The Government of Uganda is set to receive a boost to its energy sector after India has offered a loan of US $141m to help the East African country expand its electricity distribution infrastructure.

According to Ugandan President Yoweri  Museveni, the loan would be extended to Kampala to build electricity transmission lines and substations. The sector’s financing gap is currently estimated at more than US $500 m, reflected in worn-out sections of the country’s power supply network and a low electricity penetration rate of less than 20 % of the population.

“Any investment in the power sector is welcome. We still need funds for the repair of old supply infrastructure in some areas and construction of new distribution lines in areas that are not connected to the national electricity grid. So far, the Europeans have dominated investments in the mini hydro generation sub sector while China has dominated the large hydro generation segment through financing and construction of the Karuma and Isimba power dams. The Indian firms, in comparison, have been very active in construction of many electricity sub-stations commissioned by Umeme Ltd in various parts of Uganda,” said Julius Wandera, Uganda’s spokesperson of the Electricity Regulatory Authority.

Uganda-India relationship

Uganda and India’s relations date back to the 19th Century when Britain shipped a large number of Indians into East Africa to build a railway from the Indian Ocean coast into the hinterland and terminating in Uganda’s west.

The targeted investments in the energy sector is likely to raise India’s profile in the area, after years of regular participation by Indian contractors in the construction of electricity sub-stations located across Uganda. India has also added another US $64m to be spent on boosting agriculture and diary production in the country.