Parliament approves sh424b loan for Uganda–South Sudan electricity link

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Parliament has approved Government request to borrow $121,961,000 (sh424b) from the African Development Fund (ADF) for the construction of the South Sudan–Uganda Power Interconnection Project, despite dissent from a few Members of Parliament.

In Uganda, the project will cover the districts of Nwoya, Amuru, and Lamwo.

The 299-kilometre power transmission line will begin at Gumbo substation on the outskirts of Juba in South Sudan, cross into Uganda at Nimule to the metering substation at Bibia.  

The line will terminate at the Olwiyo substation, which receives power from the Karuma Hydropower Station.

The state minister for finance, planning and economic development, Henry Musasizi, on Thursday, October 30, 2025, tabled the loan request for its second and third readings in Parliament.

Musasizi said the South Sudan–Uganda Power Interconnection Project, being a transboundary initiative, would simultaneously address Uganda’s excess power capacity and South Sudan’s energy deficit, thereby ensuring affordability and stability of electricity supply in both countries.

He explained that the project would enable Uganda to export 624 GWh of surplus energy to South Sudan in its first year of operation, leading to a substantial reduction in greenhouse gas emissions. Uganda is expected to gain direct economic benefits from the project, which will be reinvested in the energy sector to expand electricity access across the country.

Musasizi added that the project complements ongoing energy investments by expanding the national transmission network and strengthening the backbone for electricity distribution, especially in the Acholi sub-region, which together with Karamoja and West Nile has some of the lowest grid access rates in the country (according to the Uganda National Household Survey 2019/2020).

Uganda and South Sudan signed an agreement in December 2015 to develop the Olwiyo (Uganda)–Juba (South Sudan) power interconnection line. Both countries are committed to construct a 299 km, 400 kV transmission line, along with associated substations and distribution infrastructure.

Project overview

Under the project, Uganda and South Sudan will build in-house capacity for high-voltage transmission operations and enter into agreements for joint operations, maintenance, cross-border power exchange, and regional grid integration.

Presenting the main report, John Bosco Ikojo (Bukedea County, NRM), the chairperson of the committee on national economy, said the committee supported the approval of the loan. Ikojo noted that transboundary power interconnection projects are inherently complex as they involve multiple governments, executing agencies, financiers, and agreements to ensure operational success.

Committee recommendations

The committee recommended that the Ministry of Energy and Mineral Development strengthen coordination with South Sudan’s Ministry of Energy and Dams to ensure efficient regional collaboration and avoid delays in utilising transmission assets.

The committee called for expediting finalisation and signing of the Power Purchase Agreement (PPA), Joint Operation and Maintenance Agreement, and other related documents before the completion and testing of the interconnector, to prevent delays in the project’s operational start date.

The committee also urged fast-tracking the inclusion of this project in the multi-year commitments for FY 2025/26 and adjust the fiscal framework to accommodate associated financing costs in the medium term.

Minority report

MPs Charles Tebandeke (Bbale County, NUP) and Hassan Kirumira (Katikamu County South, NUP) presented a minority report urging Parliament to reject the loan, citing concerns about Uganda’s growing public debt and limited electricity access.

“We request that, for the sake of reducing the risk and fear of increasing debt stock, Parliament considers and supports this minority report. The government should instead seek affordable credit to extend power to Ugandans rather than borrow heavily to export electricity when many Ugandans remain unconnected to the national grid,” Tebandeke said.

He argued that while the project aims to integrate South Sudan into the Eastern Africa Power Pool (EAPP) to address energy deficits there, Uganda has yet to connect large parts of its population to electricity.

Citing the Uganda National Bureau of Statistics (2024), Tebandeke said the national electricity connection rate remains around 25.3%, with sharp disparities between urban areas (49%) and rural areas (19.1%), and only about 15% of Ugandans enjoy reliable power supply.

The minority report raised concerns over the missing Memorandum of Understanding, incomplete Power Purchase Agreement, and inadequate information on project capacity and performance.

Tebandeke noted that despite reports of installed generation capacity reaching 2,048 MW, issues such as low hydropower output during droughts, transmission losses, and limited grid expansion continue to undermine the impact of increased generation.

Project benefits

According to the main report, the project will deliver several key benefits; financial benefits to Uganda’s electricity supply industry, as the Uganda Electricity Transmission Company Limited (UETCL) will be able to export surplus power and reduce financial burdens arising from “deemed energy” clauses in take-or-pay Power Purchase Agreements (PPAs).

Other benefits include improved reliability of electricity supply in northern Uganda through the upgrading of the Olwiyo substation and construction of the new Bibia substation, both operating at 400/132/33 kV.

The project will support rural electrification through enhanced transmission infrastructure, complementing the ongoing Uganda Rural Electrification Access Project (UREAP) funded by a $100 million credit from the African Development Bank, and its upcoming Phase II (UREAP II), which aims to further expand access beyond the current 58% national coverage (FY 2023/24).

Project cost and financing

The total cost of the Ugandan section of the project is estimated at $139.8 million. The African Development Fund will provide $121.96 million (87.2%) from its Performance-Based Allocations (PBAS) and Regional Operations (RO) window, while the Government of Uganda will contribute $17.85 million (12.8%) as counterpart funding.

Implementation

The Uganda Electricity Transmission Company Limited (UETCL) will serve as the executing agency for the Ugandan portion of the project, overseeing construction, management, and operations.

With support from the Nile Equatorial Lakes Subsidiary Action Program Coordination Unit (NELSAP-CU), UETCL and the South Sudan Electricity Corporation will jointly procure a Project Supervision Consultant to oversee implementation in both countries.