Ugandan electricity distributor Umeme plans to spend $1.2 billion to expand the grid

Ugandan power distributor Umeme plans to spend $1.
2 billion over the next seven years to retrofit and expand the grid and has hired a consultant to explore financing options
.

Ugandan electricity distributor Umeme plans to spend $1.
2 billion to expand the grid

Umeme CEO Selestino Babungi told Reuters in an interview that the investment would be used to prepare
for what is expected to be connected to the grid by 2020.

Uganda is developing two new hydroelectric power plants
in Nile-Karuma and Isamba.
Once completed, the two hydropower plants will add 780 megawatts of electricity
to the grid.

The two Chinese-funded hydropower plants will double Uganda's existing power generation capacity, which currently generates about 700 megawatts
.

"We need to invest in new infrastructure for next-generation projects, such as extending lines, building new substations, connecting more customers
.
" Babungi noted
.

Uganda's energy market is largely seen as underutilized and has significant growth potential
.
According to Umeme, the grid can only cover 23% of the country's 40 million people, and the annual per capita electricity consumption is only 85 kilowatt-hours
.
According to a 2015 report by consulting firm McKinsey, this is well below the average per capita electricity
consumption of 150 kilowatt-hours in sub-Saharan Africa outside South Africa.

Babungi said the government's start of crude oil production and economic activity driven by industrialization will increase energy consumption
by 8 percent annually over the next five years.

Uganda discovered 6.
5 billion barrels of crude oil reserves in 2006 and plans to start production
in 2020.

"We see better prospects .
.
.
All of this oil activity, including pipelines, refineries, is starting to pick up, and we believe this will impact the power industry
.
Babungi added
.

Last year, Uganda signed an agreement with neighboring Tanzania to develop a crude oil export pipeline
from Uganda's western inland oil fields to Tanzania's port in the Indian Ocean.
With a total length of 1,445 kilometers, the project is expected to be the longest electric heating pipe
in the world.

Last year, Uganda's only electricity distributor, Umeme, fell 77 percent
in pre-tax profit, hit by debt-servicing costs.
Babungi expects 2018 to be better because it is the central bank's clearer forecast of economic growth
.

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