A decline in  profits makes UEGCL struggle with Karuma dam costs

Uganda Electricity Generation Company Limited

A steep decline in its profits for the 2024/25 financial year has been recorded by  Uganda Electricity Generation Company Limited (UEGCL)  highlighting the growing financial pressures within Uganda’s expanding hydropower sector.

The state-owned power producer reported profit after tax of Shs25.02 billion, down from Shs54 billion the previous year. The drop was largely attributed to rising operating expenses, higher depreciation charges and growing interest obligations linked to the 600MW Karuma Hydropower Plant.

Despite the fall in profit, the company’s revenue grew strongly, climbing by 40 per cent to Shs492 billion from Shs350 billion in 2023/24. This increase was driven by improved power dispatch from its hydropower stations and the first full year of commercial operations at the Karuma plant, Uganda’s largest hydropower facility, which has significantly boosted national generation capacity.

However, the higher revenue did not fully translate into stronger bottom-line performance. Financing costs related to the Karuma loan, together with increased depreciation and general operating expenses, constrained net earnings. Return on assets improved slightly to 1.67 per cent from 1.25 per cent, but remained below industry standards due to lower-than-expected dispatch from some plants.

UEGCL’s financial position improved following a government decision to convert Shs566 billion in accumulated interest on the Karuma loan into equity. This strengthened the company’s balance sheet, raising total equity to Shs1.54 trillion, easing long-term financial strain and improving solvency. Total assets were reported at Shs8.368 trillion, reflecting the large-scale investments required to expand the country’s power generation infrastructure.

Speaking at the company’s 15th Annual General Meeting held at the Ministry of Finance, Planning and Economic Development headquarters in Kampala on December 4, CEO Harrison Mutikanga described the year as a turning point for UEGCL, marked by the first full year of Karuma’s commercial operations.

He said the company remained committed to providing reliable power and aligning its work with national development frameworks, including Vision 2040, the Energy Policy 2023 and the Fourth National Development Plan.

Mutikanga noted that UEGCL’s strategic plan has been certified by the National Planning Authority, reinforcing the company’s role in driving Uganda’s socio-economic transformation. He added that ongoing reforms, including partial debt-to-equity conversion, were beginning to reduce financial pressure, even as the utility continued engaging regulators to improve revenue collection while maintaining affordable tariffs.

Operationally, the company showed modest gains. Electricity generation rose to 3.63 terawatt hours, representing a 6.7 per cent increase compared to the previous year. Plant availability averaged 97.7 per cent, while system reliability stood at 99.6 per cent. UEGCL operates four power stations—Nalubaale–Kiira, Isimba, Namanve and Karuma—with a combined installed capacity of 1,213MW, accounting for more than 59 per cent of Uganda’s grid-connected power.

Energy and Mineral Development Minister Ruth Nankabirwa described the performance as steady, but noted that power dispatch from Karuma had been constrained by low industrial demand. She explained that the slow completion of several industrial parks has limited electricity consumption, but demand is expected to rise once those projects are completed.

The AGM also raised serious concerns about structural defects at the Isimba Hydropower Dam. Shareholders warned that failure to resolve the issues could threaten safety and reduce the long-term value of the asset. The contractor, China International Water and Electric Corporation, has reportedly delayed repair works. UEGCL was directed to prepare a detailed report to guide government action. Nankabirwa said the government would secure funding to carry out the repairs and hold the contractor accountable where necessary, with Cabinet set to review the findings.

The company has also made progress in diversifying its energy sources. The 6.6MW Nyagak III Small Hydropower Plant in Zombo was commissioned to improve power supply in the West Nile region. In addition, feasibility studies for Uganda’s first floating solar project, a planned 10MW facility on the Isimba reservoir, were completed. Rehabilitation of the Nalubaale–Kiira complex is also underway and is expected to extend the plants’ operational lifespan by more than 30 years.

Looking forward, UEGCL said it will focus on improving profitability through tighter cost controls, increased power dispatch, stronger revenue collection and continued investment in renewable energy. Although short-term pressure on profits remains, the company expressed confidence that rising industrial demand, efficiency improvements and sustained government support will enhance financial performance over time, while supporting Uganda’s energy security and economic growth.