganda; and
  • to purchase all independently generated power in Uganda and import electricity from neighbouring countries.

To the best of this firm's knowledge, there are no recent material changes in the laws and regulations pertaining to the power industry.

'Take or pay' clauses have been removed from standardised power purchase agreements. This is meant to reduce the financial burden imposed on UETCL to pay for deemed energy. It has been reported that UETCL paid UGX30 billion in the financial year 2018-19 due to the take or pay clauses that thrust upon it the financial burden of paying for deemed energy.

Uganda has high power losses of 17% and they are a result of a combination of technical hitches, power thefts and non-payment.

There are also low levels of electrification, with rural coverage at 8% and 18.1% overall coverage compared to the National Development Plan target of 25%.

The Electricity Act, 1999, Chapter 145 and regulations thereunder established the Electricity Regulatory Authority, which is mandated to regulate and license the generation, transmission, distribution, metering and supply of electricity. It also liberalised the electricity sector and unbundled the UEB to split the power industry into generation, transmission and distribution sectors run by UEGCL, UETCL and UEDCL respectively.

The Electricity (Tariff Code) Regulations, 2003  provides for the methodology to be used by ERA in computing tariffs for licensees.

A competitive wholesale market does not exist in Uganda. UETCL, under the single-buyer model, purchases all power in bulk at tariff rates computed by ERA under the Electricity (Tariff Code) Regulations, 2003.

Regulation 8(1) of the Electricity (Tariff Code) Regulations, 2003 provides that the components of tariff computation for each licensee shall be in accordance with the tariff methodology approved by ERA in respect of each particular licence and may include the following categories of costs:

  • power acquisition-related costs;
  • operation and maintenance costs;
  • return on investment;
  • adjustment factors for system losses, inflation and foreign exchange; and
  • other costs as approved by ERA.

Furthermore, only specific costs allowable by ERA and associated with the activities of each licensee shall be included in the tariff computation.

The electricity market operates under a 'merit order' system. Generators sell electricity into the 'pool' and the supplier/market operator/system operator (UETCL) purchases it from the pool. Electricity pooling is an arrangement involving generators and suppliers that provides for the wholesale market mechanism for trading electricity.

The pool operates by asking the generators to bid a volume of power and a price for a given time of day. Many pools operate on an hourly basis, meaning that there are 24 separate pooling markets in a day.

Each hour is a wholly separate market for which there is a demand assumption and competition between the generators to meet the demand.

The electricity is run by UETCL, which accepts bids from all generators in price order starting with the lowest bid to the highest until such time as the demand is met. Where a generator’s bid is accepted, that generator is said to be in merit, and where the generator’s bid is unsuccessful, he is said to be out of merit.

Nodal pricing does not apply to the electricity market in Uganda.

Import and export of electricity to/from other jurisdictions is permitted upon grant of a licence by ERA. Section 60 of the Electricity Act, 1999 provides that persons shall only import or export electricity when they obtain an import or export licence from ERA.

UETCL has a licence to import and export electricity in Uganda. Electricity imports and exports are priced in accordance with power sales and power exchange agreements executed between countries.

The electricity supply is from various sources, which include hydro, solar, thermal and cogeneration. As of June 2018, the supply mix was as follows:

  • hydro – 89.07%;
  • cogeneration – 5.05%;
  • thermal – 5.07%; and
  • solar – 0.79%.

To the best of this firm's knowledge, there are no concentration limits in respect of the percentage of electricity that is controlled by any one entity in the electricity market.

A competitive electricity market does not exist in Uganda. UETCL purchases all power from generators and sells it to distributors.

The National Environment Act, 2019  provides for the management of the environment for sustainable development. It was also meant to bring the law on environmental protection in line with the current international guidelines and policies on the environment.

Section 69(1) of the National Environment Act, 2019 provides that lead agencies may, in consultation with the National Environment Management Authority (NEMA) to address the impact of climate change on ecosystems, advise institutions, firms and individuals on strategies to address the impacts of climate change.

