Ministry of Energy Inherits Shs570 Billion Debt from REA Merger

Uganda’s goal of extending electricity to rural areas faces a significant financial hurdle of Shs570 billion, a debt inherited by the Ministry of Energy and Mineral Development following the absorption of the Rural Electrification Agency (REA).

State Minister for Energy, Hon. Sidronious Okaasai, informed Parliament that the ministry took on contractual obligations that were still in progress when REA was integrated. Over the subsequent four years, the ministry only received approximately Shs222.078 billion, less than half of the inherited financial burden.

Hon. Okaasai explained that insufficient budgets and delayed fund releases constrain the ministry’s capacity to maintain contractor work on ongoing government-funded projects. To manage these inherited obligations and finance new rural electrification initiatives, the ministry requires an annual budget of Shs200 billion. Efforts are underway to increase the budget allocation for the next fiscal year.

Lawmakers voiced concerns about the slow pace of electrification, with several pointing to districts where poles have been erected but wiring remains incomplete for years. Questions were raised about the disparity between national electrification goals and the reality on the ground, with some newly established cities experiencing poor connectivity.

Past projects, including the Uganda Rural Electrification Access Project and the Accelerated Rural Electrification Programme, have left substantial compensation claims unpaid for Project Affected Persons and landowners, amounting to billions of shillings. While new projects like the Electricity Access Scale-Up Project are progressing, the underlying debt and outstanding payments continue to impede the ministry’s operations and the nation’s development aspirations.

Source: https://www.parliament.go.ug/news/4558/rural-electrification-agency-merger-left-ministry-shs570-billion-debt