The Act further provides for the establishment of environmental standards that include setting air quality standards, standards for the control of the effects of vibration and pollution caused by noise, minimum standards for the management of the quality of soil and standards for the minimisation of ionising and other radiation in the environment.

Section 110 of the National Environment Act, 2019 sets forth the need for environmental and social impact assessments by developers. Section 114 (1) of the Act also provides that NEMA may require a developer to undertake an environmental risk assessment as part of the process for environmental and social impact assessment.

Furthermore, the Act provides that where Uganda is a party to an international treaty, convention or agreement concerning the management of the environment, the Minister for Environment shall, with approval of the Cabinet and in consultation with NEMA and relevant lead agencies, (i) initiate legislative proposals for the purposes of giving effect to such treaty, convention or agreement in Uganda or for enabling Uganda to perform her obligations; or (ii) identify other appropriate measures necessary for the national implementation of such treaty, convention or agreement.

Uganda does not mine coal, nor do generators in Uganda produce electricity using coal.

Uganda, through the Global Energy Transfer Feed-in Tariff (GET FiT) programmes, has encouraged private investors to embrace renewable energy, especially when financing off-grid power plants. This has been driven by the government in order to create localised grids off the national grid. Promoting localised grids has driven private investors to embrace renewable energy like solar as a way of generating electricity.

The Constitution of the Republic of Uganda, 1995  is the supreme law of the land and provides for the land tenure systems, ownership and control of natural resources in Uganda. It also provides for the protection and preservation of the environment.

The Electricity Act, 1999, Chapter 145  and regulations thereunder established the Electricity Regulatory Authority, which is mandated to regulate and license the generation, transmission, distribution, metering and supply of electricity. It also liberalised the electricity sector and unbundled the UEB to split the power industry into generation, transmission and distribution sectors run by UEGCL, UETCL and UEDCL respectively.

The National Environment Act, 2019  provides for the management of the environment for sustainable development.

The Land Act, 1998, Chapter 227 provides for the tenure, ownership and management of land in Uganda.

The Electricity (Application for Permit, Licence and Tariff Review) Regulations, 2007  provides for the procedure for the grant of permits, licences to own and operate generation facilities.

The Electricity (Installation Permits) Regulations, 2003 ) provides for the procedure for the application and grant of permits to persons who are desirous to practise as installation persons.

The Electricity (Licence Exemption) (Isolated Grid System) Order, 2007  regulates the supply of electricity from isolated grid systems for commercial use. It applies to generation facilities not interconnected to the national grid.

The Electricity (Licence Fees) (Amendment) (No 3) Regulations, 2014  provides the scale for licence fees payable.

First and foremost, the procedure for obtaining a licence to build and operate a generation facility is the same one followed when obtaining licences for transmission and distribution facilities.

Under the Electricity (Application for Permit, Licence and Tariff Review) Regulations, 2007, a person who intends to establish a project for which a licence is required under the Electricity Act, 1999 shall submit to ERA a notice of intended application, which shall contain the following:

  • information on the financial and legal status as well as the technical and industrial competence of the intended applicant;
  • a description of the project and the time plan for the execution of the project;
  • a review of the use of land for the project and the relation of the project to local authorities;
  • a review of public and private measures necessary to carry out the project;
  • information relating to permissions required from public authorities;
  • a description of the impact of the project on electricity supply, socioeconomics, cultural impact, the environment, natural resources and wildlife; and
  • any other relevant information required by ERA.

The notice of intended application shall be published in the Gazette and one newspaper of wide circulation in Uganda, within 30 days after receipt. ERA is responsible for the publishing of the notice.

ERA may, within 30 days after the expiration of the notice, issue a permit to the intended applicant, taking into account the responses and comments made by the applicant.

A permit that is issued above shall (i) be for a specific period and is subject to review at intervals specified in the permit, and (ii) allow the intended applicant to carry out studies and any other activities that may be necessary to enable the intended applicant to prepare an application for a licence.

ERA may renew a permit on such terms and conditions as it may determine.

An applicant shall submit his or her application for a licence to ERA accompanied by an evaluation by the applicant of all the comments from affected parties and public agencies.

ERA may, within 30 days after receipt of the application, request additional information from the applicant. Upon receipt of a complete application, ERA shall confirm in writing to the applicant that his or her application is complete.

ERA may require an applicant to make arrangements as may be satisfactory to the authority for the execution of a bond or other form of security for the performance and observance of the conditions to which the licence may be subject.

ERA shall also require the applicant to take out the necessary insurance policies to protect against liabilities that may arise as a result of activities performed under the licence.

ERA shall, within 40 days after receipt of a complete application for a licence, cause a notice of the application to be published in the Gazette and in at least one national newspaper of wide circulation in Uganda.

Where the government or a government agency initiates a project under the Electricity Act, 1999 that is likely to benefit from public finances, ERA shall, through a fair, open and competitive process, invite applications for licences in accordance with the Public Procurement and Disposal of Public Assets Act, 2003.

Where ERA, in the public interest, identifies a need for a project under the Electricity Act, 1999, it may invite applications and award a licence through a fair, open and competitive process.

Where a privately initiated project is converted into a PPP, ERA may award a licence through a fair, open and competitive process.

Where two or more investors or developers have interest in the same site or project to generate, sell or distribute electricity to the same community or to the national grid and the required capacity or energy can be supplied conveniently by only one investor or developer, ERA may award a permit or licence through a fair, open and competitive process.

A competitive process of issuing a licence shall not apply where a private entity has, at its expense, carried out a feasibility study, unless ERA determines that it is in the public interest to do so.

Where a private entity has carried out a feasibility study, ERA shall refund the costs of the feasibility study and other expenses incurred by the private entity.

Under Regulation 10 of the Electricity (Application for Permit, Licence and Tariff Review) Regulations, 2007, ERA shall consider the policies of the government, matters provided for under the Electricity Act, 1999 and any other relevant law, the report of the public hearing and any other matter that has a bearing on the operations of the applicant when granting a licence.

In the event that ERA refuses to grant a licence to an applicant, it shall give the applicant a statement of its reasons for the refusal in writing within 30 days after the refusal.

An appeal may be made to the Electricity Disputes Tribunal by a person aggrieved by the refusal of ERA to grant a licence.

Under Regulation 7 (1) of the Electricity (Application for Permit, Licence and Tariff Review) Regulations, 2007, an application for a licence to own and operate a generation facility must contain the following:

  • the legal and financial status of the applicant;
  • a technical and economic description of the project;
  • a description of how the project fits in with the existing and planned power supply system;
  • the planned time of commencement and completion of the construction of the project;
  • a view of the project’s adaptation to the landscape, including necessary maps and drawings;
  • the impact of the project on public interests and possible mitigation;
  • the results of assessments, including environmental impact assessments and studies carried out, and reports of those assessments and studies;
  • impacts of the project on private interests, including the interests of affected landowners and holders of other rights; and
  • consents and permits required under any other law.

It is upon presentation of the above-mentioned documentation that ERA shall impose terms and conditions in approvals for a licence. The terms and conditions therefore vary depending on the assessment of the documentation accompanying the application for a licence. Be that as it may, the Environment Impact Assessment Certificate from NEMA is mandatory.

Section 67(1) of the Electricity Act, 1999 provides that a licensee authorised by ERA either generally or on a particular occasion may place and maintain electric supply lines in, over or upon any land and for that purpose it shall be lawful, upon written authorisation by ERA, for the licensee:

  • at all times, on reasonable notice, to enter upon the land and put up any posts that may be required for the support of any electric supply lines;
  • to fasten to any tree growing on that land a bracket or other support for the line;
  • to cut down any tree or branch that is likely to injure, impede or interfere with any electric supply line; and
  • to perform any activity necessary for the purpose of establishing, constructing, repairing, improving, examining, altering or removing an electric supply line, or for performing any other activity.

However, a licensee shall not acquire any right other than that of the user of the land under, over, along, across, in or upon which an electric supply line or post is placed and for the reason of that exercise.

A licensee shall also do as little damage as possible to the land and to the environment, and shall ensure prompt payment of fair and adequate compensation to all interested persons for any damage or loss sustained by reason of the exercise of the powers granted under the Electricity Act, 1999.

Questions as to the entitlement of any person to compensation shall, in default of agreement, be determined as if the land had been acquired under the Land Act, 1998 and Land Acquisition Act, Chapter 226.

Under Section 71 (1) of the Electricity Act, 1999, in the event that the licensee considers that he or she requires the acquisition of land, or an interest in land greater than the right of use necessary for the purpose of providing or maintaining electricity supply lines as stated above, the licensee may, with the approval of ERA, request action by the Minister of Lands.

ERA shall provide a copy of its approval, without unreasonable delay, to the Minister of Lands and to the owner or the person having interest in the land.

Where the Minister of Lands is satisfied that the land or interest in land is required for the purpose of providing or maintaining electricity supply services to the public, and that it is required in the public interest, the Minister shall pursue the acquisition of the land on behalf of the licensee in accordance with the Constitution; the Land Act, 1998; and the Land Acquisition Act, Chapter 226.

Where the Minister acquires land on behalf of the licensee, the costs shall be borne by the licensee.

The procedure for acquisition of public land by a licensee is as follows:

  • where the land is owned by the Uganda Land Commission or district land boards, the licensee shall give 30 days’ notice to the owners stating the nature and extent of the acts intended to be performed;
  • the Uganda Land Commission or a district land board may, within 30 days after receipt of the notice, permit the licensee to place and maintain electricity supply lines, subject to conditions, including the payment of any fee or compensation;
  • where the licensee considers the terms set by the Uganda Land Commission or a district land board to use the land as unacceptable, the licensee may, after the expiration of the notice, apply to ERA for a decision on the matter; and
  • a person aggrieved by the decision of ERA may, within 30 days of the decision, appeal to the Electricity Disputes Tribunal.

Section 49 (1) of the Electricity Act, 1999 provides that the licensee shall, on expiry of the licence, remove, at his or her own expense and to the satisfaction of ERA, all installations considered by ERA as inappropriate for further operation.

The licence must follow the National Environment Act, 2019 and any other law when removing installations.

Under Section 116 (1) of the National Environment Act, 2019, NEMA may require a developer or operator of a project to submit a preliminary decommissioning plan as part of a project brief or environmental and social impact statement.

NEMA may, in consultation with the relevant lead agency, require a developer or operator of a project to undertake decommissioning in accordance with the approved decommissioning plan and international best practice, at his or her own cost, before final closure of the project or completion of activities.

A person required to decommission a project or who wishes to voluntarily decommission shall submit a detailed decommissioning plan to NEMA, at least twelve months, or such shorter period as NEMA may determine, before the intended project closure.

The Constitution of the Republic of Uganda, 1995 is the supreme law of the land and provides for the land tenure systems, ownership and control of natural resources in Uganda. It also provides for the protection and preservation of the environment.

The Electricity Act, 1999, Chapter 145  and regulations thereunder established the Electricity Regulatory Authority, which is mandated to regulate and license the generation, transmission, distribution, metering and supply of electricity. It also liberalised the electricity sector and unbundled the UEB to split the power industry into generation, transmission and distribution sectors run by UEGCL, UETCL and UEDCL respectively.

The National Environment Act, 2019  provides for the management of the environment for sustainable development.

The Land Act, 1998, Chapter 227 provides for the tenure, ownership and management of land in Uganda.

The Electricity (Application for Permit, Licence and Tariff Review) Regulations, 2007  provides for the procedure for the grant of permits, and licences to own and operate generation facilities.

The Electricity (Installation Permits) Regulations, 2003 provides for the procedure for the application and grant of permits to persons who are desirous to practise as installation persons.

The Electricity (Licence Fees) (Amendment) (No 3) Regulations, 2014  provides the scale for licence fees payable.

The process for applying for a licence to construct and operate a transmission line is the same as the process for applying to construct a generation facility.

The model for imposing terms and conditions in an approval is the same as the one for obtaining a licence to own and operate a generation facility stated above.

The procedure for acquiring land or an interest in land to build and operate a transmission facility is the same as the procedure to build and construct a generation facility stated above.

UETCL is the single system operator, bulk supplier and single buyer of power for the national grid in Uganda. It is a State-owned monopoly that can compulsorily acquire land to place and maintain electric supply lines in, over or upon any land in accordance with the Land Act, 1998; the Electricity Act, 1999; and the Land Acquisition Act, Chapter 226.

The Electricity Act, 1999, Chapter 145 and regulations thereunder established the Electricity Regulatory Authority, which is mandated to regulate and license the generation, transmission, distribution, metering and supply of electricity. It also liberalised the electricity sector and unbundled the UEB to split the power industry into generation, transmission and distribution sectors run by UEGCL, UETCL and UEDCL respectively.

The Electricity (Tariff Code) Regulations, 2003 provides for the Code to be used by ERA when it considers charges for licensees. It applies to holders of licences under the Electricity Act, 1999.

The Electricity (Application for Permit, Licence and Tariff Review) Regulations, 2007 provides for the procedure for the grant of permits, and licences to own and operate generation facilities.

The Electricity (Installation Permits) Regulations, 2003  provides for the procedure for the application and grant of permits to persons who are desirous to practise as installation persons.

The Electricity (Licence Fees) (Amendment) (No 3) Regulations, 2014  provides the scale for licence fees payable.

Sector costs divided by units sold establish the tariff to be charged by the distribution company.

A licensee may apply to ERA to have the tariff reviewed if the licence permits him or her to do so. ERA shall conduct a public hearing in respect of the application and make a full report after close of the hearing. The report shall contain the decision of ERA on the application.

A party aggrieved by the decision of ERA may make an application to the High Court of Uganda.

Transmission service is open to all persons and entities licensed by ERA to access the service. The UETCL is the system operator licensed by ERA to provide transmission services to generators and distributors.

The procedure for applying for a licence to construct and operate generation facilities and distribution facilities is the same. Please see the discussion above.

The procedure is the same as obtaining approvals for a generation facility as stated above.

Terms and conditions imposed in the approval for distribution facilities are the same as for generation facilities as stated above.

Please make reference to the procedure for acquiring land for the construction and operation of generation facilities, as the procedure is the same for distribution facilities.

ERA has awarded licences to various distributors to supply power to specific geographical areas.

The principal laws governing the provision of distribution service, regulation of distribution charges and terms of services are the same as for transmission facilities, as discussed above.

Sector costs divided by units sold establish the tariff to be charged by the distribution company.

A licensee may apply to ERA to have the tariff reviewed if the licence permits him or her to do so. ERA shall conduct a public hearing in respect of the application and make a full report after closure of the hearing. The report shall contain the decision of ERA on the application.

A party aggrieved by the decision of ERA may make an application to the High Court of Uganda.

Kasirye Byaruhanga & Co Advocates

Plot 33 Clement Hill Road
P. O Box 10946
Kampala
Uganda

+256 39 3260 558

lawyer@lawyer.co.ug lawyer.co.ug
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Kasirye Byaruhanga & Co Advocates is one of Uganda's leading business law firms. The firm provides legal services in a broad range of areas, including commercial real estate; corporate-commercial transactions and restructuring; mergers, acquisitions and divestiture litigation and dispute resolution; labour, employment and pension law; immigration; international trade; PPP and joint ventures; personal wealth management; equipment leasing; mining and natural resources; corporate restructuring and insolvency; competition and antitrust; non-profit organisations; banking and finance; oil and gas; energy law and policy; and probate and administration of estates.

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